The translation of this document is outdated.
Translation validity: 28.11.2023.–17.07.2024.
Amendments not included:
20.06.2024.
Text consolidated by Valsts valodas centrs (State
Language Centre) with amending laws of:
14 April 2005 [shall come
into force on 13 May 2005];
9 June 2005 [shall come into force on 12 July
2005];
15 June 2006 [shall come into force on 13 July
2006];
29 March 2007 [shall come into force on 1 May
2007];
4 October 2007 [shall come into force on 8 November
2007];
22 May 2008 [shall come into force on 25 June
2008];
29 May 2008 [shall come into force on 1 July 2008];
23 October 2008 [shall come into force on 1 January
2009];
26 February 2009 [shall come into force on 25 March
2009];
15 October 2009 [shall come into force on 1 January
2010];
13 January 2011 [shall come into force on 11 February
2011];
22 March 2012 [shall come into force on 25 April
2012];
14 June 2012 [shall come into force on 10 July
2012];
8 November 2012 [shall come into force on 1 December
2012];
9 July 2013 [shall come into force on 7 August
2013];
19 September 2013 [shall come into force on 1 January
2014];
24 April 2014 [shall come into force on 28 May
2014];
11 June 2015 [shall come into force on 14 July
2015];
29 October 2015 [shall come into force on 1 January
2016];
4 February 2016 [shall come into force on 29 February
2016];
26 May 2016 [shall come into force on 29 June
2016];
15 December 2016 [shall come into force on 1 January
2017];
14 September 2017 [shall come into force on 17 October
2017];
21 September 2017 [shall come into force on 4 October
2017];
26 October 2017 [shall come into force on 9 November
2017];
21 June 2018 [shall come into force on 18 July
2018];
28 February 2019 [shall come into force on 28 March
2019];
20 June 2019 [shall come into force on 16 July
2019];
12 December 2019 [shall come into force on 6 January
2020];
17 June 2020 [shall come into force on 3 July
2020];
29 April 2021 [shall come into force on 19 May
2021];
27 May 2021 [shall come into force on 23 June
2021];
23 September 2021 [shall come into force on 20 October
2021];
30 September 2021 [shall come into force on 29 October
2021];
31 March 2022 [shall come into force on 3 May
2022];
28 April 2022 [shall come into force on 31 May
2022];
16 June 2022 [shall come into force on 1 July
2023];
26 October 2023 [shall come into force on 28 November
2023].
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:
Financial Instrument Market
Law
Division A
General Provisions
Section 1. Terms Used in this
Law
(1) The following terms are used in this Law:
1) category - financial instruments of the same type
strengthening rights of the same type with uniform rules for
exercising such rights;
2) investment firm - an investment firm within the
meaning of the Law on Investment Firms;
3) Member State - a European Union Member State or a
country of the European Economic Area;
4) home Member State - a Member State in accordance
with the requirements of Section 3.1 of this Law;
5) supervisory authority of a Member State - an
authority to which a Member State has delegated the supervisory
function of the provision of investment services, irrespective of
whether this authority has been established on the basis of a law
or the performance of such function has been delegated thereto by
a State administration institution, if the relevant Member State
has notified the European Commission of such authority and its
rights and obligations;
6) regulated market - a multilateral system which is
operated or managed by a regulated market operator and which,
according to the rules of a multilateral system and in conformity
with equivalent conditions, brings together or facilitates the
bringing together of multiple third-party buying and selling
interests in financial instruments in a way that results in
entering into a transaction in respect of the financial
instruments admitted to trading under the rules of a multilateral
system, and which is authorised and functions regularly in
accordance with Division D, Chapter I of this Law;
7) regulated market operator - a capital company which
organises or manages a regulated market;
8) official list - such regulated market for which the
regulated market operator has determined the highest requirements
compared to other regulated markets organised thereby and the
activities of which are performed in accordance with the minimum
requirements laid down in this Law;
9) public circulation - concluding transactions in
financial instruments admitted to trading on a regulated
market;
10) issuer - a person whose transferable securities are
admitted to trading on a regulated market, and also a person on
whose behalf transferable securities or other financial
instruments are issued or intended to be issued for admission to
trading on a regulated market. In relation to the depository
receipts admitted to trading on a regulated market, the issuer of
such securities the right to which is represented by the
depository receipt shall be deemed the issuer regardless of
whether such securities are or are not admitted to trading on the
regulated market;
11) initial placement - a public offer made by the
issuer or a person authorised thereby to acquire transferable
securities or other financial instruments and the first placement
thereof;
12) [12 December 2019];
13) prospectus - a document that includes detailed
information on the issuer and any transferable securities issued
thereby for which the public offeror wishes to make an offering
to the public or which the person asking for admission of
transferable securities on a regulated market wishes to admit on
the regulated market;
14) [31 March 2022];
15) [31 March 2022];
16) central securities depository - a capital company
within the meaning of Article 2(1)(1) of Regulation (EU) No
909/2014 of the European Parliament and of the Council of 23 July
2014 on improving securities settlement in the European Union and
on central securities depositories and amending Directives
98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012
(hereinafter - Regulation No 909/2014);
17) central securities depository participant - a
participant within the meaning of Section 1, Paragraph one,
Clause 6 of the law On the Settlement Finality in Payment and
Financial Instrument Settlement Systems;
18) financial instrument market participants - credit
institutions providing investment services or ancillary
investment services, investment firms, issuers, investors,
companies entitled under the law to administer collective
investment undertakings, regulated market operators, central
securities depositories, foreign investment firms providing
investment services or ancillary investment services, and other
persons performing activities governed by this Law;
19) qualifying holding - a holding acquired directly or
indirectly by one or several persons which are acting in concert
on the basis of an agreement and representing 10 per cent and
more of the share capital or of the voting rights of shares or
stocks of a commercial company or making it possible to exercise
a significant influence over the financial and operational policy
of the commercial company;
20) control - a person has control over a commercial
company, if:
a) this person has decisive influence in the commercial
company on the basis of participation;
b) this person has decisive influence in the commercial
company on the basis of a group of companies contract;
c) other relationships between this person and the commercial
company exist - analogous to the relationships referred to in
Sub-clause "a" or "b" of this Clause;
21) major holding - a directly or indirectly acquired
holding which comprises five and more per cent of the voting
capital of the issuer;
22) [28 April 2022];
23) [28 April 2022];
24) parent financial holding company in the Republic of
Latvia - a financial holding company registered in the
Republic of Latvia which is not a subsidiary of an investment
firm or credit institution registered in the Republic of Latvia
or a subsidiary of another financial holding company registered
in the Republic of Latvia;
25) close links - a mutual link between two or more
persons:
a) by participation - a person owns directly or by way of
control 20 per cent or more of the voting rights in a commercial
company or a person directly or by way of control has acquired a
holding which comprises 20 per cent or more of the share capital
of the commercial company;
b) by control;
c) if they are linked with one and the same person by a
relationship of control;
26) [28 April 2022];
27) initial register - a list which contains persons
who own financial instruments issued by one or several issuers
(hereinafter also - the owners of financial instruments) and who
have acquired the financial instruments as a result of initial
placement or, after putting the financial instruments into public
circulation, have not moved accounting of financial instruments
owned thereby from the initial register to the financial
instrument account owned thereby;
28) [12 December 2019];
29) depositary receipts - transferable securities which
are negotiable on the capital market and which represent
ownership of the securities of a non-domiciled issuer while being
able to be admitted to trading on a regulated market and traded
independently of the securities of the non-domiciled issuer;
30) transferable securities - securities which are
negotiable on the capital market, except for payment instruments,
such as:
a) capital securities;
b) debt securities;
c) other securities representing the right to acquire or
dispose of transferable securities or giving rise to a cash
settlement determined by reference to transferable securities,
currencies, interest rates or yields, commodities or other
indices or measures;
31) [12 December 2019];
32) [12 December 2019];
33) [12 December 2019];
34) [12 December 2019];
35) host Member State - the country which is not the
home Member State and where an offer of securities to the public
is made or admission of the transferable securities on a
regulated market is sought, or the country where an investment
firm or credit institution has a branch or it provides investment
services or ancillary investment services, or the country where
the regulated market operator implements corresponding measures
to promote remote access by market participants of such country
to trading in its system, if the country differs from the home
Member State;
36) qualified investors - investors which are specified
as such in Section 124.1, Paragraph two of this Law or
meet the requirements and criteria referred to in Paragraph two
or five of this Section, and also persons who have been
recognised as eligible counterparties in accordance with the
provisions of Section 124.2 of this Law;
37) [12 December 2019];
38) foreign country - a country which is not a Member
State of the European Union or the European Economic Area;
39) competent authority - an authority to which a
Member State has delegated the function to supervise the
procedures for drawing up, registering, and distributing
prospects and which fulfils the duties related to international
cooperation with competent authorities of other Member
States;
40) affiliated company - holding in an undertaking
where group undertakings, directly or indirectly (via
subsidiaries), own 20 or more per cent of the voting rights of
shares (stocks) or holding which gives the right to exercise
significant influence, but not to control the taking of the
decisions related to the financial and operating policy;
41) [31 March 2022];
42) [31 March 2022];
43) debt securities - bonds or other forms of
transferable securitised debts, and also depositary receipts in
relation to such securities;
44) controlled commercial company - a commercial
company which meets at least one of the following conditions:
a) a person has majority of voting rights in the commercial
company;
b) a person has the right to directly or indirectly elect or
revoke majority of the members of the executive or supervisory
board, and such person concurrently is a shareholder (member) of
the commercial company;
c) a shareholder (member) of the commercial company is a
person who solely controls majority of the voting rights of
shareholders or members under an agreement which such person has
entered into with other shareholders or members of the relevant
commercial company;
d) a person has control over the commercial company and such
person actually uses or may use it;
45) regulated information - all types of information
which is disclosed by an issuer or a person who has requested
admission of transferable securities to trading on a regulated
market in accordance with the requirements laid down in Sections
3.1, 54, Division D, Chapters III, IV of this Law and
Articles 7 and 19 of Regulation (EU) No 596/2014 of the European
Parliament and of the Council of 16 April 2014 on market abuse
(market abuse regulation) and repealing Directive 2003/6/EC of
the European Parliament and of the Council and Commission
Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (hereinafter -
Regulation No 596/2014);
46) electronic means - electronic equipment for data
processing, storage, and transmission, by using cables, radio
waves, optical technologies, or other electromagnetic means;
47) market maker - a person who continuously ensures
trade (liquidity) of one or several financial instrument assets
during a trade day, by purchasing and selling financial
instruments within the limits of price specified by itself and at
its own funds;
48) trade day - a day or period during the relevant day
when, in accordance with the provisions of a regulated market
operator, it is possible to conduct transactions in financial
instruments in the relevant regulated market;
49) multilateral trading facility (hereinafter also -
the MT facility) - a system operated by an investment firm, a
credit institution, or a regulated market operator and which
brings together third party orders for buying and selling
financial instruments under equivalent conditions in a way that
results in a contract;
50) operator of a multilateral trading facility - an
investment firm, a credit institution, or a regulated market
operator which ensures operation of the MT facility in accordance
with the rules of the system;
51) tied agent - a natural or legal person who, on
behalf of one investment firm or credit institution, advertises
or otherwise promotes to clients or prospective clients the use
of investment services or ancillary investment services provided
by the investment firm or credit institution, receives and
transmits instructions or orders from the clients in respect of
investment services or financial instruments, places financial
instruments or provides investment advice to clients or
prospective clients in respect of the abovementioned financial
instruments or services;
52) responsible person of the tied agent - a
self-employed person, a member of the executive body of the tied
agent, or other person who, in conformity with the competence, is
responsible for the professional activity of the tied agent on
the management level of the tied agent;
53) systematic internaliser - an investment firm or
credit institution which, on an organised, frequent systematic
and substantial basis, deals on own account when executing client
orders outside a regulated market, the MT facility, or the
organised trading facility without operating a multilateral
system. The frequent and systematic basis of the systematic
internaliser shall be measured by the number of over-the-counter
trades in the financial instruments conducted by the investment
firm or credit institution on own account when executing client
orders. The substantial basis shall be measured either by the
size of the over-the-counter trading executed by the investment
firm or credit institution in relation to the total trading of
the investment firm or credit institution in a specific financial
instrument or by the size of the over-the-counter trading
executed by the investment firm or credit institution in relation
to the total trading in the European Union in a specific
financial instrument;
54) limit order - an order to acquire or sell certain
amount of financial instruments for a specially determined price
or for a better price;
55) investment advice - the provision of a personal
recommendation to a client, either upon its request or at the
initiative of the investment firm or credit institution, in
respect of one or more transactions relating to financial
instruments;
56) execution of orders on behalf of clients - activity
taken to conclude agreements to buy or sell one or more financial
instruments on behalf of clients and includes the conclusion of
agreements to sell financial instruments issued by an investment
firm or a credit institution at the moment of their issuance;
57) dealing on own account - trading against
proprietary capital (funds) resulting in the conclusion of
transactions in one or more financial instruments;
58) portfolio management - managing portfolios in
accordance with mandates given by clients on a discretionary
client-by-client basis where such portfolios include one or more
financial instruments;
59) client - any natural or legal person to whom an
investment firm or credit institution provides investment
services or ancillary investment services;
60) professional client - a client who has the relevant
experience, knowledge, and competence to independently take an
investment decision and duly assess the risks undertaken by him
or her;
61) retail client - a client other than professional
client;
62) financial analyst - an employee of an investment
firm or credit institution who develops investment research
content;
63) corporate governance - a set of measures for
achieving the objectives of the activities of a commercial
company and controlling the activities of a commercial company,
and also assessing and managing the risks related to activities
of a commercial company;
64) date of entry - the date specified by the issuer or
offeror on which the right to such benefits which will be gained
as a result of a corporate action on financial instruments are
determined;
65) free capital - the value of assets belonging to a
person which is reduced by the value of liabilities of such
person and by the value of those assets which are regarded as
long-term investments;
66) [12 December 2019];
67) [12 December 2019];
68) holding of financial instruments - the holding and
administration of financial instruments on behalf of clients,
including holding of the funds necessary for ensuring the
transactions to be made in financial instruments and provision of
other services related to holding or administration of financial
instruments, except for maintaining securities accounts at the
top tier level;
69) formal understanding - a contract which is binding
in accordance with that laid down in laws and regulations and
provides the person the right to obtain the stocks with voting
rights of the issuer in the joint-stock company on the day of
exercising the rights arising from financial instruments;
70) long position in financial instruments - financial
instruments which belong to a person, or financial instruments
which give the right to or impose an obligation on the person to
acquire financial instruments;
71) short position in financial instruments -
liabilities of a person which must be fulfilled in financial
instruments, or financial instruments which give the right to or
impose an obligation on the person to dispose of financial
instruments;
72) corporate action on financial instruments - any
fact or circumstance affecting the nominal value of financial
instruments or other characteristics, and also actions of an
issuer when fulfilling liabilities against a person who has the
right to benefits as a result of corporate actions on financial
instruments (disbursement of dividends, disbursement of interest,
division of issue, joining of issue, and other similar facts or
circumstances);
73) small and medium-sized enterprise growth market - a
multilateral trading facility to which the status of a small and
medium-sized enterprise growth market has been granted in
accordance with Section 133.11 of this Law;
74) energy derivative contracts - options, futures,
swaps, and any other derivative contracts referred to in Section
3, Paragraph two, Clause 6 of this Law and relating to coal or
oil that are traded on an organised trading facility and must be
physically settled;
75) multilateral system - a system or facility in which
multiple third-party buying and selling trading interests in
financial instruments are able to interact in the system;
76) organised trading facility (hereinafter also - the
OT facility) - a multilateral system which is not a regulated
market or a multilateral trading facility and in which multiple
third-party buying and selling interests in bonds, structured
finance products, emission allowances, or derivatives are able to
interact in the system in a way that results in a
transaction;
77) trading venue - a regulated market, a multilateral
trading facility, or an organised trading facility;
78) liquid market - a market for a financial instrument
or a category of financial instruments where there always is a
market participant who is ready and willing to sell and who has
been evaluated in accordance with the following criteria, taking
into consideration the specific market structures of the
particular financial instrument or the particular category of
financial instruments:
a) the average frequency and volume of transactions over a
range of market conditions, having regard to the nature and life
cycle of products within the category of the financial
instrument;
b) the number and type of market participants, including the
ratio of market participants to traded instruments in a
particular product;
c) the average size of spreads between buying and selling
interests, where available;
79) group - a parent undertaking and all its
subsidiaries;
80) matched principal trading - a transaction where the
facilitator interposes itself between the buyer and the seller to
the transaction in such a way that it is never exposed to market
risk throughout the execution of the transaction, with both sides
executed simultaneously, and where the transaction is concluded
at a price where the facilitator makes no profit or loss, other
than a previously disclosed commission, fee or charge for the
transaction;
81) algorithmic trading - trading in financial
instruments where a computer algorithm automatically determines
individual parameters of orders, including - whether to initiate
the order, the timing, price, or quantity of the order or how to
manage the order after its submission, with limited or no human
intervention, and does not include any system that is only used
for the purpose of routing orders to one or more trading venues
or for the processing of orders involving no determination of any
trading parameters or for the confirmation of orders or the
post-trade processing of executed transactions;
82) high-frequency algorithmic trading technique - an
algorithmic trading technique characterised by:
a) infrastructure intended to minimise network and other types
of latencies, including at least one of the following
characteristics: co-location at the same data centre of the
algorithmic trading system of a client and the transaction
processing system, proximity hosting of the algorithmic trading
system of a client and the transaction processing system at
different data centres which are interconnected with a fast and
low-latency connection, or the systems are interconnected with
high-speed direct electronic access;
b) system-determination of order initiation, generation,
routing or execution without human intervention for individual
trades or orders;
c) high message intraday rates which constitute orders, quotes
or cancellations;
83) direct electronic access - an opportunity for a
person to electronically transmit orders relating to a financial
instrument directly to the trading venue, using trading code of
the member, participant, or client of the trading venue and using
the infrastructure of the member, participant, or client or any
connecting system of the member, participant, or client (direct
market access) or without using such infrastructure (sponsored
access);
84) cross-selling practice - the offering of an
investment service together with another service or product as
part of a package or one or several products or services is as a
condition for another product or agreement or a package
thereof;
85) structured deposit - a deposit as defined in
Section 1, Paragraph one, Clause 1 of the Investment Guarantee
Law and which is fully repayable at maturity on terms under which
any interest or a premium is calculated according to a formula
involving factors such as:
a) an index or combination of indices, except for variable
rate deposits whose return is directly linked to an interest rate
index, including Euribor or Libor;
b) a financial instrument or combination of financial
instruments;
c) a commodity or combination of commodities or other physical
or non-physical non-fungible assets;
d) a foreign exchange rate or combination of foreign exchange
rates;
86) exchange-traded fund - a fund at least one unit or
share category of which is traded throughout the day on at least
one trading venue and with at least one market operator which
implements measures to ensure that the price of its units or
shares on the trading venue does not significantly vary from its
net asset value and, where applicable, from its indicative net
asset value;
87) certificates - securities as defined in Article
2(1)(27) of Regulation (EU) No 600/2014 of the European
Parliament and of the Council of 15 May 2014 on markets in
financial instruments and amending Regulation (EU) No 648/2012
(hereinafter - Regulation No 600/2014);
88) structured finance products - securities as defined
in Article 2(1)(28) of Regulation No 600/2014;
89) derivatives - derivatives as defined in Clause 30,
Sub-clause c" of this Paragraph and Section 3, Paragraph two,
Clauses 4, 5, 6, 7, 8, 9, and 10 of this Law;
90) commodity derivatives - commodity derivatives as
defined:
a) in Clause 30, Sub-clause c" of this Paragraph and are
related to the commodity or the base asset referred to in Section
3, Paragraph two, Clause 10 of this Law;
b) in Section 3, Paragraph two, Clauses 5, 6, 7, and 10 of
this Law;
91) central counterparty - a person as defined in
Article 2(1) of Regulation (EU) No 648/2012 of the European
Parliament and of the Council of 4 July 2012 on OTC derivatives,
central counterparties and trade repositories (hereinafter -
Regulation No 648/2012);
92) approved publication arrangement - a person
authorised in accordance with this Law to provide the service of
publishing trade reports on behalf of investment firms and credit
institutions in accordance with Articles 20 and 21 of Regulation
No 600/2014;
93) consolidated tape provider (hereinafter also - the
CT provider) - a person authorised in accordance with this Law to
provide the service of collecting trade reports for financial
instruments listed in Articles 6, 7, 10, 12, 13, 20, and 21 of
Regulation No 600/2014 from regulated markets, MT facilities, OT
facilities and approved publication arrangements and
consolidating them into a continuous electronic live (hereinafter
- real time) data stream providing price and volume data per
financial instrument;
94) approved reporting mechanism - a person authorised
in accordance with this Law to provide reports on transaction
details to Latvijas Banka and the European Securities and Markets
Authority on behalf of investment firms and credit
institutions;
95) foreign company - a company that would constitute a
credit institution providing investment services or performing
investment activities or an investment firm if the head office of
such firm were located within the European Union;
96) wholesale energy products - wholesale energy
products as defined Article 2(4) of Regulation (EU) No 1227/2011
of the European Parliament and of the Council of 25 October 2011
on wholesale energy market integrity and transparency
(hereinafter - Regulation No 1227/2011);
97) agricultural commodity derivatives - derivative
contracts relating to the products listed in Article 1 of and
Annex I, Parts I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII,
XIII, XIV, XV, XVI, XVII, XVIII, XIX, XX and Part XXIV/1 to
Regulation (EU) No 1308/2013 of the European Parliament and of
the Council of 17 December 2013 establishing a common
organisation of the markets in agricultural products and
repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79,
(EC) No 1037/2001 and (EC) No 1234/2007 (hereinafter - Regulation
No 1308/2013), and also to products listed in Annex I to
Regulation (EU) No 1379/2013 of the European Parliament and of
the Council of 11 December 2013 on the common organisation of the
markets in fishery and aquaculture products, amending Council
Regulations (EC) No 1184/2006 and (EC) No 1224/2009 and repealing
Council Regulation (EC) No 104/2000;
98) sovereign issuer - any of the following issuers
that issue debt instruments:
a) the European Union;
b) a Member State, including a government department, an
agency, or a special purpose vehicle of the relevant Member
State;
c) in the case of a federal Member State - a member of the
federation;
d) a special purpose vehicle for several Member States;
e) an international financial institution established by two
or more Member States which has the purpose of mobilising funding
and providing financial assistance to the benefit of its members
that are experiencing or threatened by severe financing
problems;
f) the European Investment Bank;
99) sovereign debt - a debt instrument issued by a
sovereign issuer;
100) durable medium - any instrument which enables a
client to store information addressed personally to that client
in a way accessible for future reference and for a period of time
adequate for the purposes of the information and allows the
unchanged reproduction of the information stored;
101) [28 April 2022];
102) money market instruments - financial instruments
which are normally dealt in on the money market: treasury bills,
certificates of deposit, and commercial papers, except for
instruments of payment;
103) senior management - those persons (employees)
whose official position provides them with an opportunity to
significantly affect the direction of the operation of the
institution, but who are not members of the supervisory or
executive board;
104) branch - a territorially or otherwise separated
structural unit of an investment firm or credit institution which
does not have the status of a legal person and which acts on
behalf of the investment firm or credit institution. All
structural units which have been established in one Member State
by an investment firm or credit institution located in another
Member State shall be considered as one branch;
105) securities financing transaction - a transaction
as defined in Article 3(11) of Regulation (EU) 2015/2365 of the
European Parliament and of the Council of 25 November 2015 on
transparency of securities financing transactions and of reuse
and amending Regulation (EU) No 648/2012 (hereinafter -
Regulation No 2015/2365);
106) proxy advisor - a legal person which, within the
scope of its economic activity, performs research and provides
advices and recommendations in relation to exercising the voting
rights in a joint-stock company registered in a Member State the
stock of which have been admitted to trading on a regulated
market of the Member State;
107) electronic form - a way for the provision or
receipt of information by using any durable medium, except for
paper.
(2) The following terms conform to the terms used in
Regulation No 575/2013:
1) parent undertaking - to the term "parent
undertaking" within the meaning of Article 4(1)(15) of Regulation
No 575/2013;
2) subsidiary - to the term "subsidiary" within the
meaning of Article 4(1)(16) of Regulation No 575/2013;
3) mixed holding company - to the term "mixed activity
holding company" within the meaning of Article 4(1)(22) of
Regulation No 75/2013.
(3) In addition to the terms referred to in Paragraphs one and
two of this Section within the meaning of Regulation No 575/2013
and Regulation (EU) 2017/1129 of the European Parliament and of
the Council of 14 June 2017 on the prospectus to be published
when securities are offered to the public or admitted to trading
on a regulated market, and repealing Directive 2003/71/EC
(hereinafter - Regulation No 2017/1129) the following terms are
used:
1) financial institution - a financial institution
within the meaning of Article 4(1)(26) of Regulation No
575/2013;
2) financial holding company - a financial holding
company within the meaning of Article 4(1)(20) of Regulation No
575/2013;
3) parent financial holding company in a Member State -
a parent financial holding company in a Member State within the
meaning of Article 4(1)(30) of Regulation No 575/2013;
4) [28 April 2022];
5) own funds - own funds which have been specified for
the relevant financial market participant in accordance with the
requirements of the laws and regulations governing its
operation;
6) equity securities - securities of own funds within
the meaning of Article 2(b) of Regulation No 2017/1129;
7) offer of securities to the public - an offer of
securities to the public within the meaning of Article 2(d) of
Regulation No 2017/1129;
8) public offeror - an offeror within the meaning of
Article 2(i) of Regulation No 2017/1129.
(4) The term "related party" used in this Law corresponds to
the term used in IAS 24 "Related party disclosures" referred to
in Annex to Commission Regulation (EC) No 1126/2008 of 3 November
2008 adopting certain international accounting standards in
accordance with Regulation (EC) No 1606/2002 of the European
Parliament and of the Council.
(5) When applying the legal norms of this Law which include
the terms referred to in Paragraph one of this Section,
Commission Delegated Regulation (EU) 2017/565 of 25 April 2016
supplementing Directive 2014/65/EU of the European Parliament and
of the Council as regards organisational requirements and
operating conditions for investment firms and defined terms for
the purposes of that Directive (hereinafter - Regulation No
2017/565) and Commission Delegated Regulation (EU) 2017/2294 of
28 August 2017 amending Delegated Regulation (EU) 2017/565 as
regards the specification of the definition of systematic
internalisers for the purposes of Directive 2014/65/EU shall be
conformed to.
(6) The term "sustainability factors" used in the Law
corresponds to the term used in Article 2(24) of Regulation (EU)
2019/2088 of the European Parliament and of the Council of 27
November 2019 on sustainability‐related disclosures in the
financial services sector.
[21 June 2018; 20 June 2019; 12 December 2019; 31 March
2022; 28 April 2022; 23 September 2021; 16 June 2022
Section 2. Purpose of this Law
The purpose of this Law is to ensure the functioning of the
financial instrument market by facilitating:
1) protection of the interests of investors;
2) the stability and reliability of the financial instrument
market;
3) accessibility of information and equal opportunities for
all financial instrument market participants.
Section 3. Application of this
Law
(1) This Law governs the procedures for making an offer of
securities to the public of financial instruments, for the public
circulation of financial instruments, for the provision of
investment services and ancillary investment services, the
procedures for the licensing, activity, and supervision of
financial instrument market participants, the procedures for the
cooperation of competent authorities, prescribes the rights and
obligations of financial instrument market participants and
persons referred to in Section 4.1, Paragraphs three
and four of this Law and also the liability for the failure to
comply with the requirements provided for in this Law.
(11) Latvijas Banka shall be regarded as the
competent authority within the meaning of the following directly
applicable legal acts of the European Union:
1) Commission Regulation (EC) No 2273/2003 of 22 December 2003
implementing Directive 2003/6/EC of the European Parliament and
of the Council as regards exemptions for buy-back programmes and
stabilisation of financial instruments (hereinafter - European
Commission Regulation No 2273/2003);
2) Commission Regulation (EC) No 809/2004 of 29 April 2004
implementing Directive 2003/71/EC of the European Parliament and
of the Council as regards information contained in prospectuses
as well as the format, incorporation by reference and publication
of such prospectuses and dissemination of advertisements
(hereinafter - European Commission Regulation No 809/2004);
3) Commission Regulation (EC) No 1287/2006 of 10 August 2006
implementing Directive 2004/39/EC of the European Parliament and
of the Council as regards record-keeping obligations for
investment firms, transaction reporting, market transparency,
admission of financial instruments to trading, and defined terms
for the purposes of that Directive (hereinafter - European
Commission Regulation No 1287/2006);
4) Regulation (EC) No 1060/2009 of the European Parliament and
of the Council of 16 September 2009 on credit rating agencies
(hereinafter - Regulation No 1060/2009);
5) Regulation (EU) No 236/2012 of the European Parliament and
of the Council of 14 March 2012 on short selling and certain
aspects of credit default swaps (hereinafter - Regulation No
236/2012);
6) Regulation No 648/2012;
7) Regulation No 575/2013;
8) Regulation No 596/2014;
9) Regulation No 909/2014;
10) Regulation (EU) No 537/2014 of the European Parliament and
of the Council of 16 April 2014 on specific requirements
regarding statutory audit of public-interest entities and
repealing Commission Decision 2005/909/EC (hereinafter -
Regulation No 537/2014) in the cases specified in Section
37.5 of the Audit Services Law;
11) Regulation (EU) No 1286/2014 of the European Parliament
and of the Council of 26 November 2014 on key information
documents for packaged retail and insurance-based investment
products (PRIIPs) (hereinafter - Regulation No 1286/2014);
12) Regulation No 2015/2365;
13) Regulation No 600/2014;
14) Regulation (EU) 2016/1011 of the European Parliament and
of the Council of 8 June 2016 on indices used as benchmarks in
financial instruments and financial contracts or to measure the
performance of investment funds and amending Directives
2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014
(hereinafter - Regulation No 2016/1011);
15) Regulation No 2017/1129;
16) Regulation (EU) 2022/858 of the European Parliament and of
the Council of 30 May 2022 on a pilot regime for market
infrastructures based on distributed ledger technology, and
amending Regulations (EU) No 600/2014 and (EU) No 909/2014 and
Directive 2014/65/EU.
(2) This Law shall apply to the following financial
instruments which are as follows within the meaning of this
Law:
1) transferable securities;
2) money market instruments;
3) certificates (units) of investment funds and alternative
investment funds and other transferable securities which certify
holding in such funds or in equivalent collective investment
undertakings;
4) options, futures, swaps, forward rate agreements and any
other derivative contracts relating to securities, currencies,
interest rates or yields, emission allowances or other
derivatives instruments, financial indices or financial measures
which may be settled physically or in cash;
5) options, futures, swaps, forward rate agreements and any
other derivative contracts relating to commodities that must be
settled in cash or may be settled in cash at the option of one of
the parties otherwise than by reason of termination of a contract
due to failure to fulfil the liabilities or other termination of
contractual relationships;
6) options, futures, swaps, and any other derivative contracts
in accordance with Regulation No 2017/565 relating to commodities
that can be physically settled provided that they are traded on a
regulated market, the MT facility, or the OT facility, except for
wholesale energy products which are traded on the OT facility and
which may be settled in physically;
7) options, futures, swaps, forwards and any other derivative
contracts in accordance with Regulation No 2017/565 relating to
commodities, that can be physically settled not otherwise
mentioned in Clause 6 of this Paragraph and not being for
commercial purposes, which have the characteristics of other
derivative financial instruments;
8) derivative instruments for the transfer of credit risk;
9) financial contracts for differences;
10) options, futures, swaps, forward rate agreements and any
other derivative contracts in accordance with Regulation No
2017/565 relating to climatic variables, freight rates, inflation
rates, or other official economic statistics that must be settled
in cash or may be settled in cash at the option of one of the
parties otherwise than by reason of termination of a contract due
to failure to fulfil the liabilities or other termination of
contractual relationships, and also any other derivative
contracts relating to assets, rights, obligations, indices, and
measures not otherwise mentioned in this Paragraph, which have
the characteristics of other derivative financial instruments, if
these instruments are traded on a regulated market, the MT
facility, or the OT facility;
11) emission allowances consisting of emission units
recognised for compliance with the requirements laid down in the
field of emission allowance trading (Emissions Trading
Scheme);
12) instruments issued by using the distributed ledger
technology.
(3) [13 January 2011]
(4) This Law shall apply to investment services and activities
(hereinafter - the investment services) which are as follows
within the meaning of this Law:
1) reception and transmission of orders in relation to one or
more financial instruments;
2) execution of orders on behalf of clients;
3) dealing on own account;
4) portfolio management;
5) investment advice;
6) underwriting of financial instruments or placing of
financial instruments on a firm commitment basis;
7) placing of financial instruments without a firm commitment
basis;
8) organising of the MT facility;
9) operating of the OT facility.
(5) This Law shall apply to ancillary investment services
which are as follows within the meaning of this Law:
1) the holding of financial instruments;
2) the granting of credits or loans to an investor for
performing transactions in financial instruments where the
commercial company granting the credit or loan is involved in the
transaction in financial instruments;
3) the provision of advice regarding capital structure,
industrial strategy and related matters, and also the provision
of advice and services regarding mergers of commercial companies
and the acquisition of undertakings;
4) foreign exchange services provided that they are related to
the provision of investment services;
5) the provision of investment research, financial analysis,
or other general recommendation in relation to transactions in
financial instruments;
6) the provision of services related to the initial allocation
of financial instruments;
7) the provision of investment services and ancillary
investment services referred to in relation to the base asset of
the derivatives referred to in Paragraph two, Clauses 5, 6, 7,
and 10 of this Section, if it is related to the provision of
investment services or ancillary investment services.
(51) Holding of positions of non-trading portfolio
financial instruments in order to invest own funds of a credit
institution or a brokerage firm shall not be considered the
execution of transactions involving financial instruments at the
cost of the credit institution or brokerage firm.
(52) [28 April 2022]
(6) This Law shall not restrict the rights of consumers
specified in other laws.
(7) [12 December 2019]
(8) The requirements of Section 54 and Division D, Chapters
III and IV of this Law shall not apply to investment fund units
and opened alternative investment funds or securities equivalent
thereto which certify holding in such funds or in equivalent
collective investment undertakings.
(9) The requirements of Section 54, Paragraphs three, eight,
and nine of this Law shall not apply to transferable securities
which are admitted to trading on a regulated market and which
have been issued by a Member State or by a local government,
institution or agency of a Member State.
(10) The requirements of Section 54, Paragraphs one, two, and
nine of this Law shall not apply to shares issued by central
banks of the Member States which are admitted to trading on a
regulated market, if a decision to admit the shares on the
regulated market is taken by 20 January 2005 and such exception
is intended by the legal acts of the relevant Member State
governing the procedures for issuing of the shares of central
banks.
(11) [11 June 2015]
(12) Section 103.2, Section 124, Paragraph two,
Clauses 1 and 6, Section 124.2, Section 126, Paragraph
one, Section 126.2, Paragraphs one, 1.1,
ten, eleven, twelve, sixteen, and seventeen, Section 127,
Paragraphs one, seven, 7.1, 7.2, and
eleven, Section 128 and Section 128.1, Paragraphs one,
1.1, three, four, 4.1, eight, nine, and
ten, Section 138, Section 148, Paragraphs eight, 8.1,
and 8.2, Section 150, Paragraphs one, two, three,
four, nine, and ten of this Law shall also be applied to the
investment firms and credit institutions which sell structured
deposits or consult clients on them.
(13) The requirements laid down in Sections 125.1,
125.2, 125.3, 129, 129.1,
129.2, 131.1, 133.16,
133.17, 133.18, 133.19, and
133.20 of this Law in relation to the protection of
financial instruments and funds of clients shall also be applied
to:
1) investment management companies and managers of alternative
investment funds;
2) credit institutions which do not provide investment
services or ancillary investment services, however, offer
structured deposits.
(14) The requirements laid down in Section 132.1,
Paragraphs one, two, three, four, five, six, seven, eight, nine,
ten, eleven, twelve, thirteen, and fourteen of this Law shall be
also be applied to the persons referred to in Section 101,
Paragraph seven, Clauses 1, 5, 12, 15, and 16 of this Law who are
members or participants of a regulated market or the MT
facility.
(15) The multilateral system of financial instruments shall
operate either as the MT facility or OT facility, or a regulated
market in accordance with the provisions of this Law.
(16) In cases when an issuer expresses an offer of securities
to the public for transferable securities issued thereby, the
expressing of the offer of securities to the public shall not be
considered an investment service within the meaning of this Law
and the provisions of Division F of this Law shall not apply to
it if all of the following provisions are fulfilled
concurrently:
1) the issuer has the characteristics of a small or
medium-sized enterprise;
2) the total payment calculated for transferable securities in
36 months does not exceed EUR 3 000 000;
3) the issuer expresses not more than two offers of securities
to the public in a period of 36 months;
4) the offer is expressed for capital or debt securities.
[9 June 2005; 15 June 2006; 29 March 2007; 4 October 2007;
26 February 2009; 13 January 2011; 22 March 2012; 8 November
2012; 9 July 2013; 19 September 2013; 24 April 2014; 11 June
2015; 26 May 2016; 21 September 2017; 14 September 2017; 21 June
2018; 20 June 2019; 12 December 2019; 23 September 2021; 28 April
2022; 26 October 2023]
Section 3.1 Determination
of a Home Member State
(1) For investment firms a home Member State is a Member State
where the investment firm is registered and has obtained a
licence for the provision of investment services.
(2) [12 December 2019]
(21) The sample form to be used for notices on the
home Member State shall be approved by Latvijas Banka.
(3) [12 December 2019]
(4) In respect to share issuers and issuers of such debt
securities the denomination per unit of debt securities of which
is less than EUR 1000 and the obligation of which is to provide
regulated information, the home Member State is:
1) a Member State where the issuer has its registered office,
if it is registered in the Member State;
2) a Member State which has been chosen by the issuer as the
home Member State from such Member States on regulated markets of
which transferable securities of the issuer are admitted to
trading, if the issuer is registered in a foreign country. An
issuer registered in a foreign country has the right to change
the home Member State in accordance with Paragraph four, Clause 3
of this Section, informing the competent supervisory authorities
thereof in accordance with Paragraph 7.1 of this
Section without delay;
3) a Member State on the regulated market of which
transferable securities of the issuer are admitted to trading or
in which the registered office of the issuer is located, if
transferable securities of the issuer are excluded from the
regulated market in the home Member State initially chosen by the
issuer which was specified in accordance with Clause 2 of this
Paragraph or Paragraph six of this Section, but which are still
admitted to trading on a regulated market in other Member
States.
(5) Paragraph four of this Section shall be applied also to
such issuer the debt securities of which are issued in a currency
other than euro, if the denomination per unit of debt security on
the day of issue is less than the equivalent of EUR 1000 in the
relevant currency and it is not equal to EUR 1000 and the
obligation of which is to provide regulated information.
(6) If Paragraph four of this Section does not apply to the
issuer, the home Member State of the issuer at the choice thereof
is the Member State where it has its registered office or in one
of those Member States where transferable securities of the
issuer are admitted to trading on regulated markets.
(7) The issuer referred to in Paragraph six of this Section
may choose only one home Member State and may not change it for
three years, unless transferable securities of such issuer are
excluded from the regulated market in such Member State or,
within the abovementioned three years, specification of a Member
State may not be attributed to the issuer in accordance with
Paragraph four of this Section.
(71) The issuer shall, without delay, notify
information on his home Member State of choice in accordance with
the procedures for distributing and access to the regulated
information laid down in Section 64.2 of this Law:
1) to Latvijas Banka if it is the competent authority of the
home Member State of the issuer and the registered office of the
issuer is in Latvia, and to the competent authorities of host
Member States;
2) to Latvijas Banka if the registered office of the issuer is
in Latvia, to the competent authority of the home Member State,
and to the competent authorities of host Member States.
(72) If the issuer that determines a home Member
State in accordance with Paragraph four, Clause 2 of this Section
or Paragraph six of this Section, does not notify the relevant
competent authorities of the choice of the home Member State
within three months since its transferable securities have been
admitted to trading on a regulated market for the first time, the
Member State in which transferable securities of the issuer are
admitted to trading on a regulated market, shall be deemed the
home Member State of such issuer. If transferable securities of
the issuer are admitted to trading on a regulated market in
several Member States, then all the abovementioned Member States
shall be deemed the home Member State until the day when the
issuer chooses one home Member State from them and notifies the
competent authorities thereof without delay.
(73) The issuer whose transferable securities are
admitted to trading on a regulated market, whose home Member
State is determined in accordance with Paragraph four, Clause 2
of this Section or Paragraph six of this Section, and who has
informed the competent authorities of his home Member State of
choice by 27 November 2015, need not inform the competent
authorities in accordance with Paragraph 7.1 of this
Section, unless he chooses another home Member State by 27
November 2015.
(8) In respect of a regulated market, a home Member State is a
Member State in which the regulated market has been registered
or, if in accordance with the legal acts of the relevant Member
State it does not have a registered office, - a Member State in
which the head office of the regulated market is located.
(9) [28 April 2022]
[9 June 2005; 15 June 2006; 29 March 2007; 4 October 2007;
4 October 2007; 13 January 2011; 22 March 2012; 19 September
2013; 26 May 2016; 21 September 2017; 21 June 2018; 12 December
2019; 28 April 2022; 23 September 2021 / Amendment
regarding the replacement of the words "the Financial and Capital
Market Commission" with the words "Latvijas Banka" shall come
into force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 3.2 Recognition
of a Person as Qualified Investor
[22 March 2012]
Section 3.3 Determination
of Additional Requirements for an Issuer for whom the Republic of
Latvia is not a Home Member State
For the issuer for whom the Republic of Latvia is not a home
Member State, more stringent requirements may not be determined
for the content of regulated information than the requirements
laid down in the legal acts of the home Member State of the
issuer.
[29 March 2007; 21 September 2017]
Section 3.4 Law
Applicable to Financial Instruments
(1) The law of such country shall be applied to points of law
in relation to financial instruments to be transferred to an
account or register of financial instruments by an entry (record)
in which the operator of the relevant account or register of
financial instruments has been registered. A reference to the law
of the relevant country shall mean the application of such legal
norms of the country which are not rules of international private
law.
(2) If the operator of the account or register of financial
instruments has a branch in another country with the
intermediation of which the account of financial instruments is
being maintained, the relevant branch shall be considered as the
operator of the account or register of financial instruments
within the meaning of Paragraph one of this Section.
(3) If financial instruments are kept with the intermediation
of several operators of the accounts or registers of financial
instruments, the law applicable to points of law in relation to
such financial instruments shall be determined individually for
each account or register of financial instruments in which such
financial instruments have been recorded.
(4) Within the meaning of this Section, a credit institution,
an investment firm, and another person who provides services of
operating the account or register of financial instruments and
holding of financial instruments, and also the central securities
depository shall be considered the operator of the account or
register of financial instruments.
(5) Within the meaning of this Law, a person on whose behalf
an account of financial instruments has been opened shall be
considered the holder of the account of financial
instruments.
(6) The procedures referred to in Paragraph one of this
Section shall be applied to the following points of law:
1) legal status and belonging of financial instruments;
2) acquisition and disposal of financial instruments, and also
validity of acquisition and disposal;
3) the rights of the alienor or acquirer to dividends or other
income in case of buy-back, maturity of financial instruments or
in another case;
4) mutual priority of the rights of several persons to
financial instruments, including ascertaining of good faith of
the acquirer of financial instruments;
5) obligations of the operator of the account or register of
financial instruments against a person who is not the holder of
the account of financial instruments and who concurrently with
the holder of the account of financial instruments or another
person is requesting to recognise his or her rights to the
financial instruments recorded on the account of financial
instruments;
6) the provisions for the use of the security (except for a
financial security);
7) the rights to financial instruments if liquidation,
insolvency, reorganisation proceedings of the operator of the
account or register of financial instruments or proceedings
similar thereto in accordance with the law of the relevant
country have been initiated.
[14 September 2017]
Section 4. Issue and Disputation of
Administrative Acts
(1) In the cases laid down in this Law, Latvijas Banka shall
issue administrative acts.
(2) An administrative act of Latvijas Banka which has been
issued in accordance with this Law may be appealed to the
District Administrative Court. The court shall adjudicate the
matter as the court of first instance. The case shall be reviewed
in the composition of three judges. A judgement of the
Administrative District Court may be appealed by submitting a
cassation complaint.
(3) If documents are re-examined in Latvijas Banka, Latvijas
Banka may not indicate deficiencies or inaccuracies in the
information which it had already examined and in which no
deficiencies or inaccuracies had been noted thereby in a previous
examination of the documents, except for cases where new
information is obtained in relation to such information.
(4) Contesting and appeal of the administrative acts issued by
Latvijas Banka shall not suspend the operation thereof if the
administrative act issued by Latvijas Banka is a decision to:
1) restrict the right of a credit institution to provide
investment services or to hold financial instruments;
2) [28 April 2022];
3) cancel a licence to operate a regulated market;
4) suspend or prohibit trading in financial instruments;
41) exclude transferable securities from the
regulated market;
5) request that any influence of persons having acquired a
qualifying holding in a regulated market operator is immediately
terminated;
51) limit the rights of the central securities
depository to provide services;
52) cancel the permit issued to the central
securities depository;
53) request that the influence of persons who have
acquired control in the central securities depository is
discontinued without delay;
6) request the recall of the executive or supervisory board or
of a member of the executive or supervisory board of the
regulated market operator or the central securities
depository;
7) prohibit to exercise the voting rights to a person who has
acquired qualifying holding in a regulated market operator by
violating the norms of this Law;
71) prohibit to exercise the voting rights to a
person who has acquired control in the central securities
depository;
8) [28 April 2022];
9) [28 April 2022];
10) [28 April 2022];
11) determine a temporary prohibition for a member of the
executive or supervisory board of the central securities
depository or for another natural person responsible for the
violation to fulfil the obligations imposed on him or her in the
central securities depository;
12) [28 April 2022];
121) request that the central securities depository
or the person responsible for the violation immediately
discontinues the violation referred to in Article 63(1) of
Regulation No 909/2014;
13) present a public notification which indicates the natural
or legal person responsible for the violation and the essence of
the violation.
(5) When taking the decision to impose sanctions and
administrative measures on persons who have violated the laws and
regulations governing financial market, Latvijas Banka shall take
into consideration any potential systemic consequences of the
violation.
[29 March 2007; 29 May 2008; 23 October 2008; 22 March
2012; 24 April 2014; 26 May 2016; 14 September 2017; 23 September
2021; 28 April 2022 / The new wording of Paragraph one,
the new wording of the introductory part of Paragraph four, and
amendment to Paragraph five regarding the replacement of the
words "financial and capital market" with the words "financial
market", and also amendment regarding the replacement of the word
"Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 4.1 Right to
Request Information and Obligation to Provide It
(1) Latvijas Banka, when supervising the fulfilment of the
requirements of this Law, has the right to request information
and documents from the financial instrument market participants
on the activities thereof.
(2) The financial instrument market participants shall submit
the requested information within the time periods laid down by
Latvijas Banka. The fulfilment of the abovementioned requirements
may not be refused, including by excusing it as a commercial
secret.
(3) Latvijas Banka has the right, when supervising the
fulfilment of the requirements of this Law, to request any person
if there are grounds for considering that he or she is connected
to a possible violation of the requirements of laws or
regulations or information necessary for finding out
circumstances of the violation could be at the disposal
thereof:
1) to provide documents and information at the disposal of
such person, including such containing a commercial secret;
2) to arrive at Latvijas Banka and provide information at the
disposal of such person in person.
(4) Latvijas Banka has the right to request information from
any person on the beneficial owners thereof, until information on
natural persons is acquired, if there are grounds to believe that
information necessary for Latvijas Banka to supervise the
fulfilment of the requirements of this Law could be at the
disposal of such persons. In order to identify the abovementioned
natural persons, the relevant persons have an obligation to
submit the requested information to Latvijas Banka if such
information is not available for Latvijas Banka in public
registers. Natural persons shall provide information on
themselves or indicate who else is regarded as a beneficial
owner.
(5) Latvijas Banka shall determine reasonable time periods for
the persons referred to in Paragraphs three and four of this
Section within which they shall submit the requested information
or arrive for the provision of information at Latvijas Banka in
person. If the persons referred to in Paragraphs three and four
of this Section cannot submit the requested information or arrive
for the provision of information at Latvijas Banka in person due
to objective reasons within the time period laid down by Latvijas
Banka, they shall notify Latvijas Banka thereof in writing by
indicating such reasons and the date when information will be
submitted or the person will arrive for the provision of
information at Latvijas Banka.
[22 March 2012; 8 November 2012; 23 September 2021 /
Amendment regarding the replacement of the word "Commission" with
the words "Latvijas Banka" shall come into force on 1 January
2023. See Paragraph 73 of Transitional Provisions]
Section 4.2 Right to
Issue Provisions
For the purpose of ensuring the activities of financial market
participants in conformity with the requirements of this Law and
the directly applicable legal acts of the European Union,
Latvijas Banka is entitled to determine additional requirements
governing the activities of financial market participants in the
areas not governed by the directly applicable legal acts of the
European Union in respect of the specific risks inherent to the
financial market of Latvia and activities of financial market
participants in order to reduce the risks caused by financial
market participants and to protect the interests of investors and
clients, and also to determine the requirements arising from the
decisions, guidelines, and recommendations adopted by the
European Securities and Markets Authority, the European Central
Bank, or the European Banking Authority in order to ensure a
uniform, effective, and constructive supervision practice in
Member States by taking into account the nature of cross-border
activities of the European financial supervision system.
[28 April 2022; 23 September 2021 / Amendment
regarding the replacement of the words "regulatory provisions"
with the word "regulations" and amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 5. Legal Guarantees
Latvijas Banka, employees and authorised persons thereof shall
not be liable for the losses caused to financial instrument
market participants or to third parties, and they may not be held
liable for the acts they have performed legally, precisely,
justifiably and in good faith by properly performing the
supervisory functions in accordance with the procedures laid down
in this Law and other laws and regulations.
[23 September 2021 / Amendment regarding the replacement of
the word "Commission" with the words "Latvijas Banka" shall come
into force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 6. Liability
[9 June 2005]
Division B
Qualifying Holding
Section 7. Rights to Acquire a
Qualifying Holding
(1) Only a person or several persons acting in concert on the
basis of an agreement (hereinafter in this Division - the person)
which meet the requirements laid down in this Law for
shareholders or members of a regulated market operator and ensure
the fulfilment of the criteria laid down in Section 10, Paragraph
one of this Law are entitled to acquire a direct or indirect
qualifying holding in a regulated market operator, moreover such
person must be financially sound.
(2) Latvijas Banka has the right to request the information on
the persons who apply for a qualifying holding (the actual
acquirers of the qualifying holding or persons suspected of
having acquired such a holding), including the owners of legal
(registered) persons (beneficial owners) who are natural persons
in order to assess the conformity of such persons with the
criteria laid down in Section 10, Paragraph one of this Law.
(3) Latvijas Banka has the right to identify founders of legal
(registered) persons (shareholders or members) and owners
(beneficial owners) who apply for a qualifying holding (the
actual acquirers of the qualifying holding or persons suspected
of having acquired such a holding) until the information on the
owners (beneficial owners) who are natural persons is obtained.
In order to identify such persons, the abovementioned legal
persons have the obligation to provide information to Latvijas
Banka requested thereby if such information is not available on
the public registers from which Latvijas Banka is entitled to
receive such information.
(4) If persons who are suspected of acquiring a qualifying
holding in a regulated market operator fail to provide or refuse
to provide the information referred to in Paragraph two or three
of this Section and holding thereof in total represents 10 per
cent and more of the share capital or of the voting rights of
shares or stocks of the regulated market operator, such
shareholders or members may not exercise the voting rights of all
shares belonging to them. Latvijas Banka shall immediately notify
the respective shareholders or members and the regulated market
operator of this fact.
(5) Investment funds and alternative investment funds and
foundations equivalent thereto are not entitled to obtain a
qualifying holding in a regulated market operator.
[26 February 2009; 9 July 2013; 14 September 2017; 21 June
2018; 28 April 2022; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 8. Holding Acquired
Indirectly
In determining the amount of holdings acquired by a person
indirectly, the following acquired voting rights of such person
(hereinafter - the specific person) shall be taken into
account:
1) voting rights which may be exercised by a third party with
whom the specific person has entered into an agreement, imposing
as obligation to coordinate the exercising of the voting rights
and action policy in long-term in relation to the management of
the specific issuer;
2) voting rights which may be exercised by a third party in
accordance with an agreement that has been entered into with the
specific person and provides for temporary transfer of the voting
rights;
3) voting rights which arise from shares which the specific
person has received as security, if he or she may exercise the
voting rights and has expressed his or her intention to exercise
them;
4) voting rights which may be exercised by the specific person
for an unlimited period of time;
5) voting rights which may be exercised by a commercial
company controlled by the specific person or which may be
exercised by such commercial company in accordance with the
provisions of Clauses 1, 2, 3, and 4 of this Section;
6) voting rights which arise from shares transferred to and
held by the specific person and which the person may exercise
upon his or her own initiative, if special instructions have not
been received;
7) voting rights which arise from shares held in the name of
third parties and for the benefit of the specific person;
8) voting rights which may be exercised by the specific person
as an authorised person, when he or she is entitled to exercise
the voting rights upon his or her own initiative if special
instructions have not been received.
[29 March 2007]
Section 9. Obligation to Notify in
Event of Acquisition and Increase of a Qualifying Holding
(1) Any person, if he or she wishes to acquire a qualifying
holding in a regulated market operator, shall notify Latvijas
Banka thereof in writing in advance. The amount of the qualifying
holdings to be acquired as a percentage of the share capital of
the relevant capital company or the number of the shares with
voting rights or stocks shall be indicated in the notification,
and information provided for in the regulations of Latvijas Banka
which is necessary in order to assess the conformity of the
person with the criteria laid down in Section 10, Paragraph one
of this Law shall be appended thereto. The list of information to
be appended to the notification shall be published on the website
of Latvijas Banka.
(2) If a person wishes to increase the qualifying holding so
that it would reach or exceed 20, 33, or 50 per cent of the share
capital or number of shares with voting rights (stocks) in the
regulated market operator, or if the relevant capital company
becomes a subsidiary of this person, such person shall notify
Latvijas Banka thereof in writing in advance. The amount of the
qualifying holdings to be acquired as a percentage of the share
capital of the relevant capital company or the number of the
shares with voting rights or stocks shall be indicated in the
notification, and information provided for in the regulations of
Latvijas Banka which is necessary in order to assess the
conformity of the person with the criteria laid down in Section
10, Paragraph one of this Law shall be appended thereto. The list
of information to be appended to the notification shall be
published on the website of Latvijas Banka.
(3) Within two working days after the day of receipt of the
notification referred to in Paragraph one or two of this Section
or within two working days after receiving the additional
information requested by Latvijas Banka, Latvijas Banka shall
notify the person in writing of receipt of the notification or of
additional information and of the final date of the assessment
period.
(4) Latvijas Banka, during the assessment period laid down in
Section 10, Paragraph one of this Law but not later than on the
50th working day of the assessment period, has the right to
request additional information on the persons referred to in this
Section in order to assess the conformity of such persons with
the criteria laid down in Section 10, Paragraph one of this
Law.
[26 February 2009; 14 September 2017; 28 April 2022; 23
September 2021 / Amendment regarding the replacement of the words
"regulatory provisions" with the word "regulations" and amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 10. Rights and Obligations
of Latvijas Banka
(1) Latvijas Banka shall, not later than within 60 working
days from the day when the information referred in Section 9,
Paragraph three of this Law on receipt of the notification has
been sent to the person, assess the free capital adequacy of a
person in the amount of all stocks or shares of a regulated
market operator to be acquired, financial stability, and
financial feasibility of the planned acquisition of a holding in
order to ensure sound and prudent management of the regulated
market operator in which the holding is planned to be acquired,
and also the possible influence of the person on the management
and activities of the regulated market operator. Latvijas Banka
shall take the following criteria into account during the
assessment process:
1) impeccable reputation of the person and his or her
conformity with the requirements laid down for shareholders or
members of the regulated market operator;
2) impeccable reputation and professional experience of such
person who will manage the operation of the regulated market
operator as a result of the planned acquisition of holding;
21) [28 April 2022];
3) the financial soundness of the person, in particular in
relation to the type of the economic activity pursued or intended
in the regulated market operator in which the holding is planned
to be acquired;
4) whether the regulated market operator will be able to
comply with the regulatory requirements laid down in this Law and
in other laws and regulations and whether the structure of such
group of undertakings where the regulated market operator is
going to be incorporated does not restrict the possibilities of
Latvijas Banka to perform the supervisory functions thereof laid
down in the law, to ensure an efficient exchange of information
among the supervisory authorities, and to determine the
allocation of the supervisory powers among the supervisory
authorities;
5) whether there are reasonable doubts that, in relation to
the planned acquisition of the holding, money laundering and
terrorism and proliferation financing has been carried out or an
attempt to carry out such activities has been made, or that the
planned acquisition of the holding could increase such a
risk.
(11) When determining whether the criteria referred
to in Paragraph one of this Section have been met, Latvijas Banka
need not take into account such voting shares or capital shares
which may be held by investment firm or credit institutions
because they have signed up for the issued financial instruments
or their offer by providing the service referred to in Section 3,
Paragraph four, Clause 6 of this Law, provided that the voting
rights are not implemented or otherwise exercised in order to
become involved in the management of the issuer and that, within
one year after acquisition of holding, the investment firm or
credit institution disposes of such voting shares or capital
shares.
(12) If Latvijas Banka has suspended the assessment
period in accordance with Paragraphs two and 2.1 of
this Section, such suspension time shall not be included in the
assessment period.
(2) When requesting additional information referred to in
Section 9, Paragraph four of this Law, Latvijas Banka has the
right to suspend the assessment period once until the day when
such information is received, but not more than for 20 working
days. Latvijas Banka has the right to extend the abovementioned
suspension of the assessment period for up to 30 working days if
the person who wishes to acquire, has acquired, wishes to
increase or has increased the qualifying holding thereof in a
regulated market operator is not subject to the supervision of
activities of credit institutions, insurance undertakings,
reinsurance undertakings, alternative investment fund managers,
or investment management companies, or the place of residence
(registration) of such person is in a foreign country.
(21) If a person who wishes to acquire a qualifying
holding is concurrently being assessed in another Member State in
conformity with the provisions similar to Section
111.1 of this Law in relation to granting a permit,
Latvijas Banka has the right to suspend the assessment period
until the day when the relevant authority exercising the
consolidated supervision completes the assessment.
(3) Latvijas Banka shall, within the time period referred to
in Paragraph one of this Section, take the decision by which the
person is prohibited from acquiring or increasing a qualifying
holding in a regulated market operator if:
1) the person does not conform to the criteria laid down in
Paragraph one of this Section;
2) the person does not submit or refuses to submit to Latvijas
Banka the information specified in this Law or the additional
information requested by Latvijas Banka;
3) due to circumstances beyond the control of the person, he
or she is unable to provide the information specified in this Law
or the additional information requested by Latvijas Banka.
(4) Latvijas Banka shall, within two working days from taking
the decision referred to in Paragraph one of this Section, but
not exceeding the assessment period referred to in Paragraph
three of this Section, send that decision to the person who has
been prohibited from acquiring or increasing a qualifying holding
in a regulated market operator.
(5) If Latvijas Banka fails to, within the time period
referred to in Paragraph one of this Section, send to the person
the decision by which it prohibits this person from acquiring or
increasing a qualifying holding in a regulated market operator,
it shall be considered that it agrees that this person acquires
or increases a qualifying holding in the regulated market
operator.
(6) The provisions of Paragraph three, Clause 3 of this
Section shall not be applicable to a legal (registered) person if
the shares thereof are listed in any regulated market of a Member
State or in the regulated market registered in a Member State of
Organisation for Economic Co-operation and Development, and such
legal (registered) person submits information to Latvijas Banka
on the shareholders thereof who own a qualifying holding
therein.
(7) If Latvijas Banka has agreed that a person acquires or
increases a qualifying holding in a regulated market operator,
such person shall acquire or increase the qualifying holding
thereof in the regulated market operator within six months from
the day when the information referred to in Section 9, Paragraph
three of this Law on receipt of the notification or additional
information is sent. If, until expiry of the relevant time
period, the person has failed to acquire or increase a qualifying
holding in regulated market operator, the consent of Latvijas
Banka for acquiring or increasing a qualifying holding in the
regulated market operator is no longer effective. Upon receipt of
a reasoned request of the person in writing, Latvijas Banka may
decide to extend the abovementioned time period.
(8) When assessing the notifications referred to in Section 9,
Paragraphs one and two of this Law, Latvijas Banka shall consult
with supervisory authorities of the relevant Member State if the
acquirer of a qualifying holding in a regulated market operator
is the regulated market operator, credit institution, alternative
investment fund manager, investment management company, insurance
company or reinsurance company registered in another Member
State, a parent undertaking of the investment firm, credit
institution, alternative investment fund manager, investment
management company, insurance company or reinsurance company
registered in another Member State, or a person who controls an
investment firm, credit institution, alternative investment fund
manager, investment management company, insurance company or
reinsurance company registered in another Member State, and if,
upon acquiring or increasing the qualifying holding by the
relevant person, the regulated market operator becomes a
subsidiary of such person or comes under its control.
(81) Latvijas Banka shall indicate in its
assessment every opinion expressed by the supervisory authority
of the responsible Member State on the potential acquirer of a
holding referred to in Paragraph eight of this Section or an
objection against it.
(9) If the influence of persons who have acquired a qualifying
holding in a regulated market operator endangers or could
endanger the sound and prudent administration and activities
thereof in conformity with the laws and regulations, Latvijas
Banka shall require that such influence be terminated without
delay, and also, if necessary, that the executive or supervisory
board, or a member of the executive or supervisory board of the
relevant capital company be recalled or prohibit such persons who
have acquired the qualifying holding from exercising the voting
rights in all of the shares or stocks owned thereby.
(10) Contesting and appealing the administrative act issued by
Latvijas Banka referred to in Paragraphs three and nine of this
Section shall not suspend the operation thereof.
(11) [28 April 2022]
(12) If Latvijas Banka has received notifications on the
acquisition or increasing of a qualifying holding in the central
securities depository or in the same regulated market operator
from two or more potential acquirers of a holding, such
notifications shall be examined in a non-discriminatory
manner.
[26 February 2009; 15 October 2009; 9 July 2013; 24 April
2014; 14 September 2017; 21 June 2018; 20 June 2019; 12 December
2019; 29 April 2021; 23 September 2021; 28 April 2022 /
The new wording of Paragraph ten and amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 11. Obligation to Notify in
Event of Reduction and Termination of a Qualifying Holding
(1) If a person wishes to terminate his or her qualifying
holding in a regulated market operator, he or she shall notify
Latvijas Banka of such decision in writing in advance. The person
shall specify in the notification the share capital shares of the
relevant capital company or the proportion of shares with voting
rights (stocks) remaining therewith.
(2) If a person wishes to reduce the qualifying holding so
that it would fall below 20, 33, or 50 per cent of the share
capital or the number of stocks (shares) with voting rights in a
regulated market operator or if the relevant capital company
ceases to be a subsidiary of this person, such person shall
notify Latvijas Banka of such decision in writing in advance.
[14 September 2017; 28 April 2022; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 12. Obligations of a Capital
Company
(1) A regulated market operator shall, without delay, notify
Latvijas Banka in writing of any acquisition, increase, or
reduction of a qualifying holding by any person, upon such
becoming known. The notification shall specify the proportion of
the holding in the share capital or the number of shares with
voting rights (stocks) held, or information on the termination of
a qualifying holding by the relevant person.
(2) A regulated market operator shall, by 31 January each
year, submit a list of those shareholders (members) to Latvijas
Banka which on 31 December of the previous year have had a
qualifying holding in the relevant capital company by indicating
the information on shareholders (members) and mutually related
groups of shareholders (members) and amount of holding as
percentage of the share capital or number of shares with voting
rights (stocks) of the relevant capital company.
[9 June 2005; 14 September 2017; 28 April 2022; 23
September 2021 / Amendment regarding the replacement of
the word "Commission" with the words "Latvijas Banka" shall come
into force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 13. Consequences of Failure
to Give Notice
(1) If a person has failed to comply with the requirements
laid down in Section 9 of this Law, Latvijas Banka shall apply
restrictions on the rights referred to in Section 7, Paragraph
four of this Law.
(2) If a person, in disregard of a prohibition by Latvijas
Banka, acquires or increases a qualifying holding, such person
has no right to exercise all the voting rights of the shares
(stocks) owned thereby, and the decisions of the meeting of
shareholders (members) taken by using the voting rights of these
shares (stocks) shall be null and void from the moment of taking
thereof, and no records in the commercial register and any other
public registers may be requested to be made on the basis of such
decisions.
[9 June 2005; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Division C
Making an Offer of Securities to the Public
[9 June 2005]
Section 14. Permit to Make an Offer
of Securities to the Public
(1) [12 December 2019]
(2) In order to receive a permit to make an offer of
securities to the public, the issuer or person making offer shall
submit a submission to Latvijas Banka appended by:
1) two originals of the prospectus and the text of the
prospectus in electronic form;
2) a decision of the person making an offer on issue of the
relevant transferable securities and offer of securities to the
public, if the person making an offer is a legal person.
(3) The submission shall specify the following:
1) the registration number, place and institution, firm name,
registered office, telephone number, and also e-mail address (if
any) of the issuer;
2) the class, category, total amount of transferable
securities and the denomination of one transferable security;
3) the expected starting date of sale or distribution;
4) countries where the issuer or person making an offer wishes
to offer transferable securities to the public.
(4) [12 December 2019]
(5) [12 December 2019]
(6) [12 December 2019]
(7) Latvijas Banka shall take the decision on refusal to issue
a permit if the information included in the documents
submitted:
1) fails to comply with the requirements of other law and
regulations;
2) indicates that the issue does not conform to the
requirements of laws and regulations;
3) indicates that issue may infringe the interests of
investors.
(8) The decision on refusal to issue a permit shall be issued
to the issuer or person making an offer who has submitted a
submission to Latvijas Banka regarding permission to make an
offer of securities to the public.
(9) [12 December 2019]
(10) [12 December 2019]
(11) The procedures for the preparation, approval, publishing,
and distribution of prospectuses shall be determined by
Regulation No 2017/1129.
(12) If an offer of securities to the public is to be made
only in Latvia, the prospectus shall be prepared in the official
language.
(13) The base prospectus shall be registered with Latvijas
Banka in accordance with the requirements of this Section.
[15 June 2006; 22 March 2012; 26 May 2016; 12 December
2019; 23 September 2021 / Amendment regarding the
replacement of the words "the Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 15. Obligation of Publishing
of an Issuing Prospectus
[12 December 2019]
Section 16. Derogations from the
Obligation to Prepare an Issue Prospectus
[12 December 2019]
Section 16.1 Exemption
from the Obligation to Prepare a Prospectus
(1) If an offer of securities to the public is expressed for
transferable securities for which the total calculated payment in
the European Union in a period of 12 months is from EUR 1 000 000
to 8 000 000 and notification in accordance with Article 25 of
Regulation No 2017/1129 is not requested, the public offeror need
not prepare the prospectus referred to in Regulation No
2017/1129. In such case, the public offeror shall prepare and
publish an information document in accordance with the
regulations of Latvijas Banka.
(2) Paragraph one of this Section shall not be applicable if a
public offer is made in respect of asset-backed securities.
[12 December 2019; 23 September 2021; 26 October 2023 /
The amendment to Paragraph one regarding the replacement of the
words "offer document" with the words "information document" and
Paragraph two shall come into force on 1 January 2024. See
Paragraph 79 of Transitional Provisions]
Section 17. Contents of a
Prospectus
(1) [12 December 2019]
(2) [12 December 2019]
(3) [12 December 2019]
(4) Detailed information to be included in the prospectus and
content of the prospectus shall be determined by the directly
applicable legal acts of the European Union regarding the content
of the prospectus.
(5) [12 December 2019]
(6) [12 December 2019]
(7) [12 December 2019]
(8) If the issuer or public offeror has taken the decision to
perform an initial placement of transferable securities through a
regulated market operator or to submit a submission for the
admission of the relevant transferable securities on the
regulated market immediately after completion of the initial
placement, it shall prepare one prospectus, taking into
consideration the requirements of this Law, Regulation No
2017/1129, and other directly applicable legal acts of the
European Union in relation to the content of the prospectus.
(9) [26 May 2016]
[4 October 2007; 22 March 2012; 8 November 2012; 26 May
2016; 20 June 2019; 12 December 2019]
Section 17.1 Content of a
Base Prospectus
[12 December 2019]
Section 17.2
Incorporation of Information by Reference
[12 December 2019]
Section 17.3 Issue
Prospectus Consisting of Separate Documents
[12 December 2019]
Section 18. Supplements to an Issue
Prospectus
[12 December 2019]
Section 19. Derogation from the
Obligation to Include Specific Information in an Issue
Prospectus
[12 December 2019]
Section 20. Approval of a Prospectus
and Responsibility for the Information Included Therein
(1) A prospectus shall be approved by the meeting of
shareholders (members) of the issuer or by an authorised
administrative body or its official.
(2) An administrative body of the issuer, a person making an
offer, and a guarantor (if any) shall be responsible for the
content of the prospectus.
(3) The given name, surname, and position of responsible
persons or the name, registered office, and registration number
of legal persons responsible for the veracity of the information
included in such prospectus shall be indicated in the prospectus.
The prospectus shall also include a notification by such person
stating that, according to the information available to this
person, the information included in the prospectus conforms to
actual circumstances, and also that no facts have been concealed
which may affect the meaning of the information included in the
prospectus.
(4) If a person is not responsible for all of the information
included in a prospectus, the prospectus shall specify the part
for which the relevant person is responsible.
(5) By bringing an action in court in accordance with general
procedures, an investor may request compensation for losses from
the persons specified in the prospectus who are responsible for
the veracity of the information included in the prospectus, if he
or she has suffered losses due to false or incomplete information
having been included in the prospectus.
(6) An investor may not request compensation for losses from
the responsible persons indicated in the prospectus, if he or she
has made his or her choice only on the basis of a summary note or
translation thereof, except for cases when the summary note is
misleading or in contradiction with other parts of the prospectus
or if it together with other parts of the prospectus does not
provide key information which allows for the investor to decide
on acquisition of securities.
[22 March 2012; 12 December 2019; 23 September
2021]
Section 20.1 Validity of
an Issue Prospectus, a Base Prospectus, and a Registration
Document
[12 December 2019]
Section 21. Procedures for the
Publication of an Issue Prospectus
[12 December 2019]
Section 22. Procedures for the
Mutual Recognition and Notification of Issue Prospectuses
[12 December 2019]
Section 22.1 Use of
Languages
[12 December 2019]
Section 23. Recognition of an Issue
Prospectus Drawn up by an Issuer Registered in Foreign
Countries
[12 December 2019]
Section 24. Advertising of an Offer
of Securities to the Public
[12 December 2019]
Section 24.1 Rights of
Latvijas Banka
(1) In order to ensure conformity with the provisions of this
Chapter, in addition to the rights laid down in the Law on
Latvijas Banka and in this Law, Latvijas Banka has the following
rights:
1) to justifiably require an issuer or public offeror to
include supplementary information in the prospectus, if necessary
for investor protection;
2) to justifiably require an issuer or person making an offer
and persons that control them or are controlled by them in order
for the information and documents necessary for the performance
of the functions of Latvijas Banka are provided;
3) to justifiably require auditors and managers of an issuer
or public offeror, and also financial intermediaries commissioned
to make the offer of securities to the public in order to provide
the information and documents necessary for the performance of
the functions of Latvijas Banka;
4) to suspend an offer of securities to the public of any
issuer or public offeror for a period of up to 10 working days if
Latvijas Banka has lawful basis to consider that the requirements
of Division C of this Law are or would be violated;
5) to prohibit or suspend advertisements for a time period up
to 10 working days if Latvijas Banka has the basis to consider
that the requirements of Division C of this Law have been
violated;
6) to prohibit an offer of securities to the public if
Latvijas Banka establishes that the requirements of Division C of
this Law have been violated, or Latvijas Banka has the basis to
consider that they would be violated;
7) to make public the fact that an issuer is failing to comply
with its obligations and liabilities;
8) to suspend examination of the prospectus submitted for
approval or to suspend or restrict the offer of securities to the
public if Latvijas Banka is exercising the powers to impose a
prohibition or restriction in conformity with Article 42 of
Regulation No 600/2014 until revocation of such prohibition or
restriction;
9) to refuse to approve any prospectus for a period of up to
five years which has been approved by a particular issuer or
public offeror, if the abovementioned issuer or public offeror
has repeatedly and significantly violated the provisions of this
Law and Regulation No 2017/1129.
(2) [12 December 2019]
(3) [12 December 2019]
(4) Latvijas Banka has the right to make public the
information on the supervisory measures taken, the sanctions and
administrative measures imposed on an issuer or public offeror
for the violation of the requirements of Division C of this Law,
except when disclosure of such information may cause serious
disorders in the financial market or cause incommensurate damage
to the persons involved.
[22 March 2012; 12 December 2019; 23 September 2021 /
Amendment regarding the replacement of the words "Law on the
Financial and Capital Market Commission" with the words "Law on
Latvijas Banka" and amendment regarding the replacement of the
word "Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Division D
Public Circulation of Financial Instruments
Chapter I
Activities of a Regulated Market Operator
Section 25. Regulated Market
Operator
(1) A regulated market operator shall act in accordance with
the Law, the regulations of Latvijas Banka, and also own articles
of association and regulations.
(2) Only a regulated market operator has the right to use a
combination of the words "regulētā tirgus organizētājs"
[regulated market operator] or "fondu birža" [stock
exchange] in the firm name.
(3) A regulated market operator may organise one or several
regulated markets. A regulated market operator also has the right
to the operate multilateral trading facility.
(4) Latvijas Banka shall establish and conduct a list of all
regulated markets organised by its licensed regulated market
operators and send this list and any changes in the list to the
European Securities and Markets Authority and the supervisory
authorities of the Member States. Only regulated markets
conforming to the requirements of this Law shall be included by
Latvijas Banka in the list.
(5) If a regulated market operator fails to comply with the
requirements of this Law or the regulated market does not conform
to the provisions of this Law, Latvijas Banka shall exclude the
relevant regulated market from the list of regulated markets and
notify the European Securities and Markets Authority and the
supervisory authorities of the Member States thereof.
[4 October 2007; 22 March 2012; 21 June 2018; 23 September
2021 / Amendment regarding the replacement of the words
"regulatory provisions" with the word "regulations" and amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 26. Minimum Paid up Share
Capital by a Regulated Market Operator
(1) The minimum paid up share capital by a regulated market
operator shall be at least EUR 730 000.
(2) Own funds of a regulated market operator may not be less
than the minimum paid up share capital.
[19 September 2013; 21 June 2018]
Section 27. Rights and Obligations
of a Regulated Market Operator
(1) A regulated market operator in conformity with the law,
the regulations of Latvijas Banka, and also his own articles of
association and regulations shall organise a regulated market and
provide services related to the public circulation of financial
instruments.
(2) A regulated market operator shall be an organisation open
and accessible to all financial instrument market participants
which shall ensure the openness of each regulated market operated
thereby and activity conforming to the principles of sound
management.
(21) A regulated market operator shall implement
the necessary measures to:
1) identify and manage the possible conflict of interest
between interests of the regulated market operator or its
shareholders and an obligation to ensure stable performance of
the regulated market, and also in order to prevent adverse effect
of such conflict of interest on performance of the regulated
market or interests of its members or participants, especially if
such conflict of interest can endanger the rights of the
regulated market operator to perform the market supervision
function;
2) identify risks to which he is subjected to, and to manage
such risks correspondingly, introducing efficient measures for
the mitigation of such risks;
3) ensure due control of technical operation of the system,
including to develop action plan for malfunction risk control of
the system in case of an emergency situation;
31) introduce transparent and binding provisions
and procedures which provide for fair and arranged trade and
determine objective criteria for efficient enforcement of
orders;
4) ensure efficient and timely completion of transactions
performed in its systems;
5) ensure sufficient financial resources at the moment of
granting a licence and henceforth in order to promote
corresponding activity of a regulated market, taking into account
the type and scope of such transactions which have been entered
into in a market, and the scope and level of such risks to which
it is subjected;
6) facilitate access of members or participants of a regulated
market operator to information which, in accordance with this Law
and directly applicable legal acts of the European Union, is
published by issuers whose transferable securities are admitted
to trading on a regulated market.
(3) A regulated market operator shall ensure:
1) the fair and open inclusion of financial instruments in a
regulated market and the process of trading, and also equal
treatment for all persons of the same status;
2) the supervision of issuers of the financial instruments
admitted to trading on regulated markets in relation to
disclosing of information in accordance with the requirements of
this Law and the directly applicable legal acts of the European
Union;
3) the concentration of supply and demand of financial
instruments admitted to trading on regulated markets for the
setting of prices for financial instruments;
4) the security of entering into transactions;
5) the dissemination of consistent information which would
make it possible for the value of financial instruments admitted
to trading on regulated markets to be determined;
6) the organisation of payments related to transactions
performed and the security of account operations.
(4) A regulated market operator shall organise one regulated
market wherein such financial instruments are admitted for which
no quantitative requirements (such as minimum paid up share
capital, number of shareholders, amount of capitalisation,
profitability or the proportion of shares in public circulation)
are imposed on issuers thereof for inclusion in such regulated
market, but all requirements specified in this Law in relation to
the openness of information are binding.
(5) A regulated market operator has the right to organise a
guarantee fund from the contributions of members or participants
thereof in order to ensure the execution of transactions entered
into in a regulated market.
(6) A regulated market operator shall keep funds of a
guarantee fund owned by members or participants of a regulated
market operator separately from its own funds. The regulated
market operator shall keep the funds of a guarantee fund in the
account of the central bank of a Member State or foreign country,
if it is providing such service, or in a credit institution,
informing the relevant institution that the funds in the account
are the funds of the guarantee fund.
(7) Funds of a Guarantee Fund may not be used to satisfy
creditors' claims of a regulated market operator. This
requirement shall also apply to the cases when the regulated
market operator has been declared insolvent in accordance with
the procedures laid down in law.
(8) A regulated market operator, in conformity with the
procedures laid down in Division F.1of this Law, has
the right to delegate the provision of the following services
(hereinafter - the outsourced services) to one or several
persons:
1) conducting of accounting;
2) management or development of information technologies or
systems;
3) organising internal control;
4) other activities (the outsourced service) necessary for
ensuring the operation of the regulated market operator and
provision of services related to public circulation of financial
instruments.
(9) A regulated market operator may delegate the obligations
of an internal audit service as the outsourced service only to a
sworn auditor or a commercial company of sworn auditors.
(10) A regulated market operator may not:
1) delegate the obligations of its administrative bodies which
are specified in accordance with the laws and regulations or the
articles or association;
2) to transfer completely the performance of the set of
functions granted in a licence for organising of the regulated
market to providers of outsourced services.
(11) A regulated market operator shall place the list of those
shareholders or members on its website which have a qualifying
holding in the capital of the regulated market operator, and
shall update such list on a regular basis.
(12) A regulated market operator shall, within first three
working days of each calendar year, publish a calendar for
trading days of financial instruments of the relevant calendar
year on its website.
(13) A regulated market operator may not execute an order of a
client by dealing on its own account or engage in matched
principal trading in any of regulated markets which are operated
thereby.
(14) More detailed requirements for the application of this
Section are determined by Commission Delegated Regulation (EU)
2017/568 of 24 May 2016 supplementing Directive 2014/65/EU of the
European Parliament and of the Council with regard to regulatory
technical standards for the admission of financial instruments to
trading on regulated markets.
(15) If a regulated market is a legal person which is managed
or operated by a regulated market operator which itself is not a
regulated market, the division of obligations specified in this
Law between these subjects shall be determined by Latvijas Banka
on a case-by-case basis.
[9 June 2005; 4 October 2007; 22 May 2008; 14 September
2017; 21 June 2018; 20 June 2019; 23 September 2021 /
Amendment regarding the replacement of the words "regulatory
provisions" with the word "regulations" and amendment regarding
the replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 28. Regulations of a
Regulated Market Operator
(1) Regulations of a regulated market operator are documents
laying down the requirements that must be complied with by the
members or participants thereof and issuers whose financial
instruments are admitted to trading on any of the regulated
markets organised by the regulated market operator.
(11) A regulated market operator shall introduce,
implement, and maintain transparent and non-discriminatory
regulations which are based on objective criteria and by which
access to the regulated market or participation therein is
governed.
(2) A regulated market operator shall prepare draft
regulations and submit them to Latvijas Banka. Latvijas Banka
shall evaluate the conformity of the draft regulations (including
amendments to the regulations where required) with the
requirements of laws, other regulatory enactments and successful
fulfilment of the obligations of the regulated market operator
and, within 30 days from the date of the submitting the draft,
prepare an opinion thereon. If the opinion does not contain
objections, the regulated market operator is entitled to decide
as to the approval of the regulations.
(3) A regulated market operator shall place the regulations
and amendments to such regulations on its website immediately
after approval thereof by the executive board of the regulated
market operator. The regulations of a regulated market operator
and amendments to such regulations shall enter into effect on the
day following their publication on the website of the regulated
market operator, unless another time period for entering into
effect has been specified in the regulations. The regulated
market operator shall, without delay, inform Latvijas Banka of
approval of the regulations.
(4) The regulations of a regulated market operator which bring
forward the requirements for activities of regulated markets
included in the list of regulated markets drawn up by Latvijas
Banka, after approval, shall be sent by Latvijas Banka to the
European Commission and the supervisory authorities of the Member
States.
(5) A regulated market operator shall govern in the
regulations:
1) the procedures by which financial instruments are admitted
to trading on a regulated market or removed therefrom;
2) the structure and management of the regulated market;
3) the obligations of issuers of financial instruments
admitted to trading on a regulated market and the procedures for
the supervision of issuers;
4) the procedures for the trade in and quotation of financial
instruments;
5) the procedures for clearing and settling accounts of
financial instruments and money transactions;
6) the procedures for the admission and exclusion of members
or participants of a regulated market operator, the rights and
obligations of members or participants, and also the procedures
for suspending the status of the member or participant and
professional requirements for employees of the company in the
status of a member or participant performing transactions on the
regulated market;
7) the procedures for identifying and preventing transactions
which are made using inside information and market
manipulation;
8) the procedures for operating the Guarantee Fund;
9) other relations related to the activities of the regulated
market and the public circulation of financial instruments.
(6) [21 June 2018]
[9 June 2005; 15 June 2006; 4 October 2007; 24 April 2014;
21 June 2018; 23 September 2021 / Amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 29. Licence to Operate a
Regulated Market
(1) A regulated market operator is entitled to commence
activities only after obtaining a licence from Latvijas
Banka.
(2) A licence to operate a regulated market (hereinafter in
this Chapter - the licence) shall be issued for an indefinite
time period.
(3) The licence shall be issued to a capital company
registered in the Republic of Latvia:
1) of which the minimum paid up share capital, and also own
funds conform to the requirements of Section 26 of this Law;
2) of which the organisational structure and regulations for
operation ensure the protection of the interests of investors and
the successful performance of the obligations referred to in
Section 27 of this Law;
3) members of the executive and supervisory boards which meet
the requirements of this Law;
4) in which the shareholders (members) possessing a qualifying
holding comply with the requirements of this Law.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 30. Documents to be
Submitted for Receiving the Licence
(1) In order to receive the licence, a regulated market
operator shall submit to Latvijas Banka a submission which shall
be accompanied by:
1) documents containing information on members of the
executive and supervisory boards of the regulated market
operator:
a) a notification containing the information referred to in
Paragraph two of this Section;
b) a copy of the page of the passport or other personal
identification document determined by law which specifies data
identifying a person [given name, surname, citizenship, personal
identity number (if any) or year and date of birth];
c) copies of documents certifying education;
2) information on shareholders (members) possessing a
qualifying holding in the regulated market operator:
a) for natural persons - a copy of the page of a passport or
other personal identification document specified by law which
indicates data identifying a person [given name, surname,
citizenship, personal identity number (if any) or year and date
of birth];
b) for legal persons - the firm name, registered office,
registration number and place. Legal persons registered in
foreign countries and other Member States shall also submit
copies of registration documents;
3) a description of the organisational structure of the
regulated market operator which clearly sets out the rights,
obligations, and authorisation of the executive and supervisory
boards, and also lays down and assigns precisely the tasks of
constituent bodies of the regulated market operator, and
obligations and authorisation of the heads and members of the
executive board of such constituent bodies;
4) a description of the main principles of the accounting
policies and accounting organisation;
5) a description of the management information system;
6) regulations for the protection of the information
system;
7) a description of the internal audit system;
8) the procedures for the identification of unusual and
suspicious financial transactions;
9) a business plan for at least the next three years of
operation which reflects in detail the strategy, financial
forecasts (balance sheet, profit and loss account of the
regulated market operator), market research plans, and other
information considered essential by the regulated market operator
and which provides additional information for the acquisition of
a true and fair view of the planned activities;
10) the draft regulations referred to in Section 28 of this
Law regarding each regulated market the market operator is
planning to organise.
(2) The notification referred to in Paragraph one, Clause 1,
Sub-clause "a" of this Section shall be completed by each member
of the executive and supervisory boards of a regulated market
operator. The notification shall specify the following
information:
1) the firm name of the regulated market operator;
2) the given name, surname, citizenship, personal identity
number (if any) or year and date of birth;
3) the position;
4) citizenship;
5) education (academic degree);
6) information on advanced vocational training;
7) whether the relevant person has ever been convicted;
8) whether the relevant person has been the head of a
commercial company which has been declared insolvent;
9) whether the relevant person has been deprived of the right
to perform any commercial activities;
10) previous working places within 10 years and a description
of the duties of employment.
(3) Latvijas Banka has the right to request the capital
company to clarify the documents and information submitted.
(4) If the information specified in Paragraph one of this
Section changes or documents are amended until the decision to
issue the licence is taken, the capital company has an obligation
to submit without delay to Latvijas Banka the new information or
the full text of the relevant documents with the amendments
made.
(5) After obtaining the licence, a regulated market operator
shall submit any amendments to the documents submitted for
obtaining the licence to Latvijas Banka not later than within
seven days after the date of adopting the amendments or after the
date the relevant information became known to him or her.
(6) Latvijas Banka has the right to refuse to approve the
amendments to the documents if the anticipated changes threaten
financially stable, prudent activity of the regulated market
operator, conforming to the laws and regulations.
[4 October 2007; 21 June 2018; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 31. Requirements for Members
of the Executive and Supervisory Boards of a Regulated Market
Operator
(1) Such person may be a member of the executive and
supervisory boards of a regulated market operator:
1) who is sufficiently competent in the field for which he or
she will be responsible;
2) who has the required education and not less than three
years of relevant work experience in a commercial company,
organisation, or institution;
3) who has an impeccable reputation;
4) who has not been deprived of the right to perform
commercial activities.
(2) Such person may not be a member of the executive and
supervisory boards of the regulated market operator:
1) who has been convicted of committing an intentional
criminal offence (including for bankruptcy in bad faith);
2) who has been convicted of committing an intentional
criminal offence, even if he or she has been released from
serving the sentence because of the limitation period, clemency,
or amnesty;
3) against whom a criminal matter for the committing of an
intentional criminal offence has been discontinued because of the
expiry of the limitation period or amnesty;
4) who has been charged for a crime, but the criminal
proceedings against whom have been terminated for reasons other
than exoneration;
5) who has knowingly provided false information to Latvijas
Banka on himself or herself by submitting documents to obtain the
licence for the performance of any activities in the financial
market.
(3) If a person already fulfils the duties of a member of the
administrative body for other regulated market operator which has
received the licence to organise a regulated market in accordance
with the procedures of this Law or legal act of the Member State,
it shall be regarded as complying with the requirements of
Paragraph one of this Section.
(4) Latvijas Banka shall determine the requirements for
members of the executive and supervisory boards of a regulated
market operator in relation to their functions in the field of
the internal control system.
[4 October 2007; 21 June 2018; 23 September 2021 /
Amendment to Clause 5 of Paragraph two regarding the replacement
of the words "financial and capital market" with the words
"financial market" and amendment regarding the replacement of the
word "Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 31.1 Provisions
Regarding the Total Number of Positions of a Member of the
Executive Board and Supervisory Board to be Held by a Member the
Executive Board and Supervisory Board of a Regulated Market
Operator
(1) Upon determining the number of positions of a member of
the executive or supervisory board that a member of the executive
or supervisory board of a regulated market operator may
simultaneously hold, individual circumstances, and also the type,
scope, and complexity of the operation of the regulated market
operator shall be considered.
(2) A member of the executive and supervisory boards of a
regulated market operator which is important in terms of its
size, internal organisation and the nature, scope, and complexity
of activities, may, except for the cases when he or she is
authorised to represent the Republic of Latvia, simultaneously
hold no more than:
1) one position of a member of the executive board and two
positions of a member of the supervisory board;
2) four positions of a member of the supervisory board.
(3) Within the meaning of this Section, one position of a
member of the executive or supervisory board is considered to be
those positions of a member of the executive or supervisory
board:
1) within the framework of one consolidation group;
2) in companies (including those that are not financial
institutions) in which a regulated market operator has a
qualifying holding.
(4) Latvijas Banka may permit a member of the executive or
supervisory board of a regulated market operator to additionally
hold one position of a member of the supervisory board.
(5) Latvijas Banka shall regularly provide the European
Securities and Markets Authority with information on the permits
referred to in Paragraph four of this Section.
(6) Within the meaning of this Section, positions of a member
of the executive or supervisory board in associations,
foundations, and other organisations whose activities are not
aimed at generating profit shall not be considered a position of
a member of the executive or supervisory board.
[21 June 2018; 23 September 2021 / Amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 32. Procedures for Granting
the Licence
(1) Latvijas Banka shall examine the submission of a capital
company for obtaining the licence and take a decision within
three months after the documents prepared and drawn up in
accordance with all the requirements of laws and regulations laid
down in this Law have been received.
(2) Latvijas Banka shall not issue the licence if:
1) while establishing a regulated market operator, the laws
and other laws and regulations have not been complied with;
2) the documents submitted by a regulated market operator
contain false information;
3) the members of the executive and supervisory boards of a
regulated market operator do not meet the requirements included
in this Law and the regulations of Latvijas Banka, and also if
Latvijas Banka has not been able to ascertain to a satisfactory
extent that members of the executive and supervisory boards of a
regulated market operator have impeccable reputation, sufficient
knowledge, skills, and experience and that they dedicate
sufficient amount of time for the fulfilment of the duties, or if
there is an objective and arguable reason to assume that the
executive and supervisory boards of a regulated market operator
may endanger its efficient, correct, and prudent management, and
also the integrity of market;
4) it is impossible to verify the identity, reputation, or
adequacy of free capital of the persons who have a qualifying
holding in a regulated market operator;
5) the information included in the documents submitted
indicates that a regulated market operator will not be able to
ensure the fulfilment of the obligations specified in Section 27,
Paragraphs two, three, and four of this Law;
6) the information included in the documents submitted
indicates that the regulated market which is planned to be
organised by a regulated market operator does not conform to the
requirements of this Law;
7) Latvijas Banka detects that the financial resources
invested in the share capital of a regulated market operator or
which are intended to be used in commercial activity of a
regulated market operator have been acquired through unusual or
suspicious financial transactions or the lawfulness of the
acquisition of these financial resources has not been proven by
documentary evidence;
8) the activities of a regulated market operator are not
economically substantiated.
(3) Latvijas Banka shall consult the supervisory authority of
the relevant Member State before issuing the licence to such
regulated market operator:
1) which is a subsidiary of a credit institution or insurance
company licensed in a Member State;
2) which is a subsidiary of such a parent undertaking another
subsidiary of which is a credit institution or insurance company
licensed in a Member State;
3) which is controlled by a person who also controls another
credit institution or insurance company licensed in a Member
State.
(4) Latvijas Banka shall, before issuing the licence, and also
during the course of supervision of a regulated market operator,
request and assess information from the supervisory authority of
the relevant Member State on suitability of shareholders of the
regulated market operator and reputation and experience of
members of the executive and supervisory boards if such persons
are involved in the management of other commercial companies of
such group in which the relevant regulated market operator will
be included.
(5) The sample forms, templates, and procedures necessary for
exchange of information referred to in Paragraphs three and four
of this Section shall be provided for by Commission Implementing
Regulation (EU) 2017/981 of 7 June 2017 laying down implementing
technical standards with regard to standard forms, templates and
procedures for the consultation of other competent authorities
prior to granting an authorisation in accordance with Directive
2014/65/EU of the European Parliament and of the Council
(hereinafter - Regulation No 2017/981).
[13 January 2011; 21 June 2018; 20 June 2019; 23 September
2021 / Amendment regarding the replacement of the words
"regulatory provisions" with the word "regulations" and amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 33. Re-registration of the
Licence
(1) Latvijas Banka shall re-register the licence if the firm
name of a regulated market operator is being changed.
(2) A regulated market operator shall submit to Latvijas Banka
a submission for the re-registration of the licence not later
than within five working days after re-registration of the firm
name.
(3) Latvijas Banka shall re-register the licence not later
than within five working days after receipt of the
submission.
(4) [21 June 2018]
(5) [21 June 2018]
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 34. Procedures for
Cancelling the Licence
(1) Latvijas Banka shall cancel the licence issued to a
capital company for operating a regulated market if:
1) it is established that the regulated market operator has
provided false information in order to receive the licence;
2) the regulated market operator systematically fails to
comply with the requirements of this Law, Regulation No 600/2014,
and other laws and regulations;
3) the regulated market operator has failed to rectify the
violations of laws and regulations detected by Latvijas Banka
within the time period laid down by Latvijas Banka;
4) the regulated market operator has initiated liquidation
proceedings;
5) the bankruptcy procedure of the regulated market operator
has been initiated in accordance with the procedures laid down in
law;
6) the regulated market operator has submitted a written
submission for the cancellation of the licence;
7) the regulated market operator has not commenced activities
within 12 months from the day when the licence was issued;
8) the regulated market operator has not performed the
activity indicated in the licence for more than six months;
9) it is established that the regulated market operator no
longer meets the requirements laid down in this Law for obtaining
the licence;
10) it is detected that the prohibition to exercise the voting
right of shares belonging to shareholders of the regulated market
operator with a qualifying holding has set it and it lasts for
more than six months;
11) the decision not to take a resolution activity in relation
to the regulated market operator has been taken.
(2) Latvijas Banka shall inform the European Securities and
Market Authority that the licence to operate a regulated market
has been cancelled.
[4 October 2007; 13 January 2011; 22 March 2012; 21 June
2018; 20 June 2019; 23 September 2021; 30 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 35. Obligations of
Administrative Bodies of a Regulated Market Operator
(1) The executive board of a regulated market operator
shall:
1) decide on inclusion of financial instruments in any of the
regulated markets organised by the regulated market operator or
the exclusion therefrom;
2) decide on suspension of trade in financial instruments;
3) decide on admission and exclusion of members or
participants of the regulated market operator, and also on
suspension of the status of a member or participant of the
regulated market operator;
4) approve the regulations of the regulated market operator
and ensure conformity with the requirements referred to
therein;
5) ensure that the information to be published by the
regulated market operator in accordance with this Law, other laws
and regulations, and the regulations of the regulated market
operator is published in a timely manner.
(2) If the executive board cannot be convened due to objective
reasons, a specially delegated member of the executive board is
entitled to decide on suspension of trade in financial
instruments and suspension of activities of members or
participants of a regulated market operator.
(3) [15 June 2006]
(4) The relevant administrative body of a regulated market
operator has an obligation, upon its own initiative or upon
request of Latvijas Banka, to recall members of the executive or
supervisory board from the office without delay if they do not
conform to the requirements of this Law.
(5) A regulated market operator may delegate the obligations
of the executive board specified in Paragraph one, Clauses 1, 2,
and 3 of this Section to a committee of independent experts
approved by the supervisory board of the regulated market
operator, the activity of which is governed by the by-laws
approved by the supervisory board of the market operator.
[15 June 2006; 29 September 2007; 21 June 2018; 23
September 2021 / Amendment regarding the replacement of
the word "Commission" with the words "Latvijas Banka" shall come
into force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 35.1 Systems
Resilience, Circuit Breakers and Electronic Trading
(1) A regulated market operator shall introduce effective
facilities and procedures and develop arrangements to ensure that
its trading facilities are resilient, have sufficient capacity to
deal with peak order and message volumes, are able to ensure
orderly trading under conditions of market stress, are fully
tested to ensure meeting of such conditions and they have
effective business continuity arrangements to ensure continuity
of its services if there is any unforeseen failure of its trading
facilities.
(2) A regulated market operator shall ensure that it has:
1) written agreements with all investment firms and credit
institutions pursuing a market making strategy on the regulated
market;
2) schemes to ensure that a sufficient number of investment
firms or credit institutions with which agreements have been
concluded for the performance of the functions of the market
maker on the regulated market operated thereby which require them
to post firm quotes at competitive prices with the result of
providing liquidity to the market on a regular and predictable
basis, if such a requirement is appropriate to the nature and
scale of the trading on the relevant regulated market.
(3) At least the following information shall be indicated in
the agreements referred to in Paragraph two of this Section:
1) the obligations of the market maker in relation to the
provision of liquidity and, where applicable, any other
obligation arising from participation in the scheme referred to
in Paragraph two, Clause 2 of this Section;
2) any remuneration, rebate, or any other incentives offered
by the regulated market to the market maker so as to provide
liquidity to the market on a regular and predictable basis and,
where applicable, any other rights accruing to the market maker
as a result of participation in the scheme referred to in
Paragraph two, Clause 2 of this Section.
(4) A regulated market operator shall monitor and enforce
compliance by the market maker with the requirements of the
agreements referred to in Paragraph two, Clause 1 of this
Section.
(5) A regulated market operator shall inform Latvijas Banka of
the content of the agreements referred to in Paragraph two of
this Section and shall, upon request, submit all the information
necessary to Latvijas Banka to enable Latvijas Banka to satisfy
itself of compliance by the regulated market operator with that
laid down in Paragraph four of this Section.
(6) A regulated market operator shall establish effective
internal control systems, procedures, and arrangements to reject
such orders on the regulated market operated thereby which exceed
the pre-determined volume and price thresholds stipulated by the
regulated market operator or which are clearly erroneous.
(7) A regulated market operator shall ensure that it is able
to temporarily halt or constrain trading if there is a
significant price movement in a financial instrument on the
regulated market operated thereby or a related market during a
short period and, in exceptional cases, to be able to cancel,
vary, or correct any transaction concluded on the regulated
market operated thereby. The regulated market operator shall
ensure that the parameters for halting trading are appropriately
calibrated in a way which takes into account the liquidity of
different asset classes and sub-classes, the nature of the market
model and types of users and they are sufficient to avoid
significant disruptions to the orderliness of trading.
(8) A regulated market operator shall notify Latvijas Banka of
the parameters for halting trading stipulated thereby and shall
inform Latvijas Banka in a consistent and comparable manner of
any material changes in such parameters. Latvijas Banka shall
notify the European Securities and Markets Authority of the
abovementioned parameters and changes therein. The regulated
market operator which is material in terms of liquidity in that
financial instrument shall ensure that the necessary systems and
procedures have been established for it in order to inform
Latvijas Banka of halting of trading so that Latvijas Banka could
coordinate a market-wide response and determine whether it is
appropriate to halt trading on other trading venues on which the
relevant financial instrument is traded until trading resumes on
the original market.
(9) A regulated market operator shall introduce effective
internal control systems, procedures, and arrangements, including
requiring members or participants of the operated regulated
market to carry out appropriate review and testing of algorithms,
concurrently providing environments to promote and facilitate
testing of the abovementioned algorithms in order to ensure that
algorithmic trading facilities cannot create or contribute to
disorderly trading conditions on the market and to manage any
disorderly trading conditions which do arise from such
algorithmic trading facilities, including facilities to limit the
ratio of unexecuted orders to transactions that may be entered
into the facility by a member or participant, to be able to slow
down the flow of orders if there is a risk of its facility
capacity being reached and to limit and enforce the minimum tick
size that may be executed on the market.
(10) A regulated market operator that permits direct
electronic access to the regulated market operated thereby shall
have in place effective internal control systems, procedures, and
measures to ensure that such service may be provided to its
clients only by such members or participants of the regulated
market which are investment firms or credit institutions which
have the right to provide investment services in a Member State
and that criteria are set in relation to the suitability of such
person to whom such direct electronic access may be offered, and
that a member or participant of the regulated market retains
responsibility for orders and transactions which have been
submitted or concluded by using such service. The regulated
market operator shall also determine appropriate standards
regarding risk controls and thresholds on trading through such
access, and also is able to distinguish and to stop orders or
trading by a person using direct electronic access separately
from other orders or trading by the member or participant. The
regulated market operator shall introduce corresponding measures
to suspend or terminate the rights of the particular member or
participant to offer direct electronic access for clients to the
regulated market, if the provisions of this Paragraph are not
conformed to.
(11) A regulated market operator shall ensure that its rules
on co-location services are transparent, fair, and
non-discriminatory.
(12) A regulated market operator shall ensure that its service
fees including execution fees, ancillary fees and any rebates are
transparent, fair, and non-discriminatory and that they do not
create incentives to place, modify, or cancel orders or to
execute transactions in a way which contributes to disorderly
trading conditions or market abuse. The regulated market operator
shall grant rebates for market making in relation to individual
shares or to a basket of shares. The regulated market operator
may adjust the amount of its fees for cancelled orders according
to the length of time for which the order was maintained on the
trading facility and to calibrate the fees to each financial
instrument to which they apply. The regulated market operator may
impose a higher fee for placing orders that are subsequently
cancelled than orders which are executed and to impose a higher
fee on members or participants placing a high ratio of cancelled
orders to executed orders, and also on those members or
participants operating a high-frequency algorithmic trading
technique in order to reflect the additional burden on system
capacity.
(13) A regulated market operator shall be able to identify, by
means of flagging from members or participants, orders generated
by algorithmic trading, the different algorithms used for the
creation of orders, and the relevant persons initiating those
orders. The abovementioned information shall be submitted by the
regulated market operator to Latvijas Banka upon the request
thereof.
(14) Upon request by Latvijas Banka, a regulated market
operator the home Member State of which is the Republic of Latvia
shall make available to Latvijas Banka data relating to the order
submitted on the regulated market (the order register or book) or
give Latvijas Banka access to such data so that it is able to
monitor trading.
(15) More detailed requirements for the application of this
Section shall be determined by the following directly applicable
legal acts of the European Union:
1) Commission Delegated Regulation (EU) 2017/584 of 14 July
2016 supplementing Directive 2014/65/EU of the European
Parliament and of the Council with regard to regulatory technical
standards specifying organisational requirements of trading
venues (hereinafter - Regulation No 2017/584);
2) Commission Delegated Regulation (EU) 2017/578 of 13 June
2016 supplementing Directive 2014/65/EU of the European
Parliament and of the Council on markets in financial instruments
with regard to regulatory technical standards specifying the
requirements on market making agreements and schemes (hereinafter
- Regulation No 2017/578);
3) Commission Delegated Regulation (EU) 2017/566 of 18 May
2016 supplementing Directive 2014/65/EU of the European
Parliament and of the Council on markets in financial instruments
with regard to regulatory technical standards for the ratio of
unexecuted orders to transactions in order to prevent disorderly
trading conditions;
4) Commission Delegated Regulation (EU) 2017/573 of 6 June
2016 supplementing Directive 2014/65/EU of the European
Parliament and of the Council on markets in financial instruments
with regard to regulatory technical standards on requirements to
ensure fair and non-discriminatory co-location services and fee
structures (hereinafter - Regulation No 2017/573);
5) Commission Delegated Regulation (EU) 2017/570 of 26 May
2016 supplementing Directive 2014/65/EU of the European
Parliament and of the Council on markets in financial instruments
with regard to regulatory technical standards for the
determination of a material market in terms of liquidity in
relation to notifications of a temporary halt in trading.
[21 June 2018; 20 June 2019; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 35.2 Tick Size of
Financial Instruments
(1) A regulated market operator shall determine tick size
regimes in the regulated markets operated thereby in relation to
shares, depositary receipts, exchange‐traded funds, certificates,
and other similar financial instruments which are specified in
Commission Delegated Regulation (EU) 2017/588 of 14 July 2016
supplementing Directive 2014/65/EU of the European Parliament and
of the Council with regard to regulatory technical standards on
the tick size regime for shares, depositary receipts and
exchange-traded funds (hereinafter - Regulation No 2017/588).
(2) Tick size regimes which are referred to in Paragraph one
of this Section shall be determined:
1) to reflect the liquidity profile of one financial
instrument in different markets and the average bid-ask spread,
taking into account the desirability of enabling reasonably
stable prices without unduly constraining further narrowing of
spreads;
2) adapting the tick size for each financial instrument
appropriately.
(3) Regulation No 2017/588 shall determine more detailed
requirements for the application of this Section.
(4) A regulated market operator may pool large-scale orders
within the meaning of Article 4 of Regulation No 600/2014 for a
price which conforms to the buying and selling mid-price at the
pooling moment by derogation from the requirement laid down in
this Section regarding application of tick size regimes.
[21 June 2018; 20 June 2019; 17 June 2020]
Section 35.3
Synchronisation of Clocks
(1) Trading venues and their members or participants shall
synchronise their clocks which they use to record the date and
time of any reportable event that has occurred at the trading
venue.
(2) The level of accuracy to which clocks are to be
synchronised in accordance with international standards shall be
determined by Commission Delegated Regulation (EU) 2017/574 of 7
June 2016 supplementing Directive 2014/65/EU of the European
Parliament and of the Council with regard to regulatory technical
standards for the level of accuracy of business clocks.
[21 June 2018; 20 June 2019]
Section 36. Members or Participants
of a Regulated Market Operator
(1) A member or participant of a regulated market operator
shall be a person who is entitled to perform transactions on the
regulated markets operated by the regulated market operator. The
regulated market operator shall ensure that a member or
participant of the regulated market operator has a possibility to
become a member or participant of the regulated market operator
with direct access or remote access.
(2) Such investment firm may become a member or participant of
a regulated market operator to which Latvijas Banka has issued
the licence for the provision of investment services, or a credit
institution to which Latvijas Banka has issued the licence to
operate a credit institution and which has commenced the
provision of investment services in accordance with the
procedures laid down in this Law.
(3) An investment firm or a credit institution of another
Member State may become a member or participant of a regulated
market operator, which in its country of registration has
obtained the licence for the provision of investment
services.
(4) An investment firm or credit institution registered in
another Member State may become a member or participant of a
regulated market operator:
1) with direct access, by opening a branch;
2) with remote access without opening a branch if transactions
may be performed from a distance on the markets regulated by the
regulated market operator.
(5) A company registered in a foreign country which is
providing investment services may become a member or participant
of a regulated market operator only after it has been registered
with Latvijas Banka in accordance with the procedures laid down
in this Law.
(6) Before the investment firm referred to in Paragraphs three
and five of this Section becomes a member or participant of a
regulated market operator, the regulated market operator shall
verify that it fulfils and complies with the capital adequacy
requirements laid down in this Law.
(7) A regulated market operator is entitled to grant the
status of a member or participant also to a person other than
referred to in Paragraphs two and three of this Section but who
according to the criteria approved by the regulated market
operator is appropriate and conforming, who has sufficient level
of skills and competence in respect of trading on the regulated
market and who has sufficient resources and organisational
structure in order to perform the obligations of the member or
participant of the regulated market operator and to guarantee due
settlements for transactions.
(8) A regulated market operator shall ensure equal rights for
all members or participants of the regulated market operator.
Members or participants of the regulated market operator, upon
entering into mutual transactions on the regulated market, need
not conform to the requirements referred to in Sections 126,
126.1, 126.2, 128, 128.1,
128.2, and 128.3 of this Law. Members or
participants of the regulated market operator shall apply the
requirements of Sections of this Law referred to in the second
sentence of this Paragraph in relation to their clients if, upon
acting on behalf of clients, their orders on the regulated market
are executed.
(9) A regulated market operator shall submit the list of
members or participants of the regulated market operator to
Latvijas Banka and, without delay, inform Latvijas Banka of
amendments and supplements made in the list.
(10) A regulated market operator shall intend the right for
members or participants of the market operator to choose other
settlement system other than offered by the regulated market
operator for entering into transactions on the regulated
market.
(11) The right referred to in Paragraph ten of this Section
shall apply to cases when:
1) there is such link or mechanism between the financial
instrument settlement system offered by the regulated market
operator and selected settlement system, which ensures effective
and economic settlements;
2) technical conditions for the settlements of the transaction
which is entered into on the regulated market, using the
settlement system other than offered by the regulated market
operator, ensures due operation of the financial market.
[9 June 2005; 4 October 2007; 21 June 2018; 23 September
2021 / Amendment regarding the replacement of the word
"Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 37. Provision and Storing of
Information on Transactions in Financial Instruments Admitted to
Trading on Regulated Markets
[4 October 2007]
Section 38. Disclosure of
Information on Transactions in Financial Instruments
[21 June 2018]
Section 39. Right of a Regulated
Market Operator to Conduct Supervision
(1) A regulated market operator shall supervise the activities
of each regulated market organised thereby in accordance with the
procedures governed by this Law and the regulations of the
regulated market operator.
(2) A regulated market operator shall supervise the pricing of
financial instruments in regulated markets organised thereby, and
also trading procedures in order to identify violations of the
regulations of the regulated market operator, non-conforming
trading circumstances or action which is prohibited in accordance
with Regulation No 596/2014, or disruptions to a system in
relation to a financial instrument, and other violations of this
Law and other laws and regulations.
(3) A regulated market operator is entitled to request and
receive from its members or participants any information and
documents necessary in order to decide on the conformity thereof
with the status of a member or participant in the regulated
market operator.
(4) [15 October 2009]
(5) A regulated market operator shall supervise the conformity
of activities of issuers of financial instruments admitted to
trading on regulated markets organised thereby with the
requirements of the regulations governing activities on the
regulated market approved by the regulated market operator.
(6) [15 October 2009]
(7) A regulated market operator shall, without delay, inform
Latvijas Banka of any violations of this Law, other laws and
regulations, and regulations of the regulated market operator,
non-conforming trading circumstances or action which is
prohibited in accordance with Regulation No 596/2014, or
disruptions to a system in relation to a financial instrument
detected by the regulated market operator, and also of any
decisions taken in connection with these violations.
(71) Latvijas Banka shall notify the information
which has been received in accordance with Paragraph seven of
this Section to the European Securities and Markets Authority and
the competent authorities of other Member States. Latvijas Banka
shall notify the European Securities and Markets Authority and
the competent authorities of other Member States of action which
is prohibited in accordance with Regulation No 596/2014 if it has
ascertained that such action has been performed or is being
performed.
(72) Regulation No 2017/565 shall determine the
circumstances in which the requirement for the provision of
information referred to in Paragraphs seven and 7.1 of
this Section is applicable.
(73) A regulated market operator shall provide the
information necessary to Latvijas Banka or the relevant law
enforcement institutions for the ascertaining of all such facts
and circumstances which are related to potential violations of
Regulation No 596/2014.
(8) A regulated market operator is entitled to request and
members or participants of the regulated market operator have an
obligation to provide information requested thereby after receipt
of such request on the clients of members or participants of the
regulated market operator (natural and legal persons), their
financial instrument accounts and money accounts related to
settlements of financial instruments and transactions made in
financial instruments admitted to trading on a regulated market
if such information is necessary for the regulated market
operator to ensure the performance of the supervisory functions
granted for preventing the use of inside information and market
manipulation. The regulated market operator is entitled to use
the submitted information only for the purpose for which it was
requested.
(9) Members of the supervisory board, executive board of a
regulated market operator and employees thereof shall be held
criminally liable in accordance with the procedures laid down in
the law for intentional or non-intentional disclosure of
information obtained in accordance with the procedures of
Paragraph eight of this Section.
[9 June 2005; 29 March 2007; 15 October 2009; 21 June 2018;
23 September 2021 / Amendment regarding the replacement of
the word "Commission" with the words "Latvijas Banka" shall come
into force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 39.1 Activity of
a Regulated Market Operator in the Republic of Latvia which is
Licensed in Another Member State
(1) A regulated market operator registered in another Member
State which has received the licence to organise a regulated
market is entitled to carry out activity in the Republic of
Latvia in order to promote access by investment firms and credit
institutions registered in the Republic of Latvia to this
regulated market.
(2) A regulated market operator registered in another Member
State is entitled to commence the activity referred to in
Paragraph one of this Section in the Republic of Latvia after
Latvijas Banka has received the relevant notification from the
supervisory authority of the home Member State of the regulated
market operator.
(3) Latvijas Banka is entitled to request identifying data
from the supervisory authority of the home Member State of the
regulated market operator on that investment firm and credit
institution or other person registered in the Republic of Latvia
which are members or participants of the regulated market
operator licensed in such country.
(4) [21 June 2018]
[4 October 2007; 21 June 2018; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 39.2 Activity of
a Regulated Market Operator in Another Member State which is
Licensed in the Republic of Latvia
(1) A regulated market operator registered in the Republic of
Latvia which has received the licence to organise a regulated
market is entitled to carry out activity in another Member State
in order to promote access by investment firms and credit
institutions registered in such Member State to this regulated
market.
(2) A regulated market operator registered in the Republic of
Latvia who wishes to commence activity in any of the Member
States shall submit a submission to Latvijas Banka where he or
she shall indicate such Member State.
(3) Latvijas Banka shall examine the submission for the
commencement of activity in another Member State within 30 days
from the day of receipt of the submission and inform the
regulated market operator and the supervisory authority of the
relevant Member State of its decision. The regulated market
operator may commence activity when Latvijas Banka has informed
the supervisory authority of the relevant Member State.
(4) Latvijas Banka shall, upon request of the supervisory
authority of the relevant Member State, send identification data
on such investment firm and credit institution or another person
which are registered in this Member State and which are members
or participants of a regulated market operator licensed in the
Republic of Latvia.
(5) In order to ensure settlements regarding transactions on
the regulated market, the regulated market operator has the right
to enter into an agreement regarding access to clearing centre,
central counterparty, or settlement system in another Member
State. Latvijas Banka may restrict entering into such agreements
only in case when it can prove that these measures hinder due
operation of the regulated market. Latvijas Banka shall take into
account system control and supervision exercised by other control
or supervisory authorities of clearing and settlement
systems.
[4 October 2007; 21 June 2018; 23 September 2021 /
Amendment regarding the replacement of the word "Commission" with
the words "Latvijas Banka" shall come into force on 1 January
2023. See Paragraph 73 of Transitional Provisions]
Section 39.3 Cooperation
with Central Counterparties in Relation to the Clearing and
Settlement Procedures
(1) In order to ensure settlements for transactions on the
regulated market regardless of that specified in Title III, IV,
or V of Regulation No 648/2012, the regulated market operator has
the right to enter into agreements for access to clearing centre,
central counterparty, or settlement system in another Member
State.
(2) Regardless of that specified in Title III, IV, or V of
Regulation No 648/2012, Latvijas Banka may restrict entering into
such agreements only if it proves that such measures are
hindering proper functioning of the regulated market by taking
into account the conditions of Section 133.12,
Paragraph two of this Law in relation to settlement systems.
Latvijas Banka shall take into account system control and
supervision carried out by other control or supervisory
authorities of clearing and settlement systems.
[21 June 2018; 23 September 2021 / Amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 40. Supervision of a
Regulated Market Operator
(1) A regulated market operator shall provide Latvijas Banka
(upon its request) with information from the trading facility
thereof, with information submitted by members or participants of
the regulated market operator and issuers of financial
instruments admitted to trading on a regulated market, and also
with any other information required for Latvijas Banka for the
purposes of supervision.
(2) Latvijas Banka has the right to inspect the activity of a
regulated market operator, including to perform internal controls
of a regulated market operator. Latvijas Banka has the right to
become acquainted with all documents, account books, and
databases of a regulated market operator, and also to take
statements therefrom, make true copies (copies).
(3) A regulated market operator shall, upon a motivated
written request of Latvijas Banka, submit to Latvijas Banka true
copies (copies) of documents or other information related to the
activities of the regulated market operator.
(4) Latvijas Banka has the right to participate in meetings of
shareholders (members) of a regulated market operator, to propose
the convening of sessions of the administrative bodies of the
regulated market operator, and to determine the matters to be
discussed therein, and also to participate in these meetings
without voting rights.
(5) Latvijas Banka has the right to revoke in full or in part
the decisions of the administrative bodies of a regulated market
operator which are related to the fulfilment of the obligations
laid down in Section 27 of this Law, or the appointment of
members of the executive and supervisory boards of a regulated
market operator if such decisions do not conform to the laws,
other legal acts, or articles of association, regulations, or
internal acts of the regulated market operator, or which may
substantially affect the financial condition of the regulated
market operator.
(6) Latvijas Banka shall be responsible for the cooperation
with the supervisory authorities of other Member States in order
to ensure supervision of the regulated market operators.
[4 October 2007; 21 June 2018; 23 September 2021 /
Amendment regarding the replacement of the word "Commission" with
the words "Latvijas Banka" shall come into force on 1 January
2023. See Paragraph 73 of Transitional Provisions]
Section 40.1 Supervision
of a Regulated Market Operator Licensed in Another Member
State
(1) If a regulated market operator registered in another
Member State which operates in the Republic of Latvia undertakes
activities which are in contradiction with the applicable laws
and regulations of the Republic of Latvia governing financial
instrument market, Latvijas Banka shall, without delay, inform
the supervisory authority of the home Member State thereof and
ask to rectify the established violations, and also inform it of
the measures taken.
(2) If a regulated market operator registered in another
Member State which operates in the Republic of Latvia continues
activities which are in contradiction with the applicable laws
and regulations of the Republic of Latvia governing financial
instrument market, or if the measures implemented by the
supervisory authority of the Member State turn out ineffective,
Latvijas Banka shall inform the supervisory authority of the home
Member State thereof and take measures to rectify such
violations. Within the scope of such activities, Latvijas Banka
is entitled to prohibit the relevant regulated market operator
from continuing activities in the Republic of Latvia until such
violations are rectified. Latvijas Banka shall inform the
European Commission and the European Securities and Markets
Authority of the measures taken in accordance with the
requirements of Section 147 of this Law.
(3) Latvijas Banka is entitled to address a request to the
European Securities and Markets Authority to examine the
violation of a market operator registered in another Member
State.
(4) Latvijas Banka shall inform the relevant regulated market
operator of the measures taken in Paragraph two of this Section
or the prohibition imposed.
[4 October 2007; 22 March 2012; 21 June 2018; 23 September
2021 / Amendment regarding the replacement of the word
"Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Chapter II
Admission of Financial Instruments to Trading on Regulated
Markets
[9 June 2005]
Section 41. General Requirements for
Admission of Financial Instruments to Trading on Regulated
Markets
(1) Financial instruments the disposal of which is not
restricted may be admitted to trading on regulated markets.
(2) [26 May 2016]
(3) In order for transferable securities to be admitted to
trading on a regulated market, the issuer or a person asking the
admission of the transferable securities to trading on a
regulated market shall append a prospectus to the submission
which is prepared in accordance with the requirements of this
Law, Regulation No 2017/1129, and other directly applicable legal
acts of the European Union, and also registered with Latvijas
Banka.
(4) [12 December 2019]
(5) The requirements for admission of other financial
instruments to trading on a regulated market shall be determined
by the relevant regulated market operator. The requirements in
relation to admission of derivatives and commodity derivatives to
trading on a regulated market shall be such to ensure that the
provisions of an agreement on derivative allow precise
determination of the price and effective settlement
conditions.
(6) The decision to admit a financial instrument to trading on
regulated markets shall be taken by the executive board of the
regulated market operator, on the basis of the submission of the
issuer or the person requesting the admission of the transferable
securities to trading on a regulated market.
(7) A transferable security which is admitted to trading on
one regulated market may be admitted to trading on other
regulated market without a consent by the issuer. The operator of
that regulated market in which the transferable security is
admitted without a consent by the issuer shall inform the issuer
thereof. In such case the issuer is exempted from the obligation
to provide information in accordance with the requirements of
Division D, Chapters II and III of this Law to such regulated
market operator on the regulated market of which the transferable
security is admitted without a consent by the issuer.
(8) If a transferable security which is admitted to trading on
a regulated market is being traded without a consent by the
issuer in a multilateral trading facility, the issuer is exempted
from the obligation to disclose information in the multilateral
trading facility, if the system operator has determined the
requirements for disclosure of information.
(9) If admission of transferable securities on the regulated
market is requested in Latvia, the prospectus shall be prepared
in the official language.
(10) The procedures for the preparation, approval, publishing,
and distribution of prospectuses shall be determined by
Regulation No 2017/1129.
(11) After the decision to admit transferable securities to
trading on the regulated market has been taken, the regulated
market operator shall, without delay, post the decision and the
text of the prospectus on its website.
[4 October 2007; 26 May 2016; 21 June 2018; 12 December
2019; 23 September 2021 / Amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 42. Requirements for
Inclusion of Shares and Transferable Securities Equivalent
Thereto which Ensure Holding in the Capital of a Commercial
Company on the Official List
(1) Shares and transferable securities equivalent thereto
which ensure holding in the capital of a commercial company
(hereinafter - the shares) shall be included on the official
list, if:
1) forecast market capitalisation of the shares to be included
therein on the day when a regulated market operator takes the
decision to include the shares on the official list is at least
EUR 1 000 000. If forecasting of market capitalisation of the
shares to be included on the official list is impossible, the
inclusion of shares in this list shall be permissible, provided
that the share capital paid by the joint-stock company and
reserves (including profit or loss) within the time period of the
last reporting year amounts to at least EUR 1 000 000;
2) the joint-stock company has made accessible to the public
its annual statements for at least the last three reporting
years;
3) the submission for all shares of the relevant category has
been submitted for inclusion on the official list.
(2) If inclusion on the official list of the regulated market
takes place after the offer of securities to the public, trading
in the relevant shares may be commenced only after the end date
of the initial placement.
(3) If the public share offering does not take place with the
intermediation of the regulated market, the shares may be
included on the official list only if at least 25 per cent of the
subscribed capital share represented by the shares of the
relevant category are applied for inclusion on this list.
(4) If the public share offering takes place with the
intermediation of the regulated market operator, the shares may
be included on the official list if at least 25 per cent of the
subscribed capital share represented by the shares of the
relevant category are applied for inclusion on the list, or if
the regulated market operator has grounds to believe that the
market of such shares will operate with sufficient activity after
their inclusion on the official list even at a lower relative
percentage.
(5) The regulated market operator has the right to specify
additional requirements and stricter criteria for the inclusion
of the shares on the official list.
[15 June 2006; 13 January 2011; 19 September 2013; 21 June
2018]
Section 43. Requirements for
Inclusion of Bonds and Other Debt Securities on the Official
List
(1) Bonds and other debt securities may be included on the
official list if the total amount of the loan is not less than
EUR 200 000. This requirement shall not be applied in the case of
an ongoing issue, if the amount of the loan has not been
determined.
(2) The regulated market operator may take the decision to
include debt securities which do not conform to the requirements
of Paragraph one of this Section on the official list after it is
convinced that trade in the relevant debt securities will be
sufficiently active.
(3) Convertible or interchangeable bonds, and also any debt
securities with additional rights to obtain shares may be
included on the official list only if the shares related to the
abovementioned bonds or securities have been included on the
official list of the same or another regulated market
operator.
(4) Debt securities may be included on the official list, if
the submission regarding inclusion thereof is related to all debt
securities of the relevant issue. It is allowed not to apply this
requirement in respect of the debt securities issued by the
Republic of Latvia.
(5) If inclusion on the official list is performed on the
basis of an offer of securities to the public, trading in the
relevant debt securities may be commenced only after the final
day of the initial placement. This rule shall not be applied in
case of an issue of covered bonds and in tap issues if the final
day of the initial placement is not fixed.
(6) The regulated market operator has the right to specify
additional requirements and more stringent criteria for the
inclusion of bonds and other debt securities on the official
list.
[15 June 2006; 13 January 2011; 19 September 2013; 21 June
2018; 27 May 2021]
Section 44. Contents of a
Prospectus
[12 December 2019]
Section 44.1 Preparation
and Registration of a Base Prospectus
(1) [12 December 2019]
(2) The base prospectus shall be registered with Latvijas
Banka in accordance with the requirements of Section 48 of this
Law.
(3) [12 December 2019]
(4) [12 December 2019]
[11 June 2015; 12 December 2019; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 44.2
Incorporation of Information by Reference
[12 December 2019]
Section 44.3 Prospectus
Consisting of Separate Documents
[12 December 2019]
Section 45. Supplements to a
Prospectus
[12 December 2019]
Section 46. Liability for
Information Included in a Prospectus
(1) A prospectus shall be approved by the meeting of
shareholders (members) of the issuer or by an authorised
administrative body or its official.
(2) The administrative body of the issuer or a person asking
for the admission of the transferable securities on the regulated
market and a guarantor (if any) shall be responsible for the
content of the prospectus.
(3) The given name, surname, and position of persons
responsible for veracity of the information included in the
prospectus or the name, registered office, and registration
number of legal persons shall be indicated in the prospectus. The
prospectus shall also include a notification by such person
stating that, according to the information available to this
person, the information included in the prospectus conforms to
actual circumstances, and also that no facts have been concealed
which may affect the meaning of the information included in the
prospectus.
(4) If a person is not responsible for all of the information
included in a prospectus, the prospectus shall specify the part
for which the relevant person is responsible.
(5) By bringing an action to a court according to general
procedures, the investor may claim for damages from the persons
indicated in the prospectus who are responsible for veracity of
the information included therein, provided that the issuer has
incurred losses due to false or incomplete information having
been included in the prospectus.
(6) An investor may not request compensation for losses from
the responsible persons indicated in the prospectus, if he or she
has made his or her choice only on the basis of a summary note or
translation thereof, except for cases when the summary note is
misleading, is in contradiction with other parts of the
prospectus or if it together with other parts of the prospectus
does not provide key information which allows for the investor to
decide on acquisition of securities.
[22 March 2012; 23 September 2021]
Section 47. Derogations from the
Obligation of Preparing a Prospectus
[12 December 2019]
Section 48. Registration of a
Prospectus
(1) A prospectus shall be registered by Latvijas Banka. In
order to register a prospectus, an issuer or a person asking for
the admission of transferable securities to trading on the
regulated market shall submit a submission to Latvijas Banka to
which the following shall be appended:
1) two originals of the prospectus and the text of the
prospectus in electronic form;
2) the decision of an administrative body authorised by the
issuer to admit the relevant transferable securities to trading
on the regulated market;
3) [22 March 2012].
(11) [26 May 2016]
(2) The submission shall specify:
1) the registration number, place and institution, firm name,
registered office, telephone number, and also e-mail address (if
any) of the issuer;
2) the class, category, and total amount of transferable
securities to be admitted for trading on the regulated market and
the denomination of one transferable security;
3) the firm name, registered office, telephone number, and
also e-mail address (if any) and the name of the regulated market
in which the issuer or a person asking for admission of
transferable securities to trading on a regulated market wishes
to admit transferable securities;
4) countries where transferable securities will be admitted to
trading on a regulated market.
(3) [12 December 2019]
(4) [12 December 2019]
(5) [12 December 2019]
(6) The decision to register a prospectus or to refuse to
register it shall be issued to the issuer or to a person who is
asking for the admission of transferable securities to trading on
the regulated market and has submitted a submission to Latvijas
Banka for the registration of the prospectus.
(7) [12 December 2019]
[4 October 2007; 22 March 2012; 26 May 2016; 21 June 2018;
12 December 2019; 23 September 2021 / Amendment regarding
the replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 48.1 Validity of
a Prospectus, Base Prospectus, and Registration Document
[12 December 2019]
Section 49. Procedures for the
Mutual Recognition and Notification of a Prospectus
[12 December 2019]
Section 49.1 Use of
Languages
[12 December 2019]
Section 49.2 Recognition
of Prospectuses Prepared by Issuers Registered in Foreign
Countries
[12 December 2019]
Section 50. Examination of a
Submission Regarding Admission of Financial Instruments to
Trading on a Regulated Market
(1) An issuer or a person asking the admission of transferable
securities to trading on a regulated market shall submit a
submission to the relevant regulated market operator for the
admission of financial instruments to trading on a regulated
market not later than three months after registration of the
prospectus with Latvijas Banka.
(2) The regulated market operator shall take the decision to
admit the financial instruments to trading on a regulated market
within 10 days from the day on which the issuer or a person
asking the admission of transferable securities to trading on the
regulated market submits a submission. Within the abovementioned
time period, the regulated market operator has the right to
require from the issuer or a person asking the admission of the
transferable securities to trading on a regulated market
additional information in conformity with the provisions
regarding activities of the relevant regulated market. In such
case the 10-day time period shall be calculated from the day on
which the additional information is submitted to the regulated
market operator.
(3) The regulated market operator shall take the decision to
include the transferable securities of an issuer registered in a
Member State to trading on a regulated market only after the
prospectus has been registered with Latvijas Banka or the
regulated market operator has received a certification of the
supervisory authority of the relevant Member State or regulated
market operator for the registration of the prospectus.
(4) The decision of the regulated market operator to refuse to
admit the financial instruments to trading on a regulated market
may be appealed to Latvijas Banka within 30 days from the date of
receipt of the decision.
(5) A regulated market operator shall provide the following
information in the decision to admit a financial instrument
(except for investment fund units or alternative investment
funds) to trading on a regulated market:
1) the date on which a prospectus is registered with Latvijas
Banka (if in accordance with the law an issuer or a person asking
admission of transferable securities to trading on a regulated
market has an obligation to draw up a prospectus);
2) the firm name and registered office of the issuer;
3) the place of registration and number of the issuer;
4) the class, category, denomination of financial instruments
and amount of issue.
(6) The following information shall be provided in the
decision to admit an investment fund units or alternative
investment funds to trading on a regulated market:
1) the date on which the investment fund or alternative
investment fund is registered with Latvijas Banka;
2) the type and name of the investment fund or alternative
investment fund;
3) the firm name and registered office of the company managing
investment funds or of the manager of alternative investment
funds;
4) the number of investment fund units issued by the
investment fund or alternative investment fund, the value of the
share of the investment fund (for opened funds), or the
denomination (for a closed fund) on the day of taking of the
decision.
(7) The decision to admit transferable securities of an issuer
registered in another Member State to trading on a regulated
market shall, in addition, specify the firm name, registered
office, telephone number, and address of the website of the
responsible institution or the regulated market operator which
has taken the decision to register the prospectus.
(8) The regulated market operator shall, without delay, send
the decision to admit financial instruments to trading on a
regulated market to the issuer or person asking for the admission
of transferable securities to trading on a regulated market, and
the central securities depository which ensures settlement for
the transactions concluded on the regulated market.
[9 July 2013; 26 May 2016; 14 September 2017; 21 June 2018;
23 September 2021 / Amendment regarding the replacement of
the word "Commission" with the words "Latvijas Banka" shall come
into force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 51. Procedures for the
Distribution of a Prospectus
[12 December 2019]
Section 52. Advertising of
Transferable Securities to be Admitted to Trading on a Regulated
Market
[12 December 2019]
Section 53. Commencement of Trade in
Financial Instruments
(1) Trade in transferable securities in a regulated market may
be commenced not sooner than three days following the placing of
the prospectus on the website of the relevant regulated market
operator.
(2) Trade in financial instruments in a regulated market may
be commenced only following the entry thereof in the accounts of
the central securities depository.
(3) [14 September 2017]
[14 September 2017; 21 June 2018]
Section 54. Obligations of a Capital
Company Transferable Securities of which are Admitted to Trading
on a Regulated Market
(1) The administrative bodies of a capital company shall
ensure equal treatment of all persons possessing transferable
securities of the same class and category.
(11) Paragraphs two, 2.1, six, and
twelve of this Section shall apply to a capital company the
shares of which are admitted to trading on a regulated
market.
(12) [16 June 2022]
(2) In order for shareholders to exercise their rights, the
executive board of the joint-stock company shall ensure that all
information is available to shareholders of such company and the
data provided are true. The executive board of the joint-stock
company shall ensure at least the following information on:
1) place, time, and agenda of the meeting of shareholders, the
total number of shares with voting rights, and the right of
shareholders to participate in the meeting of shareholders. The
executive board of the joint-stock company shall provide to
shareholders a form of the power of attorney together with a
notification on convening the meeting of shareholders;
2) granting and disbursement of dividends;
3) issue of new shares, including information on the
procedures for granting of shares, subscribing for these shares,
conversion of shares, and also for waiving these shares, if the
provisions of issue provide for the possibilities of exercising
the pre-emptive rights;
4) the selected depository or an institution comparable
thereto through the intermediation of which persons owning the
shares may exercise their rights;
5) any changes in rights included in the different categories
of shares of such company, including derivative financial
instruments which ensure access to the issuer's shares. The
information referred to in this Clause shall be provided
immediately.
(21) A notification on convening the meeting of
shareholders shall be distributed in accordance with the
requirements laid down in Section 64.2 of this
Law.
(22) In order to take the decision to increase the
equity capital, the meeting of the shareholders of the credit
institution or investment firm may decide by majority of votes of
two thirds of the present shareholders that a notification on
convening the meeting of shareholders is distributed later than
30 days before the meeting, or may decide on amendments to the
articles of association providing that a notification on
convening the meeting of shareholders is distributed later than
30 days before the meeting if concurrently the following
conditions exist:
1) the relevant meeting of shareholders takes place not
earlier than on the tenth calendar day after convening
thereof;
2) early intervention measures indicated in the Law on
Recovery and Resolution of Credit Institutions and Investment
Firms are implemented or an authorised person is appointed for a
credit institution or investment firm;
3) increase of share capital is necessary in order for
resolution conditions not to set in.
(3) In order for persons who own debt securities to be able to
exercise their rights, the executive board of the capital company
debt securities of which are admitted to trading on a regulated
market, shall ensure that all information is available in the
home Member State of the company and the data provided are true.
The executive board of the capital company shall provide at least
the following information on:
1) the place, time, and agenda of the meeting of those persons
who own debt securities, and on the rights of such persons to
participate in the meeting. The executive board of the capital
company shall provide to each person who owns debt securities and
who is entitled to vote in the meeting of such persons a form of
the power of attorney (in printed form or, if possible, in
electronic form) together with a notification on the meeting, and
also ensure that the form of the power of attorney is available
also after the notification on the meeting is provided;
2) payments of interest;
3) any issue of new debt securities, including information on
the procedures for subscribing for the newly issued debt
securities, and also the procedures for waiving these securities,
if the provisions of the issue provide for the possibilities of
exercising the pre-emptive rights;
4) provisions regarding the conversion and exchange, and also
repayment of debt securities;
5) the selected depository or institution comparable thereto
through which persons owning debt securities may exercise their
rights;
6) any changes in rights included in the different categories
of debt securities of such capital company, including changes in
the provisions which can indirectly affect the abovementioned
rights, especially those arising from the changes in loan
provisions or interest rates.
(4) A regulated market operator is entitled to determine
additional requirements to be taken into account by a capital
company the transferable securities of which are admitted on the
official list of a regulated market operator or in other market
regulated by the regulated market operator, taking into account
the requirements of Section 3.3 of this Law.
(5) The executive board of a capital company shall distribute
the information specified in Paragraphs two and three of this
Section in accordance with the requirements laid down in Section
64.2 of this Law.
(6) At least 14 days before the meeting of shareholders, the
executive board of a capital company or the person who, in
accordance with the law, is entitled to convene and who convenes
the meeting, shall in accordance with the procedures laid down in
Section 64.2 of this Law send draft decisions to be
taken in the agenda issues of the meeting of shareholders to the
official centralised storage system of regulated information
(hereinafter - the official storage system). The joint-stock
company shall, upon receipt of the draft decisions submitted by
shareholders, immediately post them in the official storage
system. If it is not intended to take a decision on the
additional issue of the agenda proposed by shareholders,
information on additional issue of the agenda included in the
agenda of the meeting of shareholders and explanation regarding
inclusion thereof in the agenda shall be posted in the official
storage system.
(7) The capital company debt securities of which are admitted
to trading on a regulated market shall, without delay, disclose
the information on issue of new debt securities and guarantees or
securities related thereto. The requirements of this Paragraph
shall not apply to a body governed by public law the member of
which is at least one Member State.
(8) A capital company may send the information referred to in
Paragraphs two and three of this Section to shareholders or
persons owning debt securities, by using electronic means, if a
decision thereon is taken at the meeting of shareholders and the
following requirements are met:
1) such electronic means are used, which may be used by
shareholders or persons who have indirectly obtained holding in
the capital company, or persons owning debt securities,
regardless of their country of registration or place of
residence;
2) the procedures are laid down by which a capital company
shall ensure that information is received by shareholders or
persons who are entitled to exercise the voting rights, or by
persons owning debt securities;
3) a written request is sent to shareholders or persons who
have indirectly obtained holding in the capital company, who have
the right to obtain, dispose of or exercise voting rights, and to
persons owning debt securities, in order to receive a consent of
such persons in respect of the use of electronic means for
sending of information. If the capital company does not receive
refusal within 30 days, it is regarded that the abovementioned
persons have agreed. A consent does not prohibit a shareholder to
request at any time that information is sent in writing;
4) expenses of sending information through electronic means
are shared equally by all persons owning transferable securities
of one class and category.
(9) In cases when only such persons owning transferable
securities the denomination of one unit of which is at least EUR
100 000, or, if the value of transferable securities is expressed
in another currency, other than euro, the denomination of one
unit of which is an equivalent of EUR 100 000, are invited to the
meeting, the issuer has the right to select any Member State as
the place of the meeting provided that all the necessary
information is available in the Member State to persons owning
debt securities.
(91) The provisions of Paragraph nine of this
Section regarding selection of the place of the meeting of
shareholders shall apply also to those persons owning
transferable securities the denomination of one unit of which is
at least EUR 50 000, or, if the value of debt securities is
expressed in another currency, other than euro, the denomination
of one unit of which is an equivalent of at least EUR 50 000, and
such securities are admitted to trading on a regulated market in
the European Union before 31 December 2010 until the day when
such securities are deleted. Such provisions shall be in effect,
if all the necessary information is available in the Member State
selected by the issuer to persons owning the abovementioned debt
securities.
(10) [16 June 2022]
(11) [16 June 2022]
(12) The joint-stock company shall, immediately after the
meeting of the shareholders in accordance with the procedures
laid down in Section 64.2 of this Law, distribute
information on the decisions taken at the meeting of
shareholders.
(13) [16 June 2022]
[29 March 2007; 22 May 2008; 26 February 2009; 15 October
2009; 13 January 2011; 22 March 2012; 9 July 2013; 19 September
2013; 11 June 2015; 26 May 2016; 15 December 2016; 21 September
2017; 14 September 2017; 21 June 2018; 20 June 2019; 16 June
2022]
Section 54.1 Audit
Committee
[15 December 2016]
Section 54.2 Procedures
for Submitting Draft Decisions on Issues Included in the Agenda
of the Meeting of Shareholders and Proposed Additional Issues
[16 June 2022]
Section 54.3
Participation of a Shareholder in a Meeting of Shareholders
[16 June 2022]
Section 54.4 Appointing
and Revoking of Representatives of Shareholders by Using
Electronic Means
[16 June 2022]
Section 54.5 Procedures
for Settlement of Disputes
[16 June 2022]
Section 54.6 Special
Provisions for a Joint-stock Company the Shares of Which Are
Admitted to Trading on a Regulated Market in Respect of the
Drawing up of Documents for the Election of Members of Executive
and Supervisory Boards
(1) If a shareholder or a group of shareholders submits a
proposal for one or several candidates for the member of the
supervisory board nominated thereby, the joint-stock company
shall register the proposals received from the shareholder or
group of shareholders, indicating information on the shareholder
or shareholders who submit the proposal, and information on each
candidate for the member of the supervisory board nominated. The
proposal received should be registered regardless of whether this
information has been received in a written or oral form, and
regardless of how many days before the meeting of shareholders
taking place it has been received.
(2) If members of the supervisory board of a joint-stock
company are elected in the meeting of shareholders, the
joint-stock company has an obligation to ensure that at least the
following information is indicated in the minutes of the meeting
of shareholders:
1) information which identifies each shareholder or the
shareholder in the group of shareholders who has nominated the
particular candidate for the member of the supervisory board. The
abovementioned information shall also be indicated in the case if
the candidate for the member of the supervisory board nominated
by the relevant shareholder or group of shareholders is not
elected in the supervisory board of the joint-stock company;
2) information on the vote given by each shareholder "for" or
"against" electing of the member of the supervisory board;
3) information on the number of votes given for each candidate
for the member of the supervisory board and on shareholders who
voted for the relevant candidate, indicating also the number of
votes given by each shareholder for each candidate for the member
of the supervisory board.
(3) If members of the executive board of the joint-stock
company are elected in the meeting of the supervisory board of
the joint-stock company, the joint-stock company has an
obligation to ensure that in addition to the requirements laid
down in the Commercial Law at least the following information is
indicated in the minutes of the meeting of the supervisory board
of the joint-stock company:
1) information which identifies each member of the supervisory
board who has nominated the particular candidate for the member
of the executive board. The abovementioned information shall also
be indicated in the case if the candidate for the member of the
executive board nominated by the relevant member of the
supervisory board is not elected in the executive board of the
joint-stock company;
2) information on the vote given by each member of the
supervisory board "for" or "against" electing the members of the
executive board;
3) information on the number of votes given for each candidate
for the member of the executive board, indicating members of the
supervisory board who voted for the relevant candidate.
[26 May 2016; 16 June 2022]
Section 55. Suspension of Trade in
Financial Instruments and Removal Thereof from a Regulated
Market
(1) A regulated market operator has the right to suspend trade
in financial instruments or to remove financial instruments from
a regulated market, except when such suspension or removal would
be likely to cause significant damage to the investors' interests
or the orderly functioning of the market, if the issuer does not
fulfil the requirements of the laws and regulations governing the
financial instrument market regarding disclosing of the minimum
information or the requirements of the provisions issued by the
regulated market operator in accordance with Section 28 of this
Law, or also the condition of the issuer has reached a point
where it endangers the interests of investors.
(11) If a regulated market operator takes the
decision to suspend trade in a financial instrument or to remove
a financial instrument from a regulated market, it shall
concurrently also decide on suspension of trade in or removal
from a regulated market of such derivatives referred to in
Section 3, Paragraph two, Clauses 4, 5, 6, 7, 8, 9, and 10 of
this Law which are related to the relevant financial instrument
or are referenced to that financial instrument where necessary to
support the achievement of the objectives of the suspension or
removal of the abovementioned financial instrument.
(2) A complaint may be submitted regarding the decision of a
regulated market operator to suspend trade in financial
instruments or to remove financial instruments from a regulated
market to Latvijas Banka within 30 days from the date of receipt
of the decision.
(3) [31 March 2022]
(4) Financial instruments may be removed from a regulated
market on the basis of a submission which is received from an
issuer or person asking for the admission of transferable
securities on a regulated market.
(5) A regulated market operator shall, without delay, publish
a decision to suspend trade in a financial instrument or to
remove any financial instrument related thereto from a regulated
market and inform Latvijas Banka of taking such decision.
(51) If trade in a financial instrument and any
derivative related thereto is suspended or they are removed from
a regulated market, Latvijas Banka shall request suspension of
trade in financial instruments or removal from a trading venue
also in other regulated markets, MT facilities, OT facilities,
and systematic internalisers in the Republic of Latvia where the
same financial instruments and the derivatives referred to in
Section 3, Paragraph two, Clauses 4, 5, 6, 7, 8, 9, and 10 of
this Law which are related to the relevant financial instrument
or are referenced are being traded if the suspension or removal
is due to suspected market abuse, a take-over bid, or the
non-disclosure of inside information on the issuer or financial
instrument infringing Articles 7 and 17 of Regulation No
596/2014, except for the case when such suspension or removal
could cause significant damage to the investors' interests or the
orderly functioning of the market.
(52) If, in accordance with that laid down in this
Section, Latvijas Banka has received information on the decision
of a regulated market operator to suspend trade in a financial
instrument or to remove it from the regulated market thereof or
if Latvijas Banka itself has taken such decision, it shall
publish the decision and inform the European Securities and
Markets Authority and the supervisory authorities of other Member
States. If, in accordance with Paragraph 5.1 of this
Section, Latvijas Banka has taken the decision not to request
that trade is suspended or a financial instrument or the
derivative which is referred to in Section 3, Paragraph two,
Clauses 4, 5, 6, 7, 8, 9, and 10 of this Law and which is related
to or is referenced to the abovementioned financial instrument is
removed from a trading venue, it shall send information to the
European Securities and Markets Authority and the supervisory
authorities of other Member States and append a relevant
explanation.
(53) If Latvijas Banka has received information
from the supervisory authority of another Member State on
suspension of trade in a financial instrument or removal thereof
from a regulated market, Latvijas Banka shall request suspension
of trade in financial instruments or removal from a trading venue
also in other regulated markets, MT facilities, OT facilities,
and systematic internalisers in the Republic of Latvia where the
same financial instruments and the derivatives referred to in
Section 3, Paragraph two, Clauses 4, 5, 6, 7, 8, 9, and 10 of
this Law which are related to the relevant financial instrument
or are referenced are being traded if the suspension or removal
is due to suspected market abuse, a take-over bid, or the
non-disclosure of inside information on the issuer or financial
instrument infringing Articles 7 and 17 of Regulation No
596/2014, except for the case where such suspension or removal
could cause significant damage to the investors' interests or the
orderly functioning of the market.
(54) More detailed requirements for the application
of this Section shall be determined by Commission Delegated
Regulation (EU) 2017/569 of 24 May 2016 supplementing Directive
2014/65/EU of the European Parliament and of the Council with
regard to regulatory technical standards for the suspension and
removal of financial instruments from trading (hereinafter -
Regulation No 2017/569), Commission Implementing Regulation (EU)
2017/1005 of 15 June 2017 laying down implementing technical
standards with regard to the format and timing of the
communications and the publication of the suspension and removal
of financial instruments pursuant to Directive 2014/65/EU of the
European Parliament and of the Council on markets in financial
instruments (hereinafter - Regulation No 2017/1005), and
Regulation No 2017/565.
(6) If shares of a joint-stock company or debt securities of a
capital company are removed from a regulated market due to the
fault of the regulated market issuer because the issuer has not
fulfilled the provisions of this Law or of the regulated market
operator, the disputes related to the decision to remove shares
or debt securities from a regulated market between shareholders
and the joint-stock company or between persons to whom debt
securities belong and the capital company shall be settled in
accordance with the procedures laid down in laws and
regulations.
[26 May 2016; 21 September 2017; 21 June 2018; 20 June
2019; 31 March 2022; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 55.1 Rights of
Latvijas Banka
(1) In order to ensure compliance with the provisions of this
Chapter, in addition to the rights laid down in the Law on
Latvijas Banka and in this Law, Latvijas Banka has the following
rights:
1) to require persons asking for admission of transferable
securities to trading on a regulated market to include
supplementary information in the prospectus, if necessary for
investor protection;
2) to require persons asking for admission of transferable
securities to trading on a regulated market and the persons that
control them or are controlled by them, to provide information
and documents necessary for the performance of the functions of
Latvijas Banka;
3) to require the auditors and managers of those persons
asking for admission of transferable securities to trading on a
regulated market, and also their financial intermediaries
commissioned to ask for admission of transferable securities to
trading on a regulated market, to provide information and
documents necessary for the performance of the functions of
Latvijas Banka;
4) to suspend commencement of trading in transferable
securities or trading thereof for a period of up to 10 working
days if Latvijas Banka has lawful basis to consider that the
requirements of Division D, Chapter II of this Law are or may be
violated;
5) to prohibit or suspend advertisements on the trading of
shares for a period of up to 10 working days if Latvijas Banka
has the basis to consider that the requirements of Division D,
Chapter II of this Law have been violated;
6) to prohibit an offer of securities to the public if
Latvijas Banka establishes that the requirements of Division D,
Chapter II of this Law are violated, or if Latvijas Banka has the
basis to consider that they may be violated;
7) to suspend or to ask the relevant regulated markets to
suspend trading on a regulated market for a period of up to 10
working days if Latvijas Banka has lawful basis to consider that
the requirements of Division D, Chapter II of this Law are or may
be violated;
8) to prohibit trading on a regulated market if Latvijas Banka
establishes that the requirements of Division D, Chapter II of
this Law have been violated;
9) to make public the fact that an issuer is failing to
perform its obligations;
10) to suspend examination of the prospectus submitted for
registration or to suspend or restrict the permit to trade on a
regulated market if Latvijas Banka is exercising the powers to
impose a prohibition or restriction in conformity with Article 42
of Regulation No 600/2014 until revocation of such prohibition or
restriction;
11) to refuse to register, for a time period of up to five
years, a prospectus which has been prepared by the particular
person requesting to admit transferable securities to trading on
a regulated market, if the abovementioned person has repeatedly
violated the provisions of this Law and Regulation No
2017/1129.
(2) After the transferable securities have been admitted to
trading on a regulated market, Latvijas Banka has the right
to:
1) require the issuer to disclose all the substantial
information which may have an impact on assessment of securities
admitted to trading on a regulated market and thus to ensure
investor protection or smooth operation of the market;
2) remove or request the relevant regulated market operator to
remove the transferable securities from a regulated market if the
situation of the issuer is such that trading would be detrimental
to the interests of investors;
3) perform supervision in order to ensure that issuers whose
transferable securities are admitted to trading on a regulated
market comply with the obligations provided for in laws and
regulations, that equivalent information is provided to all
investors and equivalent treatment is granted by the issuer to
all holders of securities who are in the same position, in all
Member States where the offer of securities to the public is made
or the transferable securities are admitted to trading on a
regulated market;
4) carry out inspections to verify conformity with the
requirements of Division D, Chapter II of this Law, and also,
where necessary in accordance with the requirements of the laws
and regulations, apply to the relevant judicial authority or
cooperate with other authorities.
(3) [12 December 2019]
(4) [12 December 2019]
(5) Latvijas Banka has the right to publish the information on
the supervisory measures taken and the sanctions and
administrative measures imposed on an issuer or person asking for
admission of transferable securities to trading on a regulated
market regarding violations of the requirements of the laws and
regulations, except for the cases when disclosure of such
information may cause serious disorders in the financial market
or cause incommensurate damage to the persons involved.
[22 March 2012; 26 May 2016; 12 December 2019; 23 September
2021 / Amendment regarding the replacement of the words "Law on
the Financial and Capital Market Commission" with the words "Law
on Latvijas Banka" and amendment regarding the replacement of the
word "Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Chapter II.1
Audit
Committee
[15 December 2016]
Section 55.2 General
Requirements for the Audit Committee
(1) A capital company the transferable securities of which are
admitted to trading on a regulated market (hereinafter in this
Chapter - the capital company) shall establish an audit
committee. The audit committee shall operate in accordance with
the requirements laid down in this Law and Regulation No
537/2014.
(2) The capital company shall ensure the financial and other
resources necessary for the operation of the audit committee, and
also the information requested by such committee which is
necessary thereto for the performance of its tasks.
[15 December 2016]
Section 55.3 Tasks of the
Audit Committee
(1) The audit committee has the following tasks:
1) to supervise the annual statement of the capital company
and, if the capital company is preparing a consolidated annual
statement - the preparation process of the consolidated annual
statement, and to provide proposals to the supervisory board of
the capital company, but if there is no supervisory board in the
capital company - to its meeting of shareholders (members) for
ensuring the credibility and objectivity of the annual statement
and consolidated annual statement;
2) to supervise the efficiency of operation of the internal
control, risk management, and internal audit system of the
capital company insofar as it applies to ensuring the credibility
and objectivity of annual statements and consolidated annual
statements, and to provide proposals for eliminating deficiencies
of the relevant system;
3) to supervise the course of audit (check) of the annual
statement of the capital company and, if the capital company is
preparing a consolidated annual statement - of the consolidated
annual statement. In order to supervise the course of the audit
(check) referred to in this Paragraph, the audit committee shall
take into account the conclusions drawn in the check (inspection)
of conformity with the quality control requirements of audit
services performed by the Ministry of Finance (as the competent
authority in accordance with the Audit Services Law) and
published on the website of the Ministry of Finance regarding
quality of professional activities of the sworn auditor or
commercial company of sworn auditors appointed by the capital
company (hereinafter also - the sworn auditor);
4) to check and supervise whether the sworn auditor appointed
by the capital company, prior to commencing the audit (check) of
the annual statement of the capital company and, if the capital
company is preparing a consolidated annual statement - prior to
commencing the audit (check) of the consolidated annual
statement, and during it complies with the requirements for
independence and objectivity laid down in the Audit Services Law,
with the provisions of Article 6 of Regulation No 537/2014
regarding preparation for the performance of the abovementioned
audit (check) and assessment of threats to independence, and the
prohibitions of the provision of non-audit services specified in
Article 5 of this Regulation;
5) to inform the supervisory board of the capital company, but
if there is no supervisory board in the capital company - its
meeting of shareholders (members), of the conclusions drawn by
the sworn auditor in the audit (check) of the annual statement of
the capital company and if the capital company is preparing a
consolidated annual statement - in the audit (check) of the
consolidated annual statement, and to provide an opinion on how
this audit (check) has promoted the credibility and objectivity
of the annual statement and consolidated annual statement
prepared by the capital company, and also to inform of the
significance of the audit committee in this process;
6) to ensure the selection process of candidates for sworn
auditors in the capital company in accordance with Article 16 of
Regulation No 537/2014 and to recommend to the meeting of
shareholders (members) of the capital company a candidate for a
sworn auditor for the provision of audit services, except for
cases when in accordance with Article 16(8) of the abovementioned
Regulation the meeting of shareholders (members) of the capital
company has established another structure the task of which is to
provide a recommendation to the meeting of shareholders (members)
of the capital company for selecting the sworn auditor of the
capital company.
(2) The audit committee shall perform also the tasks specified
for the audit committee in Regulation No 537/2014.
[15 December 2016]
Section 55.4 Rights of
the Audit Committee
(1) In addition to the rights specified in Regulation No
537/2014 the audit committee has the following rights:
1) to request and receive information and documents from the
executive board of the capital company and the sworn auditor, and
also from the internal audit service, the auditor for the
performance of internal audit, or the controller of the capital
company (if any) which are necessary so that the audit committee
could perform the tasks specified in this Law and Regulation No
537/2014;
2) to participate in meetings of shareholders (members) of the
capital company;
3) to provide an opinion and reports to the meeting of
shareholders (members) and the supervisory board (if such has
been established) on the issues within the competence of the
audit committee.
(2) The institutions, units, and persons referred to in
Paragraph one, Clause 1 of this Section have an obligation to
provide information to the audit committee or its members which
is necessary for the performance of the tasks of such committee,
if the particular information requested by the audit committee is
related to the performance of the tasks of such committee.
(3) The audit committee shall independently take decisions in
relation to the tasks specified thereto in Section
55.3 of this Law and in Regulation No 537/2014.
[15 December 2016]
Section 55.5 Additional
Tasks of the Audit Committee and Actions of Administrative Bodies
of the Capital Company in Relation to the Annual Report of the
Audit Committee
(1) In addition to the tasks specified in Section
55.3 of this Law the audit committee shall also
perform the following tasks:
1) not less than once a year shall provide a written report to
the supervisory board of the capital company, but if there is no
supervisory board in the capital company - to its meeting of
shareholders (members), on its activities and the carrying out of
the tasks specified for such committee (hereinafter - the annual
report of the audit committee);
2) notify the supervisory board of the capital company, but if
there is no supervisory board in the capital company - its
meeting of shareholders (members), of the deficiencies and
violations found (if any) in the preparation and audit (check)
process of the annual statement and consolidated annual statement
of the capital company, and also in efficiency of the internal
control, risk management, and internal audit system in relation
to ensuring the quality of such reports;
3) without delay notify the capital company, if it is detected
that qualification or professional experience of the sworn
auditor is not sufficient for the performance of an audit (check)
of good quality or that the sworn auditor has not complied with
the requirements for independence laid down in the Audit Services
Law.
(2) If the capital company has a supervisory board, it shall
also include its evaluation on activities of the audit committee
in its report to the meeting of shareholders (members) of the
capital company which is prepared by the supervisory board in
accordance with Section 175 of the Commercial Law, and also
append the annual report of the audit committee to this
report.
(3) If the capital company does not have a supervisory board,
the annual report of the audit committee shall be examined at
such meeting of shareholders (members) in the agenda of which
approval of such annual statement and consolidated annual
statement (if such is prepared) of the capital company is planned
regarding which the annual report of the audit committee is
submitted.
(4) The supervisory board of the capital company, but if the
capital company does not have a supervisory board - its meeting
of shareholders (members) has an obligation, as an honest and
diligent master, to evaluate the annual report of the audit
committee and to take a decision on further action.
[15 December 2016]
Section 55.6 Composition
and Structure of the Audit Committee
(1) The audit committee is a collegial body which is elected
in a meeting of shareholders (members) of the capital company and
which consists of at least three members from which at least one
person is the member of the supervisory board (if such has been
established) of the capital company and others are other members
elected to the meeting of shareholders (members) of the capital
company.
(2) The audit committee shall be objective and independent in
its activities and decision-making. A member of the audit
committee shall perform his obligations in good faith and shall
not endanger the independence of the audit committee.
(3) The majority of members of the audit committee shall be
independent. A member of the audit committee is independent, if
none of the following circumstances apply to him or her:
1) participation (exceeding 20 per cent of capital shares or
shares with voting rights) in a capital company or the commercial
company controlled thereby (in a subsidiary);
2) employment relationships with the capital company currently
exist or have existed within the last three years;
3) marriage, kinship, or affinity up to the second degree with
a member of the executive board or shareholder (member) of the
capital company whose participation in the capital company is not
less than 20 per cent;
4) other personal or financial interest which could endanger
his independence and which are recognised as such by the meeting
of shareholders (members) of the capital company.
(4) Only a natural person with capacity to act who has an
impeccable reputation and has not been revoked the right to
conduct commercial activity may be a member of the audit
committee. A person has an impeccable reputation, if none of the
following circumstances apply to him:
1) the person has been recognised guilty of committing an
intentional criminal offence with such court judgment or
prosecutor's penal order which has entered into effect and has
been become indisputable (regardless of setting aside or
extinguishing the criminal record);
2) the person has been held criminally liable for committing
an intentional criminal offence, however, a decision has been
taken to terminate the criminal proceedings for reasons other
than exoneration.
(5) The following persons may not be a member of the audit
committee:
1) a member of the executive board of the capital company, a
sworn auditor which provides audit services to the capital
company or has provided such service thereto within the last
three years prior to applying for the position of a member of the
audit committee, a procuration holder of the capital company, or
a franchisee;
2) a member of the executive board of the controlled
commercial company (subsidiary) of the capital company or another
person who has the right to represent this controlled commercial
company (subsidiary).
(6) The member of the audit committee may not assign the
performance of his obligations to another person.
(7) The majority of members of the audit committee shall have
knowledge in the field of operation of the capital company. At
least one member of the audit committee shall have higher
education in the field of economy, management, or finances and
not less than three years of corresponding professional
experience in preparation of an annual statement and consolidated
annual statement or performance of audit (check) of such
statements, or also the relevant member of the audit committee is
a sworn auditor.
(8) Additional restrictions may be intended in the articles of
association of the capital company for a member of the audit
committee.
[15 December 2016]
Section 55.7 Election and
Removal of Members of the Audit Committee
(1) The audit committee is elected at a meeting of
shareholders (members) of a capital company for a time period not
exceeding three years. A shorter time period for the operation
(term of office) of the audit committee may be determined in the
articles of association of the capital company.
(2) A person who has applied for the position of a member of
the audit committee shall certify in writing his consent to
holding the position of a member of the audit committee and
indicate that none of the restrictive circumstances referred to
in Section 55.6, Paragraphs four and five of this Law
and the restrictive circumstances additionally specified in the
articles of association of the capital company (if any) which
would preclude the person from holding the position of a member
of the audit committee, exist in relation to such person. A
candidate for the position of a member of the audit committee
which is nominated as the independent member of the audit
committee, shall additionally certify in writing that none of the
circumstances referred to in Section 55.6, Paragraph
three of this Law apply to him.
(3) A shareholder of a capital company or a group of
shareholders which holds not less than five per cent of the
voting capital, has the right to nominate one candidate for the
position of a member of the audit committee. Each candidate
nominated for the position of a member of the audit committee
shall be included in the election list of members of the audit
committee.
(4) Voting shall take place for all the candidates for members
of the audit committee included in the list in one voting, and
all shareholders (members) shall vote at the same time. A
shareholder (member) of the capital company has the right to give
all his votes for one or several candidates for members of the
audit committee included in the list in any proportion in whole
numbers.
(5) Such persons shall be deemed as elected to the audit
committee who have obtained the highest number of votes, taking
into account the maximum number of members of the audit committee
specified in the articles association of the capital company. If
two or several candidates for members of the audit committee
receive the same number of votes and therefore it is not possible
to determine which of them is deemed to be elected, the issue
shall be re-examined at the same meeting of shareholders
(members) and decided by a repeat voting of the meeting of
shareholders (members) for each of the candidates who are still
the candidates for the position of a member of the audit
committee. Such candidate shall be deemed elected who receives
the highest number of votes in the repeat voting.
(6) A member of the audit committee may be removed from the
position at any time by a decision of the meeting of shareholders
(members) of the capital company.
(7) A member of the audit committee may leave the position of
the member of the audit committee at any time, notifying the
capital company thereof in writing.
(8) A member of the audit committee shall inform the capital
company of the circumstances which preclude him from continuing
to hold the position of a member of the audit committee or which
endanger his independence, in writing not later than within three
days after finding out about such circumstances. If after receipt
of the written information referred to in the first sentence of
this Paragraph the capital company establishes that the audit
committee does not conform to the requirements of Section
55.6, Paragraph three of this Law anymore, then the
capital company shall ensure that, within three months from the
day when it established the non-conformity of the audit committee
with the requirements of Section 55.6, Paragraph three
of this Law, a meeting of shareholders (members) is convened in
order to take a decision on the necessary changes in the
composition of the audit committee.
(9) If a member of the audit committee leaves the position or
is removed from the position prior to expiry of the operation
(term of office) of the audit committee, the capital company
shall ensure that, within three months from the day when a notice
was received that a member of the audit committee is leaving the
position or from the day from which he is removed from the
position, a meeting of shareholders (members) is convened for the
shareholders (members) of the capital company to decide on
election of a new member of the audit committee and to ensure the
corresponding number of members in the audit committee. Election
of a new member of the audit committee shall take place by
re-electing the whole audit committee. The term of operation
(term of office) of the re-elected audit committee shall start on
the day of its re-election.
(10) A member of the audit committee (except for a member of
the supervisory board elected to the audit committee) may not be
in employment relationship with the capital company. Remuneration
for a member of the audit committee shall be determined by a
meeting of shareholders (members) of the capital company.
(11) A capital company transferable securities of which are
admitted to trading on a regulated market for the first time
shall elect the audit committee at the next meeting of
shareholders (members) which takes places after admission of
transferable securities to trading on a regulated market, unless
an audit committee or a structure equivalent thereto which
conforms to the requirements laid down in this Law for the audit
committee, has already been created for it in accordance with the
requirements of this Law on the day when its transferable
securities are admitted to trading on a regulated market.
[15 December 2016]
Section 55.8 Management
and Meetings of the Audit Committee
(1) The work of the audit committee shall be managed by its
chairperson who is elected by members of the audit committee from
amongst them.
(2) During absence the chairperson of the audit committee
shall be substituted by another member of the audit committee
upon a written instruction drawn up by the former.
(3) Meetings of the audit committee shall take place not less
than three times a year.
(4) Each member of the audit committee, and also the
supervisory board of the capital company (if such has been
established) and the meeting of shareholders (members) of the
capital company have the right to request that a meeting of the
audit committee is convened, justifying the necessity and purpose
for convening the meeting.
[15 December 2016]
Section 55.9 Liability of
a Member of the Audit Committee
(1) If a member of the audit committee is acting illegally,
violates his authorisation or does not comply with legal acts,
articles of association of the capital company or decisions of
the meeting of shareholders (members), or acts in bad faith or in
negligence, he shall be liable for the losses thus caused to the
capital company and other persons.
(2) The capital company may bring a claim against members of
the audit committee in conformity with the procedures laid down
in the Commercial Law in relation to bringing of claims of a
company.
[15 December 2016]
Section 55.10
Requirements for Non-disclosure of Information
(1) A member of the audit committee is prohibited from
disclosing information to the third parties which has been
entrusted or has become known to him in performing the official
duties of the position of a member of the audit committee,
including a commercial secret. A member of the audit committee is
responsible for illegal disclosure of any such information,
including commercial secret which has been received during
performance of his duties and has not been disclosed to the
public.
(2) Upon leaving the position of a member of the audit
committee, a member of the audit committee has an obligation to
transfer all documents (within the meaning of the Law on Legal
Force of Documents) at the disposal of the capital company which
have been transferred at his disposal or which have been prepared
by himself in performing the duties of a member of the audit
committee, and also the information transferred at his disposal
and kept in relation to performance of the abovementioned
obligations (also the one kept in computer or electronic data
carriers). The capital company has an obligation to transfer the
documents and information received from the member of the audit
committee to the audit committee, ensuring invariability of the
content of such documents and information from the time of their
receipt until the time when they are transferred to the audit
committee.
(3) The prohibition referred to in Paragraph one of this
Section shall also apply to a member of the audit committee after
he has left the position of a member of the audit committee.
[15 December 2016]
Section 55.11 Special
Provisions in Relation to the Operation of the Audit
Committee
(1) In a capital company which conforms to the criteria of a
small and medium-sized enterprise, the tasks of the audit
committee may be performed by the supervisory board of the
capital company (if such has been established).
(11) Within the meaning of this Section, a small
and medium-sized merchant is a capital company which, according
to its last available annual statement or consolidated annual
statement, conforms to at least two of the following
criteria:
1) the average number of employees in the financial year is
less than 250;
2) the total sum of the balance sheet (as on the end date of
the reporting period of the statement on financial position) does
not exceed EUR 43 000 000;
3) annual net turnover does not exceed EUR 50 000 000.
(2) The decision on performance of the functions of the audit
committee by the supervisory board of the capital company shall
be taken in a meeting of shareholders (members) of the capital
company. In order to transfer the performance of the functions of
the audit committee to the supervisory board of the capital
company, consent of all members of the supervisory board to
perform also the tasks of the audit committee is necessary.
(21) The capital company in which, in accordance
with Paragraph one of this Section, the performance of the
functions of the audit committee is entrusted to the supervisory
board of the capital company need not apply the term of office of
the audit committee referred to in Section 55.7 of
this Law, entrusting the performance of the functions of the
audit committee to the supervisory board of the capital company
for the whole term of office of the supervisory board.
(3) If the supervisory board of the capital company is
re-elected in such capital company in which the tasks of the
audit committee are performed by the supervisory board of the
capital company, the meeting of shareholders (members) shall,
concurrently with the election of the supervisory board, decide
on the issue whether the tasks of the audit committee may be
entrusted to the newly-elected supervisory board. In such the
consent of all members of the newly-elected supervisory board to
perform also the tasks of the audit committee is necessary. The
information referred to in this Section on consent which has been
received from each member of the supervisory board shall be
recorded in the protocol of the meeting of shareholders (members)
of the capital company.
(31) If election of a member of the supervisory
board takes place in the capital company in accordance with the
procedures laid down in Section 296, Paragraph eleven of the
Commercial Law, consent of the newly-elected member of the
supervisory board to carry out the tasks of the audit committee
shall be required. The information referred to in this Section on
consent which has been received from the newly-elected member of
the supervisory board shall be recorded in the protocol of the
meeting of shareholders (members) of the capital company.
(4) A capital company has the right not the establish an audit
committee, if:
1) it manages an investment fund which is operating in
accordance with the Law on Investment Companies, or an
alternative investment fund which is operating in accordance with
the Law on Alternative Investment Funds and Their Managers;
2) its sole commercial activity is the issue of such
assets-based securities which are specified in Article 2(5) of
Commission Regulation No 809/2004. In such case the capital
company shall publish information on its website that an audit
committee is not established. If the capital company decides that
it is not necessary to transfer the performance of the tasks of
the audit committee to the supervisory body of the capital
company, then the capital company shall also publish information
about it on its website;
3) it is registered in the Republic of Latvia and is operating
in accordance with the laws and regulations of the Republic of
Latvia and if a body similar to an audit committee has already
been established for it which conforms to the requirements of
this Law laid down for the audit committee. In such case the
capital company shall inform the Latvijas Banka in writing of
which institution in the capital company performs the tasks
referred to in Paragraph 55.3 of this Law and of its
personnel;
4) it is a subsidiary of a group of companies (consolidation
group) which is controlled by the parent undertaking, and the
body created at the level of the group of companies
(consolidation group) ensures conformity with the requirements
referred to in Sections 55.2, 55.3, Section
55.4, Paragraph three, Section 55.6,
Paragraphs one, two, three, five, and seven, Section
55.7, Paragraph two, Section 55.8,
Paragraph one, and Section 55.11, Paragraph one, and
also in Articles 11(1) and (2) and 16(5) of Regulation No
537/2014 for the performance of the tasks of the audit committee.
Any subsidiary of a subsidiary of a group of companies
(consolidation group) shall be deemed as the subsidiary of the
parent undertaking of that group of companies (consolidation
group).
[15 December 2016; 21 June 2018; 12 December 2019; 23
September 2021 / Amendment regarding the replacement of
the words "the Financial and Capital Market Commission" with the
words "Latvijas Banka" shall come into force on 1 January 2023.
See Paragraph 73 of Transitional Provisions]
Chapter III
Information to be Provided on a Regular Basis
[29 March 2007]
Section 56. Annual Statement
(1) An annual statement shall consist of:
1) audited financial statements;
2) a management report which is prepared in accordance with
the requirements of the legal acts of the home Member State;
3) statement on the management's responsibility indicating
that on the basis of information at the disposal of the executive
of the capital company financial statements have been drawn up in
accordance with the requirements of the applicable laws and
regulations and give true and fair view of the assets,
liabilities, financial position, and profit or loss of the
capital company and consolidation group, and that the management
report includes fair overview of the development and operating
results of the commercial activities of the capital company and
consolidation group. Key risks of the activity of the capital
company and consolidation group and uncertainties faced thereby
shall also be described therein;
4) corporate governance statement, if the capital company
draws up such statement as a separate part of the annual
statement;
5) non-financial statement, if in accordance with the
requirements of Section 56.3 of this Law the capital
company has an obligation to prepare such statement and it
prepares such statement as a separate document;
6) [31 March 2022].
(2) If the capital company the transferable securities of
which are admitted to trading on a regulated market, prepares a
consolidated annual statement, it shall prepare consolidated
financial statements in accordance with Regulation (EC) No
1606/2002 of the European Parliament and of the Council of 19
July 2002 on the application of international accounting
standards (hereinafter - Regulation No 1606/2002), but financial
statements - in accordance with the requirements of the legal
acts of the home Member State unless the capital company has
chosen to prepare its financial statements in accordance with
Regulation No 1606/2002.
(3) If transferable securities of the capital company are
admitted on the official list in the Republic of Latvia or debt
securities of the capital company are admitted to trading on a
regulated market, it shall prepare its financial statements in
accordance with Regulation No 1606/2002.
(4) If the capital company need not prepare a consolidated
annual statement and its transferable securities are not admitted
on the official list in the Republic of Latvia, it shall prepare
its annual statement in accordance with the requirements of the
legal acts of the home Member State and provisions of the
relevant regulated market operator, unless the capital company
has chosen to prepare its financial statements in accordance with
Regulation No 1606/2002.
(5) The capital company shall distribute an annual statement
and consolidated annual statement together with a report of the
sworn auditor in accordance with the procedures laid down in
Section 64.2 of this Law within four months after the
end of the reporting period, but not later than on the next
working day after the auditor's report on the statement is
provided.
(6) If the annual statement approved by the meeting of
shareholders (members) of the capital company differs from the
annual statement submitted in accordance with the requirements of
Paragraph five of this Section, the capital company shall submit
the approved annual statement on the next day following approval
of the statement in a meeting of shareholders (members).
(7) Financial statements, a management report, and a statement
on the management's responsibility shall be prepared in
accordance with that laid down in Commission Delegated Regulation
(EU) 2019/815 of 17 December 2018 supplementing Directive
2004/109/EC of the European Parliament and of the Council with
regard to regulatory technical standards on the specification of
a single electronic reporting format (hereinafter - Regulation No
2019/815). The components of the annual statement referred to in
Paragraph one, Clauses 4 and 5 of this Section and the report of
the auditor shall be prepared in conformity with that laid down
in Regulation No 2019/815 if the capital company has chosen
so.
[22 May 2008; 26 February 2009; 26 May 2016; 15 December
2016; 20 June 2019; 31 March 2022]
Section 56.1 Information
to be Included Additionally in an Annual Statement
(1) Capital companies the shares of which are admitted to
trading on a regulated market shall additionally indicate the
following in the annual statement:
1) capital structure, categories of shares, the rights and
obligations arising from each category of shares and percentage
thereof from the equity capital, indicating separately the number
of those shares which are not admitted on regulated markets;
2) information on restrictions for disposal of shares or
necessity to receive a consent of the capital company or other
shareholders for disposal of shares;
3) persons which have major holding acquired directly or
indirectly in the capital company, and also a percentage of the
holding of such persons;
4) shareholders having specific control rights and description
of such rights;
5) the manner in which the voting rights arising from shares
of employees will be exercised, if the employees themselves do
not exercise them;
6) restrictions of voting rights in the cases when maximum
amount of voting rights is determined regardless of the number of
owned shares with voting rights, and also the rights of
shareholders to a part of profit which is not related to a
percentage of shares proportionally owned thereby, and other
similar restrictions;
7) agreement of shareholders which are known to the capital
company and which may cause restrictions for transfer of the
shares or voting rights owned by the shareholders to other
persons, and also conditions which provide for prior approval of
such transfer;
8) provisions governing election of members of the executive
board, changes in the composition of the executive board, and
amending the articles of association;
9) authorisation of the members of the executive board,
including authorisation to issue or buy back shares;
10) all other material contracts and their essence which have
been entered into by the capital company and which enter into
effect, are amended or terminated if control in the capital
company changes as a result of a share take-over bid. If
disclosure of such information may harm the capital company,
Latvijas Banka is entitled, upon request of the capital company,
not to disclose such information;
11) all agreements between a capital company and members of
the executive board thereof which provide for compensation in
cases when they resign from their position, they are dismissed
without any justified reason or they are dismissed after a share
take-over bid is made.
(2) The executive board shall also provide a report on the
information referred to in Paragraph one of this Section in a
regular meeting of shareholders.
[22 March 2012; 31 March 2022; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 56.2 Corporate
Governance Statement
(1) The capital company the transferable securities of which
are admitted to trading on a regulated market shall draw up a
corporate governance statement.
(2) In order to provide sufficiently clear, accurate, and
comprehensive information in a corporate governance statement on
the way of governing the capital company, on application of
corporate governance recommendations, and indicators
characterising the capital company, including capital structure
and persons to whom shares belong, the capital company the shares
of which are admitted to trading on a regulated market, shall
include the following information in the abovementioned
statement:
1) reference to recommendations of corporate governance which
are applied by the capital company, or substantial information on
corporate governance practice which is additionally applied to
the abovementioned recommendations;
2) information on where recommendations applied by the capital
company or information on the practice referred to in Clause 1 of
this Paragraph is available to the public;
3) if the capital company does not apply individual principles
included in the corporate governance recommendations - regarding
the non-applied principles, and justification for such action,
providing a sufficiently clear, accurate, and comprehensive
explanation regarding:
a) the reason for non-application in relation to each
particular principle which is not applied, the potential
consequences, and the way in which decision not to apply such
principle is taken;
b) when it is planned to commence the application of the
particular principle, if the decision referred to in Sub-clause
"a" of this Clause applies to a limited period of time;
c) in what way the measure which has been carried out at the
location of application of the particular principle (if any),
achieves the objective of this principle or of corporate
governance recommendations (in which this principle is included),
or promotes good corporate governance in the capital company;
4) if the capital company does not apply corporate governance
recommendations - justifications for such action;
5) information on key elements of internal control and risk
management system of the capital company which are applied in
preparation of financial statements;
6) the information specified in Section 56.1,
Paragraph one, Clauses 3, 4, 6, 8, and 9 of this Law;
7) the administrative body, and also composition and
description of activities of its committees;
8) if the capital company implements policy in relation to
diversity of the composition of members of governance bodies of
the capital company (versatility policy) - a description
regarding objectives of such policy, implementation measures and
results in the reporting year.
(21) Paragraph two, Clause 8 of this Section shall
not apply to the capital company referred to in Paragraph two of
this Section which does not exceed two of the following criteria
in the first reporting year when it has become an issuer within
the meaning of this Law, two years in succession (both in the
current and previous reporting year):
1) average number of employees - 250;
2) sum total of assets on the balance sheet date - EUR 20 000
000;
3) annual net turnover - EUR 40 000 000.
(3) A capital company the transferable securities of which are
admitted to trading on a regulated market, except for a capital
company the shares of which are admitted to trading on a
regulated market, shall include the following in a corporate
governance statement:
1) information on key elements of internal control and risk
management system of the capital company which are applied in
preparation of financial statements;
2) [22 March 2012].
(4) The capital companies referred to in Paragraph three of
this Section shall take into account the requirements of
Paragraph two of this Section if they have shares which are
traded in a multilateral trading facility.
(5) If a capital company the transferable securities of which
are admitted to trading on a regulated market, has already
provided information referred to in Paragraph two, Clauses 3, 4,
5, and 7, Paragraph three of this Section and Section
56.1, Paragraph one, Clauses 3, 4, 6, 8, and 9 of this
Law in the annual statement or other document available to the
public, it may include a reference in a corporate governance
statement, indicating where such information is available to the
public.
(6) A capital company the transferable securities of which are
admitted to trading on a regulated market shall include a
corporate governance statement in a management report or prepare
it as a separate part of the annual statement. If the corporate
governance statement is prepared as a separate part of the annual
statement, it shall be published together with a management
report or its website address in the management report where a
corporate governance statement is available to the public in
electronic form shall be indicated.
(7) A sworn auditor shall check whether a corporate governance
statement has been prepared, and also the information specified
in Paragraph two, Clauses 5 and 8, Paragraph three of this
Section and Section 56.1, Paragraph one, Clauses 3, 4,
6, 8, and 9 of this Law and, in accordance with the Audit
Services Law, provide an opinion of a sworn auditor on whether
the requirements laid down in Paragraph two, Clauses 5 and 8,
Paragraph three of this Section and Section 56.1,
Paragraph one, Clauses 3, 4, 6, 8, and 9 of this Law have been
met.
(8) If a capital company the transferable securities of which
are admitted to trading on a regulated market prepares an annual
statement and consolidated annual statement, it shall prepare one
corporate governance statement and include it in one of these
accounts in accordance with the requirements of Paragraph six of
this Section. In addition to the information referred to in
Paragraph two of this Section it shall provide information on key
elements of the internal control and risk management system of
the commercial companies involved in consolidation which are
applied in preparing consolidated financial statements, in the
corporate governance statement.
[22 May 2008; 22 March 2012; 29 October 2015; 15 December
2016; 31 March 2022]
Section 56.3
Non-financial Statement
(1) A capital company the transferable securities of which are
admitted to trading on a regulated market, if the average number
of employees exceeds 500 and the sum total of assets on the
balance sheet date exceeds EUR 20 000 000, or the annual net
turnover exceeds EUR 40 000 000 in the first reporting year of
the capital company when it has become an issuer within the
meaning of this Law, but starting from the second reporting year
when it has become an issuer within the meaning of this Law - two
years in succession (both in the current and previous reporting
year), has an obligation to include a non-financial statement in
the management report referred to in Section 56 of this Law.
(2) Insofar as it is necessary to understand the development,
performance results and financial position of the capital company
referred to in Paragraph one of this Section, and also the impact
of its commercial activity on the environment, social aspects,
and aspects related to employees, conformity with the human
rights, measures for preventing corruption and bribery
(hereinafter - the fields of corporate social responsibility), at
least the following information shall be provided in a
non-financial statement:
1) a short description of the model of commercial activity of
the capital company which includes general information on the
main types of economic activity and geographic markets,
cooperation partners, clients, the most important resources to be
used, flow of expenses and income, and other information
characterising the commercial activity of the capital
company;
2) a description regarding policies of the capital company
which are implemented thereby in relation to the fields of
corporate social responsibility, including a description on what
procedures have been introduced in the capital company in order
to ensure sufficient attention to the implementation process of
such policies;
3) information on the implementation results of the policies
referred to in Clause 2 of this Paragraph;
4) information on the main risks related to the fields of
corporate social responsibility which are characteristic to
transactions of the capital company and, when it is of the
essence and commensurate, also information on the risks which
arise from the legal transactions concluded within the scope of
the commercial activity of the capital company or are related to
the goods manufactured or services provided thereby and which may
cause negative consequences in the fields of corporate social
responsibility, and also on management of such risks by the
capital company;
5) main non-financial indicators which are characteristic to
the particular capital company and sector in which it is
operating.
(3) Also references to the sums indicated in the financial
statement and additional explanations regarding them shall be
included in the non-financial statement, if the sum indicated in
the financial statement is related to any of the fields of
corporate social responsibility of the capital company.
(4) In order to provide information on the fields of corporate
social responsibility, the capital company referred to in
Paragraph one of this Section may use the guidelines or
recommendations included in the legal acts of the Republic of
Latvia or European Union, or the documents issued by the United
Nations Organisation, the Organisation for Economic Co-operation
and Development, the International Labour Organisation, the
International Organisation for Standardisation, or other
international organisation (hereinafter - the guidelines or
recommendations included in the documents issued by Latvia,
European Union or other international organisations). It shall be
indicated in the management report which guidelines or
recommendations included in the documents issued by Latvia,
European Union, or other international organisations are used by
the capital company.
(5) If the capital company referred to in Paragraph one of
this Section does not implement policy in relation to one or
several fields of corporate social responsibility, a clear and
substantiated justification shall be provided in the
non-financial statement as to why it is not being carried
out.
(6) As an exception, the capital company referred to in
Paragraph one of this Section need not provide information on
corporate actions which are expected to take place within the
nearest year, or on issues under negotiations, if both of the
following conditions are met:
1) the executive board of the capital company provides an
explanation in the written report to the meeting of shareholders
(members) of the capital company on the circumstances due to
which provision of the abovementioned information would seriously
harm commercial activities of such capital company;
2) non-provision of the abovementioned information does not
constitute an obstacle for getting a clear understanding of the
development, performance results, financial position of the
capital company and the impact of its commercial activity on the
fields of corporate social responsibility.
(7) The capital company referred to in Paragraph one of this
Section shall be exempted from the obligation to include a
non-financial statement in the management report, if it prepares
the non-financial statement as an individual document in which
information is provided in accordance with the requirements laid
down for a non-financial statement in this Section, and publishes
it together with the management report as a component of the
annual statement.
(8) If the capital company referred to in Paragraph one of
this Section has included the non-financial statement in the
management report or has prepared it as the individual document
referred to in Paragraph seven of this Section, it shall be
exempted from the obligation specified in the laws and
regulations governing preparation of annual statements in
relation to provision and analysis of specific non-financial
indicators in the management report.
(9) The capital company referred to in Paragraph one of this
Section which is a subsidiary of a group of companies
(consolidation group) shall be exempted from the obligation to
prepare a non-financial statement if the information to be
provided in this statement has been included in the consolidation
management report of the parent undertaking or the separate
document which has been prepared by taking into account the
provisions of this Section, and if the consolidated management
report or separate document has been published in accordance with
the procedures laid down in Section 64.2 of this
Law.
(10) A sworn auditor shall check whether a non-financial
statement has been prepared and also whether the non-financial
statement has been included in the management report or the
separate document referred to in Paragraph seven of this Section,
but in the case referred to in Paragraph nine of this Section -
whether the information to be provided in the non-financial
statement of the subsidiary of the group of companies
(consolidation group) exempted from the preparation of the
non-financial statement is included in the consolidated
management report of the parent undertaking of the group of
companies (consolidation group) or the separate document which
has been prepared by taking into account the provisions of this
Section.
[15 December 2016]
Section 56.4 Consolidated
Non-financial Statement
(1) A capital company the transferable securities of which are
admitted to trading on a regulated market and which is the parent
undertaking of such group of companies (consolidation group) for
which the average number of employees exceeds 500 and the sum
total of assets on the balance sheet date in consolidation
exceeds EUR 20 000 000, or the annual net turnover in
consolidation exceeds EUR 40 000 000 in the first reporting year
of the capital company when it has become an issuer within the
meaning of this Law, but starting from the second reporting year
when it has become an issuer within the meaning of this Law - two
years in succession (both in the current and previous reporting
year), has an obligation to include a consolidated non-financial
statement in the consolidated management report.
(2) Insofar as it is necessary in order to understand the
development, performance results, and financial position of the
abovementioned group of companies (consolidation group), and also
the impact of its commercial activity on the fields of corporate
social responsibility, information on the group of companies
(consolidation group) at large shall be provided in the
consolidated non-financial statement, applying the provisions of
Section 56.3, Paragraphs two and four of this Law
accordingly.
(3) If the group of companies (consolidation group) referred
to in Paragraph one of this Section does not implement policy in
relation to one or several fields of corporate social
responsibility, a clear and substantiated justification shall be
provided in the consolidated non-financial statement as to why it
is not being carried out.
(4) Also references to the sums indicated in the consolidated
financial statement and additional explanations regarding them
shall be included in the consolidated non-financial statement, if
the sum indicated in the consolidated financial statement is
related to any of the fields of corporate social responsibility
of the group of companies (consolidation group).
(5) As an exception, the parent undertaking of the group of
companies (consolidation group) referred to in Paragraph one of
this Section need not provide information on corporate actions
which are expected to take place within the nearest year, or on
issues under negotiations which apply to the fields of corporate
social responsibility, if both of the following conditions are
met:
1) the executive board of the parent undertaking provides an
explanation in the written report to the meeting of shareholders
(members) of the parent undertaking on the circumstances due to
which provision of the abovementioned information would seriously
harm commercial activities of such group of companies
(consolidation group);
2) non-provision of the abovementioned information does not
constitute an obstacle for getting a clear understanding of the
development, performance results, financial position of the group
of companies (consolidation group) and the impact of its
commercial activity on the fields of corporate social
responsibility.
(6) The parent undertaking of the group of companies
(consolidation group) referred to in Paragraph one of this
Section shall be exempted from the obligation to include a
consolidated non-financial statement in the consolidated
management report, if it prepares the statement as an individual
document in which information is provided in accordance with the
requirements laid down for a consolidated non-financial statement
in Paragraphs two, three, four, and five of this Section, and
publishes it together with the management report as a component
of the consolidated annual statement.
(7) If the parent undertaking of the group of companies
(consolidation group) referred to in Paragraph one of this
Section has included the consolidated non-financial statement in
the consolidated management report or has prepared it as the
individual document referred to in Paragraph six of this Section,
it shall be exempted from the obligation specified in the laws
and regulations governing preparation of an annual statement and
consolidated annual statement in relation to provision and
analysis of specific non-financial indicators in the management
report and consolidated management report.
(8) The parent undertaking of the group of companies
(consolidation group) referred to in Paragraph one of this
Section which is a subsidiary of another group of companies
(another consolidation group) shall be exempted from the
obligation to prepare a consolidated non-financial statement if
the information to be provided therein (both on the
abovementioned parent undertaking and its subsidiaries) is
included in the consolidated management report of this another
group of companies (another consolidation group) or in the
consolidated non-financial statement prepared in the form of a
separate document which has been prepared by taking into account
the provisions of this Section, and if such consolidated
management report or the consolidated non-financial statement
prepared in the form of a separate document has been published in
accordance with the procedures laid down in Section
64.2 of this Law.
(9) A sworn auditor shall check whether a consolidated
non-financial statement has been prepared, and also whether such
statement has been included in the consolidated management report
or the individual document referred to in Paragraph six of this
Section, but in the case referred to in Paragraph eight of this
Section - whether the information to be provided in a
consolidated non-financial statement of the parent undertaking of
the group of companies (consolidation group) exempted from the
preparation of a consolidated non-financial statement is included
in the consolidated management report of the parent undertaking
of another group of companies (another consolidation group) or
the individual document which has been prepared, taking into
account the provisions of this Section.
[15 December 2016]
Section 56.5 Person
Responsible for Preparation and Distribution of the Annual
Statement and Consolidated Annual Statement
The executive board of a capital company shall be responsible
for the preparation of an annual statement and, if the capital
company has an obligation to prepare a consolidated annual
statement, of a consolidated annual statement in accordance with
the requirements of this Law, and also the procedures laid down
in this Law for the distribution of such statements.
[15 December 2016]
Section 57. Accounts of Interim
Periods
(1) A capital company transferable securities of which are
admitted to trading on a regulated market, shall prepare an
account of interim periods on the first six months of the
reporting year and shall distribute it in accordance with the
procedures laid down in Section 64.2 of this Law.
(2) A capital company shall distribute the account of interim
periods referred to in Paragraph one of this Section not later
than two months after the end of the relevant reporting
period.
(3) The account of interim periods referred to in Paragraph
one of this Section regarding the first six months of the
reporting period shall consist of:
1) at least the abbreviated financial statements;
2) the management report of interim periods in which the
following information is provided:
a) on essential corporate actions in the relevant reporting
period and their impact on financial statements, and also
describe the main risks and indicate such unclear circumstances
for the next six months of the reporting period which might
become current for the capital company and which might affect its
financial position and financial performance results;
b) the capital company the shares of which are admitted to
trading on a regulated market and to which Paragraph nine of this
Section applies - on the most important transactions performed
thereby in the reporting period with the affiliated persons, and
also on any changes in essential conditions of the transaction in
relation to transactions with affiliated persons which were
indicated in the previous annual statement;
c) the capital company the shares of which are admitted to
trading on a regulated market and to which Paragraph nine of this
Section does not apply - on its transactions with the affiliated
persons in accordance with the requirements of the legal acts of
the home Member State;
3) the statement of the management's responsibility indicating
that on the basis of information at the disposal of the executive
board of the capital company the financial accounts have been
prepared in accordance with the requirements of the applicable
laws and regulations and give true and fair view of the assets,
liabilities, financial position, and profit or loss of the
capital company and consolidation group and that true information
is included in the management report for interim periods.
(4) Upon preparing financial statements regarding the first
six months of the reporting year, the same principles for
recognition and evaluation of items shall be conformed to which
were used in preparing the annual statement, indicating them in
the annex accordingly, unless it has already been indicated in
the statement of the management's responsibility. If the
accounting methods used are changed, a corresponding explanation
shall be provided in annex to the statement. Information which
ensures comparability of the account of interim periods with the
data of the relevant period of the previous reporting year, and
also sufficient information and explanations shall be provided in
annex to the account of interim periods, so that the user of the
financial statement could get a true and fair view regarding all
material changes in respect of the balance sheet and profit or
loss account items and development tendency of the capital
company.
(5) Each item of the balance sheet of the account of interim
periods regarding the first six months of the reporting year
shall be compared at least to the data at the end of the previous
reporting year. Each item of the profit or loss statement,
statement of changes in the equity, and the cash flow statement
shall be compared at least to the data of the previous reporting
year regarding the same period regarding which the information to
be distributed has been prepared.
(6) A capital company which, in accordance with Section 56,
Paragraph two or three of this Law, prepares or, in accordance
with Section 56, Paragraph two or four, has chosen to prepare
financial statements according to Regulation No 1606/2002, shall
prepare the financial statements regarding the first six months
of the reporting year in accordance with the international
accounting standards which apply to financial statements of
interim periods and which have been adopted according to
Regulation No 1606/2002.
(7) If a capital company to which the requirements of Section
56, Paragraph four of this Law apply and which, in accordance
with that laid down in Section 56, Paragraph four, has not made
the choice to prepare its financial statements according to
Regulation No 1606/2002, its financial statements regarding the
first six months of the reporting year shall consist of at least
the condensed balance sheet, condensed profit or loss statement,
condensed cash flow statement, condensed statement of changes in
equity, and annex. The items and subtotals which were included in
the annual statement of the previous year of the capital company
shall be indicated in the condensed balance sheet and condensed
profit or loss statement. (2) The balance sheet, profit or loss
account, cash flow statement, and statement of changes in equity
items which have no figures (amounts), shall be set out only if
there is a corresponding item with a figure (amount) in the
comparative data. Additional items shall be included if, without
indicating them, the account of interim periods would provide
misleading view regarding assets, liabilities, financial
position, and profit or loss of the capital company.
(8) Information as to whether the account of interim periods
regarding the first six months of the reporting year has or has
not been audited (checked) by a sworn auditor shall be clearly
indicated on the front page of the information to be distributed.
If the account of interim periods has been audited (checked) by a
sworn auditor, such account shall be distributed together with
the relevant report of the sworn auditor.
(9) A capital company shall prepare an account of interim
periods regarding the first six months of the reporting year in a
consolidated form, if it has had an obligation to prepare a
consolidated annual statement regarding the previous reporting
year and such obligation was also in effect on the date as
regards to which the account of interim periods is being
prepared.
[26 May 2016 / See Paragraph 54 of Transitional
Provisions]
Section 57.1
Information
[22 March 2012]
Section 57.2 Financial
Information on the First Three and Nine Months of the Reporting
Year
(1) A capital company the shares of which are admitted to
trading on a regulated market, shall prepare financial
information on the first three and nine months and distribute it
in accordance with the procedures laid down in Section
64.2 of this Law.
(2) A capital company shall distribute the financial
information referred to in Paragraph one of this Section not
later than two months after the end of such period regarding
which the relevant information must be distributed.
(3) Upon preparing financial information on the first three
and nine months of the reporting year, the same principles for
recognition and evaluation of items shall be conformed to which
were used in preparing the annual statement, and it shall be
indicated in the statement of the management's responsibility
accordingly.
(4) The financial information referred to in Paragraph one of
this Section on the first three and nine months of the reporting
year shall consist of the condensed balance sheet, condensed
profit or loss statement, condensed cash flow statement,
condensed statement of changes in equity, and statement of the
management's responsibility. Such items and subtotals shall be
included in the condensed balance sheet, condensed profit or loss
statement, condensed cash flow statement, and condensed statement
of changes in equity which were included in the last annual
statement.
(5) If the capital company prepares the financial information
using the principles for recognition and evaluation of items of
the international accounting standards approved by Regulation No
1606/2002, its financial information on the first three and nine
months of the reporting year shall consist of the condensed
balance sheet, condensed profit or loss statement, condensed cash
flow statement, condensed statement of changes in equity, and
statement of the management's responsibility. Such items and
subtotals shall be included in the condensed statement on
financial position, condensed statement on comprehensive income,
condensed cash flow statement, and condensed statement of changes
in equity which were included in the last annual statement.
(6) The statement on the management's responsibility referred
to in Paragraph four or five of this Section shall indicate that
on the basis of information at the disposal of the executive
board of the capital company the financial information has been
prepared in accordance with the requirements of the laws and
regulations in force and give true and fair view of the assets,
liabilities, financial position, and profit or loss of the
capital company and consolidation group.
(7) Upon distributing the financial information on the first
three and nine months of the reporting year, a management report
of interim periods shall be appended thereto (indicating in the
statement of the management's responsibility that true
information has been included in the management report), if at
least one of the following conditions sets in:
1) since distribution of the last management report the
information provided therein has significantly changed;
2) the accounting methods used have been changed. Changing of
the accounting methods shall be explained in the management
report accordingly.
(8) Each item of the balance sheet of the financial
information on the first three and nine months of the reporting
year shall be compared at least to the data at the end of the
previous reporting year. Each item of the profit or loss
statement, cash flow statement, and statement of changes in
equity shall be compared at least to the data of the previous
reporting year regarding the same period regarding which the
information to be distributed has been prepared.
(9) A capital company which prepares the financial information
on the first three and nine months of the reporting year using
the principles for recognition and evaluation of items of the
international accounting standards referred to in Paragraph five
of this Section, shall compare each item of the statement on
financial position to at least the data at the end of the
previous reporting year and shall compare each item of the
comprehensive income statement, cash flow statement, and
statement of changes in equity at least to the data of the
previous reporting year regarding the same period regarding which
the information to be distributed has been prepared.
(10) Information as to whether the financial information on
the first three and nine months of the reporting year has or has
not been audited (checked) by a sworn auditor shall be clearly
indicated on the front page of the information to be distributed.
If the financial information on the first three and nine months
of the reporting year has been audited (checked) by a sworn
auditor, such information shall be distributed together with the
relevant report of the sworn auditor.
(11) A capital company shall prepare the financial information
on the first three and nine months of the reporting year in a
consolidated form, if it has had an obligation to prepare a
consolidated annual statement regarding the previous reporting
year and such duty was also in effect on the date as regards to
which the financial information on the first three and nine
months of the reporting year is being prepared.
[26 May 2016 / See Paragraph 54 of Transitional
Provisions]
Section 57.3 Statement on
Payments to Administration Institutions
(1) A capital company the transferable securities of which are
admitted to trading on a regulated market and which is operating
in logging of primeval forests or is engaged in exploration,
search, discovery, development, and extraction of mineral
resources, oil, natural gas, and other minerals in accordance
with the statistical classification of economic activities as
defined in Annex I, Section A, Division 02, Group 02.2 or Annex
I, Section B, Divisions 05, 06, 07, and 08 of Regulation (EC) No
1893/2006 of the European Parliament and of the Council of 20
December 2006 establishing the statistical classification of
economic activities NACE Revision 2 and amending Council
Regulation (EEC) No 3037/90 as well as certain EC Regulations on
specific statistical domains, shall prepare a statement on
payments to administration institutions in accordance with the
requirements of the law On Statements by Commercial Companies
Engaged in Mining or Logging of Primeval Forests on Payments to
Administration Institutions. A statement on payments to
administration institutions shall be provided in a consolidated
form.
(2) The commercial company shall distribute the statement
referred to in Paragraph one of this Section in accordance with
the procedures laid down in Section 64.2 of this Law
not later than six months after the end of each financial year,
and it shall be available to the public for at least 10
years.
[26 May 2016]
Section 58. Exemptions
The requirements of Sections 56, 57, and 57.2 of
this Law shall not apply to:
1) transferable securities issued by a Member State, local
government, its institution or agency, such organisation which is
a subject governed by international public law and in which one
or several Member States are members, by the European Financial
Stability Facility which has been established according to a
European Financial Stability Facility Framework Agreement, by any
other institution which has been established in order to preserve
the financial stability of the European Monetary Union, providing
temporary financial aid to the Member States in which euro is the
national currency, and also by the European Central Bank and
central banks of Member States;
2) issuers that have issued only debt securities which are
admitted to trading on a regulated market and the denomination of
one unit of debt security of which is not less than EUR 100 000,
or, if the debt securities are issued in currency other than
euro, the denomination of one unit of debt security on the day of
issue is not less than an equivalent of EUR 100 000;
3) issuers that have issued only debt securities the
denomination of one unit of a debt security of which is at least
EUR 50 000, or, if the debt securities are issued in currency
other than euro, the denomination of one unit of a debt security
of which on the day of issue is at least an equivalent of EUR 50
000, and securities of which have been admitted to trading on a
regulated market in the European Union before 31 December 2010,
until the day when such securities are deleted.
[13 January 2011; 22 March 2012; 19 September 2013; 26 May
2016]
Section 59. Significant Events
[26 May 2016 / See Paragraph 55 of Transitional
Provisions]
Section 59.1 Closing and
Discovery of Atypical Transaction and Transaction of Significant
Amount with the Affiliated Party
(1) The provisions of this Section shall apply to a capital
company the shares of which are admitted to trading on a
regulated market.
(2) Within the meaning of this Section an atypical transaction
is a transaction of a capital company which has not been
concluded within the scope of commercial activity normally
performed by the capital company or does not conform to the
normal market conditions.
(3) An atypical transaction with the affiliated party shall be
concluded in accordance with the procedures laid down in the
Commercial Law for the conclusion of a transaction with the
affiliated party.
(4) Before concluding an atypical transaction with the
affiliated party, the executive board shall provide the following
information on the transaction to the audit committee (if such
has been established):
1) information on the affiliated party (for a natural person -
the given name, surname; for a legal person - the name,
registration number, and country of registration);
2) the justification for the necessity of the transaction;
3) the provisions of the transaction;
4) an assessment regarding the impact of the transaction on
commercial activity of the capital company and the financial
performance results;
5) an assessment regarding the impact of the transaction on
shareholders of the capital company which are not considered
affiliated parties in relation to the abovementioned
transaction.
(5) The supervisory board of a capital company may request an
opinion of the audit committee (if such has been established) or
invite an independent expert for the provision of an opinion of
experts on the intended atypical transaction with the affiliated
party. Upon deciding on inviting of an audit committee or an
independent expert, the interested member of the supervisory
board of the capital company (within the meaning of the
Commercial Law) shall not have voting rights, and it shall be
recorded in the minutes of the supervisory board meeting. The
costs of attracting an expert shall be covered from the funds of
the capital company.
(6) The capital company shall draw up internal procedure
according to which it detects whether the transaction with the
affiliated party is or is not atypical. The capital company
shall, at least once a year, assess whether its atypical
transactions concluded with the affiliated parties have been
identified and the procedures for the conclusion and discovery of
such transactions have been conformed to. The capital company
shall ensure that the abovementioned assessment is not performed
by members of its executive or supervisory board or other
employees thereof with whom or with whose affiliated parties the
transactions to be assessed have been concluded.
(7) Within the meaning of this Section, a transaction of
significant amount is a transaction of a capital company the
amount of money paid or to be received as a result, the value of
acquired or disposed of assets, or the liabilities of the capital
that have arisen as a result of the transaction or may arise in
the future of which are at least 10 per cent of the share capital
or at least 10 per cent of the own funds of the capital according
to the last audited annual statement or consolidated annual
statement (if such is being prepared) - depending on the lowest
of indicators, but not less than EUR 35 000. More strict criteria
according to which a transaction is to be considered a
transaction of significant amount may be specified in the
articles of association of the capital company or in the decision
of the supervisory board.
(8) Within the meaning of this Section, several transactions
which have been concluded by the capital company within a period
of 12 months with the same affiliated party or in the interests
of the same affiliated party and the total value of which
conforms to that specified in Paragraph seven of this Section
shall also be considered a transaction of significant amount.
(9) Before concluding a transaction of significant amount with
the affiliated party, the executive board shall provide the
information referred to in Paragraph four of this Section on the
transaction to the audit committee (if such has been
established).
(10) The capital company shall, without delay in accordance
with the procedures laid down in Section 64.2 of this
Law, distribute the information on a transaction of significant
amount with the affiliated party after conclusion of the
transaction or after setting in of such circumstances when the
criteria specified in Paragraph seven or eight of this Section
are achieved. The capital company shall distribute the
information on a atypical transaction with the affiliated party
prior to conclusion of the transaction, but not later than on the
day when a consent in accordance with the procedures laid down in
the Commercial Law (in the supervisory board or in a meeting of
stockholders) has been given to the transaction of the affiliated
parties. The capital company shall provide at least information
on:
1) the affiliated party (for a natural person - the given
name, surname; for a legal person - the name, registration
number, and country of registration);
2) the type of relationships between the capital company and
the affiliated party;
3) the day (date) of concluding the transaction, the amount of
money to be received or paid in the transaction, the value of the
acquired or disposed of assets, or on the liabilities of the
capital company which have occurred as a result of the
transaction or may occur in the future, and also on the payment
provisions and the schedule of payments (if any), including on
the amount of money intended to be received or paid in the
subsequent periods, in the time period for execution of the
transaction of liabilities, and also the interest to be received
or paid (if such are intended);
4) the impact of the transaction on commercial activity of the
capital company and the financial performance results;
5) the impact of the transaction on shareholders of the
capital company which are not considered affiliated parties in
relation to the abovementioned transaction;
6) whether an opinion of the audit committee or a statement of
an independent expert (if such was requested) has been
received.
(11) In addition to the information referred to in Paragraph
ten of this Section, the capital company has an obligation also
to provide other information on the transaction, if it is of
significance to or may significantly impact the financial state
of the capital company or the possibilities of determining
commercial activity of specific type or if its discovery may
significantly impact the evaluation of shares of the capital
company admitted to trading on a regulated market, thus ensuring
the protection of investors or impeccable operation of the
market.
(12) The capital company shall ensure that it receives
information from a subsidiary on transactions between the
affiliated party of the capital company and the subsidiary if
such transaction is concurrently atypical and of significant
amount. The capital company shall distribute information on such
transactions in accordance with the procedures laid down in
Section 64.2 of this Law. The capital company shall
provide the information referred to in Paragraphs ten and eleven
of this Section by additionally indicating information on the
impact of the transaction on the commercial activity and
financial performance results of the subsidiary and on
shareholders (members) of the subsidiary.
[21 September 2017; 20 June 2019]
Chapter
III1
Remuneration Policy and Report
[20 June 2019]
Section 59.2 Scope of
this Chapter
The requirements of this Chapter shall apply to a capital
company the shares of which are admitted to trading on a
regulated market (hereinafter in this Chapter - the capital
company).
[20 June 2019]
Section 59.3 Remuneration
Policy
(1) The capital company shall draw up the remuneration policy
of the executive and supervisory boards (hereinafter - the
remuneration policy), approve it in a meeting of shareholders and
publish it. The capital company shall ensure that the
remuneration for members of the executive and supervisory boards
is determined according to the remuneration policy approved in a
meeting of shareholders.
(2) The executive board of the capital company shall draw up
the remuneration policy and submit it for approval to the meeting
of shareholders of the capital company not less than once in four
years after approval of the previous remuneration policy. If
amendments are made to the remuneration policy, they shall be
approved in a meeting of shareholders and it shall be considered
that the remuneration policy in the new wording has been approved
by approval of amendments.
(3) The remuneration policy contains at least the following
information:
1) a description of the permitted variable and fixed
remuneration components (inter alia, all bonuses and other
benefits of any kind) and their relative (percentage) share from
the total remuneration;
2) an explanation how the remuneration policy and the
particular remuneration components included therein will promote
the implementation, long-term interests, and sustainability of
the strategy of the capital company;
3) an explanation how the conditions for remuneration and
employment of employees of the capital company have been taken
into account in the drawing up of the remuneration policy;
4) the criteria for the granting of the variable remuneration
(if such is intended), the criteria of performance results of the
capital company to be used for the determination thereof, the
methods for the determination of the enforcement of such
criteria, the time periods for suspending the disbursement of the
variable remuneration, and information on the possibility of the
capital company to reclaim the variable remuneration;
5) the most important conditions of a remuneration related to
granting of shares (if such is intended), including the time
periods for granting the rights and the rights to keep the shares
after the granting thereof;
6) the term of office of the members of the executive and
supervisory boards and the applicable time periods for
withdrawal, the main characteristics in relation to supplementary
pension or accelerated retirement plans, the conditions related
to termination of contracts, and payments to members of the
executive and supervisory boards;
7) the conditions for the determination, review, and
application of the remuneration policy;
8) the measures which are intended in order to avoid conflict
of interest or to prevent them;
9) the role of the remuneration committee or other body of the
capital company (if such is intended) in determination, review,
and application of the remuneration policy;
10) a description and explanation regarding substantial
changes made in the remuneration policy and how voting of the
meeting of shareholders and opinions of shareholders on the
remuneration policy and remuneration reports which have been
examined in a meeting of shareholders after voting of the
previous meeting of shareholders on the remuneration policy has
been taken into account in the new remuneration policy.
(4) The capital company shall ensure that the remuneration
policy approved by the meeting of shareholders (full text in the
new wording) together with the date of voting by the meeting of
shareholders and the voting results after the meeting of
shareholders are published on the website of the capital company
where it is available to the public free of charge for at least
as long as it is applicable. At least information on the total
number of participating shares with voting rights, the number of
votes in conformity with the number of shares with voting rights
and a part of the voting share capital represented in the meeting
of shareholders by votes given, and also the number of votes
given "for" and "against" regarding approval of the remuneration
policy shall be included in the voting results.
(5) Until approval of a new remuneration policy in a meeting
of shareholders, the capital company shall pay remuneration to
members of the executive and supervisory boards according to the
previous remuneration policy or, if there is none, according to
the current practice of the capital company. If the meeting of
shareholders does not approve the remuneration policy drawn up by
the executive board, the executive board shall submit a reviewed
remuneration policy together with an explanation of the changes
made therein in the next meeting of shareholders for
approval.
(6) In an exceptional case, the capital company may apply a
temporary derogation from the remuneration policy, if the
procedures for the application of the derogation and the
components of the remuneration policy for which the derogation is
possible are provided for therein. Only ensuring of the long-term
interests, sustainability of the capital company or its
insolvency may be considered as an exceptional case.
[20 June 2019]
Section 59.4 Remuneration
Report
(1) The executive board of the capital company shall prepare a
clear and comprehensible annual report on the remuneration which
has been granted or disbursed in the previous financial year or
which is due for the previous financial year to each current and
former member of the executive and supervisory boards
(hereinafter - the remuneration report). The remuneration report
includes identifying information on each member of the executive
and supervisory boards (at least given name, surname, and
position), and also at least the following information on the
remuneration of each member of the executive and supervisory
boards:
1) the total remuneration divided according to remuneration
components and the relative (percentage) share of the fixed and
variable remuneration;
2) an explanation as to why the total remuneration conforms to
the remuneration policy, how it promotes long-term performance
results of the capital company, and how the criteria of the
performance results of the capital company were applied in
determination of the remuneration;
3) the changes which have occurred within the last five
financial years in a comparable way in relation to the
remuneration of the executive and supervisory boards, the
performance results of the capital company, and the average
remuneration of full-time employees of an equivalent unit of the
capital company (except for members of the executive and
supervisory boards);
4) the remuneration received from another company which is
part of the same group of companies within the meaning of the Law
on the Annual Financial Statements and Consolidated Financial
Statements;
5) the number of the granted and offered shares and share
options and the main conditions for the use of options, inter
alia, the price and date of their use, and the changes
therein (if any have occurred);
6) information on cases when the variable part of the
remuneration has been reclaimed;
7) the applied temporary derogations, inter alia, an
explanation of the nature of the exceptional case and a reference
to specific components of the remuneration policy to which a
temporary derogation has been applied.
(2) If any of the requirements referred to in Paragraph one of
this Section is not applied in the capital company or does not
apply thereto, it shall be unequivocally indicated in the
remuneration report.
(3) Personal data of specific categories of members of the
executive and supervisory boards within the meaning of Article
9(1) of Regulation (EU) 2016/679 of the European Parliament and
of the Council of 27 April 2016 on the protection of natural
persons with regard to the processing of personal data and on the
free movement of such data, and repealing Directive 95/46/EC
(General Data Protection Regulation) and personal data which
refer to the marital status of members of the executive and
supervisory boards shall not be included in the remuneration
report. In such case the remuneration components which are
related to the marital status shall be included in the
remuneration report, indicating only the amount of the
remuneration granted and without indicating the justification for
granting.
(4) The executive board of the capital company shall prepare
the remuneration report and submit it to the meeting of
shareholders for examination the agenda of which provides for the
approval of the annual statement and the consolidated annual
statement (if such is prepared) of the capital company. The
executive board shall explain in the remuneration report how the
voting of the meeting of shareholders and the opinions of
shareholders on the previous remuneration report have been taken
into account.
(5) [31 March 2022]
(6) The capital company shall ensure that the remuneration
report is published immediately after the meeting of shareholders
on the website of the capital company where it is available to
the public free of charge for 10 years after the day of
publishing. The capital company may make the information included
in the remuneration report available for a longer period of time
if it excludes personal data from such report.
(7) A sworn auditor shall check whether the remuneration
report has been prepared and, in accordance with the Law on Audit
Services, provide an opinion of a sworn auditor as to whether the
information referred to in this Section has been included in the
remuneration report and whether significant non-conformities in
relation to the financial information indicated in the annual
statement have been detected in the remuneration report.
(8) The capital company which commences trading in shares on a
regulated market shall draw up the remuneration report for the
financial year which starts after the day when shares have been
admitted to trading on a regulated market. In such case the
comparison of the changes referred to in Paragraph one, Clause 3
of this Section shall be provided for at least a period of the
last five financial years which starts after the day when shares
have been admitted to trading on a regulated market.
[20 June 2019; 31 March 2022]
Section 59.5 Liability
for the Fulfilment of the Requirements of this Chapter
(1) The capital company or the relevant officials shall be
liable for the violations in relation to the remuneration policy
and the remuneration report according to civil legal
procedures.
(2) If the remuneration policy or the remuneration report has
not been published in accordance with the procedures laid down in
Sections 59.3 and 59.4 of this Law,
liability in accordance with Section 148 of this Law shall set in
for the capital company.
[20 June 2019]
Chapter
III.2
Requirements for Shareholder
Identification, for Ensuring the Rights of Shareholders, and for
Transparency of the Activity of Proxy Advisors
[20 June 2019]
Section 59.6 Scope of
this Chapter
(1) The requirements of this Chapter shall apply to a capital
company the registered office of which is in the Republic of
Latvia and the shares of which are admitted to trading on a
regulated market of a Member State (hereinafter in this Chapter -
the capital company), and also to the operator of the account of
financial instruments which is providing the capital company
shareholder services.
(2) Within the meaning of this Chapter, the central securities
depository, a credit institution, an investment firm, and also
another person who is providing services of operation of the
account of financial instruments and capital company shareholder
services regardless of its registered office or location of the
head office.
(3) If shares of the capital company are held with the
intermediation of several operators of the account of financial
instruments, the operator of the account of financial
instruments, if it has a contract with another operator of the
account of financial instruments the registered office or
location of the head office of which is not in the Member State,
shall include provision in the contract which ensure the
enforcement of the provisions of this Chapter.
(4) The fulfilment of the provisions of this Chapter shall be
supervised by Latvijas Banka.
[20 June 2019; 23 September 2021 / Amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 59.7 Shareholder
Identification
(1) The capital company may request the information referred
to in Table 2, Section C of Commission Implementing Regulation
(EU) 2018/1212 of 3 September 2018 laying down minimum
requirements implementing the provisions of Directive 2007/36/EC
of the European Parliament and of the Council as regards
shareholder identification, the transmission of information and
the facilitation of the exercise of shareholders rights
(hereinafter in this Chapter - the Implementing Regulation) on
its shareholder from the operator of the account of financial
instruments. The capital company may authorise another person for
exercising of the rights referred to in this Chapter.
(2) The capital company may request that the central
securities depository in which shares of the capital company have
been initially recorded aggregates information on shareholders of
the capital company.
(3) If shares of the capital company are held with the
intermediation of several operators of the account of financial
instruments, the operator of the account of financial instruments
shall, after receipt of a request of the capital company, hand
over the request to the subsequent operator of the account of
financial instruments without delay. The operator of the account
of financial instruments who has information on the shareholder
at its disposal shall hand it over to the capital company without
delay. The capital company may request information on the
shareholder from any operator of the account of financial
instruments who has such information at its disposal.
(4) In order for the capital company to be able to contact a
shareholder for the purpose of facilitating the exercise of its
rights, the capital company and the operator of the account of
financial instruments have the right to store the information
obtained in accordance with the procedures laid down in this
Section on the shareholder for not more than 12 months after the
capital company or the operator of the account of financial
instruments have become aware of losing the status of a
shareholder.
(5) The shareholder may request that the operator of the
account of financial instruments corrects incorrect information
on the shareholder. If information on the shareholder is
maintained by the capital company, the shareholder (with or
without the intermediation of the operator of the account of
financial instruments) may request that the capital company
corrects incorrect information on the shareholder.
(6) Provision of information on a shareholder of the capital
company in accordance with the procedures laid down in this
Chapter shall not be considered a violation of the prohibition of
disclosure of information specified in the contract or law.
[20 June 2019 / Section shall come into force on 1
September 2020. See Paragraph 67 of Transitional
Provisions]
Section 59.8 Transmission
of Information
(1) The capital company shall, in a timely manner in
conformity with the requirements laid down in the Implementing
Regulation, transmit information to the operator of the account
of financial instruments which is necessary for exercising the
rights of the shareholder. The operator of the account of
financial instruments shall forward such information to a
shareholder of the capital company in accordance with the
procedures laid down in the Implementing Regulation.
(2) If the information referred to in Paragraph one of this
Section is available on the website of the capital company, the
operator of the account of financial instruments shall, after
receipt of the request of the capital company, transmit a
notification to the shareholder of the capital company with an
accurate reference where information is available on the website
of the capital company.
(3) The capital company itself may send the information or
notification referred to in Paragraphs one and two of this
Section to the shareholder, if it is allowed by the contract
entered into with the central securities depository in which
shares of the capital company were initially recorded.
(4) The operator of the account of financial instruments
shall, without delay, transmit the information received from the
shareholder which is related to exercising of the right of the
shareholder to the capital company.
(5) If shares of the capital company are held with the
intermediation of several operators of the account of financial
instruments, the operator of the account of financial instruments
shall, without delay, transfer the information which is necessary
for exercising the rights of the shareholder to the subsequent
operator of the account of financial instruments, unless it
cannot transmit such information directly to the shareholder or
capital company accordingly.
[20 June 2019 / Section shall come into force on 1
September 2020. See Paragraph 67 of Transitional
Provisions]
Section 59.9 Facilitation
of the Exercise of Shareholders Rights
(1) The operator of the account of financial instruments shall
facilitate the participation of a shareholder in a meeting of
shareholders and the exercise of other rights arising from shares
or also, upon direct assignment from the shareholder, implement
itself the rights arising from shares.
(2) If voting in a meeting of shareholders takes place by
using electronic means, the capital company shall send a
confirmation regarding receipt of the vote cast to the person who
has voted in the meeting of shareholders.
(3) The shareholder may request a confirmation that the votes
cast by him or her have been registered in accordance with the
procedures laid down in the law. The shareholder may exercise
such rights within a month from the day when the meeting of
shareholders took place.
(4) If the operator of the account of financial instruments
receives the confirmation referred to in Paragraphs two and three
of this Section from the capital company, it shall, in accordance
with the procedures laid down in the Implementing Regulation,
transmit such confirmation to the shareholder without delay. If
shares of the capital company are held with the intermediation of
several operators of the account of financial instruments, the
operator of the account of financial instruments shall, without
delay, transfer the received information to the subsequent
operator of the account of financial instruments, unless it
cannot transmit such information directly to the shareholder.
[20 June 2019 / Section shall come into force on 1
September 2020. See Paragraph 67 of Transitional
Provisions]
Section 59.10 Payment for
Services of the Operator of the Account of Financial
Instruments
(1) The operator of the account of financial instruments shall
publish information on any payment which is applied thereby to a
shareholder, capital company, or another operator of the account
of financial instruments for the services referred to in Sections
59.7, 59.8, and 59.9 of this
Law.
(2) Any payment for services shall be non-discriminatory and
commensurate as regards the actual costs of the provision
thereof.
[20 June 2019 / Section shall come into force on 1
September 2020. See Paragraph 67 of Transitional
Provisions]
Section 59.11
Transparency of the Activity of the Proxy Advisor
(1) A proxy advisor shall publish information on the code
applicable in the conduct thereof (hereinafter - the code of
conduct).
(2) If the proxy advisor does not apply the code of conduct,
it shall provide a justification for such action. If the proxy
advisor does not apply one or more recommendations of the code of
conduct, it shall provide information as to which recommendation
is not being applied, a justification for such action, and
information on alternative measures.
(3) The information referred to in Paragraphs one and two of
this Section shall be made publicly available, free of charge, on
the website of the proxy advisor and shall be updated on an
annual basis.
(4) The proxy advisor shall publicly disclose on an annual
basis at least the following information in relation to the
preparation of their research, advice given, and recommendations
in relation to the exercise of the voting rights:
1) the essential features of the methodologies and models
applied;
2) the main information sources used;
3) the procedures put in place to ensure quality of the
research, advice, and recommendations in relation to the exercise
of the voting rights;
4) the procedures put in place to ensure qualifications of the
staff involved;
5) the impact of issues related to a regulated market of the
particular Member State and the laws applicable thereto on
conducting of research and provision of advice and
recommendations in relation to the exercise of the voting
rights;
6) the impact of the specific issues related to the
joint-stock company regarding which research is conducted and
advice and recommendations in relation to the exercise of the
voting rights are provided on the conducting of research and
provision of advice and recommendations in relation to the
exercise of the voting rights;
7) the most essential features of the voting policy applicable
to each market in which the proxy advisor is conducting research
and providing advice and recommendations in relation to the
exercise of the voting rights in a joint-stock company;
8) information on communication with the joint-stock company
regarding which research is conducted and advice and
recommendations in relation to voting are provided;
9) information on communication with the interested parties of
such joint-stock company regarding whom research is conducted and
advice and recommendations in relation to voting are
provided;
10) the policy for the prevention and management of potential
conflict of interest.
(5) The information referred to in Paragraph four of this
Section shall be made publicly available by the proxy advisor,
free of charge, on the website of the proxy advisor for at least
three years from the date of publication of the information.
(6) The proxy advisor shall identify and disclose without
delay to its clients a conflict of interest that may influence
the conducting of research and the provision of advice or voting
recommendations. The proxy advisor shall disclose without delay
the actions that have been undertaken to prevent and manage a
conflict of interest.
(7) The fulfilment of the provision of this Section shall be
supervised by Latvijas Banka if the registered office of the
proxy advisor is in the Republic of Latvia. Latvijas Banka shall
supervise the fulfilment of the provisions of this Section if the
registered office of the proxy advisor is not in a Member State,
but the location of the head office of the proxy advisor is in
the Republic of Latvia. Latvijas Banka shall supervise the
fulfilment of the provisions of this Section if the registered
office or the location of the head office of the proxy advisor is
not in a Member State, but a branch of the proxy advisor has been
registered in the Republic of Latvia.
[20 June 2019; 23 September 2021 / Amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Chapter IV
Acquisition of a Major Holding
[29 March 2007]
Section 60. Scope of this
Chapter
(1) The provisions of this Chapter regarding the obligation to
notify and the consequences of non-notification shall apply to
the following persons:
1) who obtain or dispose of the shares with voting rights in
such joint-stock company the shares of which are admitted to
trading on a regulated market in the Republic of Latvia;
2) who obtain or dispose of depository receipts which have
been issued for the shares referred to in Paragraph one, Clause 1
of this Section;
3) who obtain or dispose of financial instruments which on the
day of exercising the rights arising from such financial
instruments give the person the right, according to an official
agreement, to obtain the shares with voting rights of the issuer
in such joint-stock company the shares of which are admitted to
trading on the regulated market of the Republic of Latvia;
4) who obtain or dispose of financial instruments the
reference of which is a share basket (an aggregate of different
shares) or an index in which such shares are included which are
admitted to trading on the regulated market of the Republic of
Latvia.
(2) If depository receipts have been issued for the shares of
such joint-stock company the shares of which are admitted to
trading on a regulated market, the obligation to notify shall
apply to the acquirer of depository receipts and not to the
issuer thereof.
(3) The requirements of this Section shall also apply to
persons who are entitled to obtain, acquire, or exercise voting
rights in one or several cases referred to in Section 8 of this
Law.
(4) The requirements of this Chapter shall also apply to the
persons to whom the financial instruments referred to in
Paragraph one, Clause 3 of this Section belong, provided that
they have unlimited rights to obtain the relevant shares
according to the official agreement within the specified period
of time or the right of choice to obtain or not obtain them at
their preference.
(5) The financial instruments referred to in Paragraph one,
Clause 3 of this Section are also such financial instruments in
relation to which the conditions referred to in Paragraph four of
this Section do not exist, but which are related to the shares
with voting rights of the issuer whose transferable securities
have been admitted to trading on a regulated market, or voting
rights to be potentially obtained the economic impact of which is
similar, regardless of whether such financial instruments grant
or do not grant the right to perform the settlement of accounts
in financial instruments.
(6) The list of the financial instruments referred to in
Paragraph one, Clause 3 of this Section shall be determined by
the regulations of Latvijas Banka.
(7) The requirements of this Chapter shall also be applied if
the joint-stock company the shares of which have been admitted to
trading on a regulated market in the Republic of Latvia, has been
registered in a foreign country.
[26 May 2016; 23 September 2021 / Amendment
regarding the replacement of the words "regulatory provisions"
with the word "regulations" and amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 61. Obligation to Notify
Taking into Account the Proportion of Voting Rights
(1) A person shall notify of the proportion of his or her
voting rights when, as a result of acquiring, disposing of
shares, increasing or decreasing equity or any other events, it
reaches, exceeds or becomes less than 5, 10, 15, 20, 25, 30, 50,
or 75 per cent.
(2) If the Republic of Latvia is the home Member State for a
joint-stock company, a person shall also notify of the proportion
of his or her voting rights when as a result of acquiring,
disposing of shares, increasing or decreasing share capital or
any other events it reaches, exceeds or becomes less than 90 per
cent.
[26 May 2016; 31 March 2022]
Section 61.1 Calculation
of the Proportion of Voting Rights
(1) When calculating the proportion of voting rights, all
shares with voting rights shall be taken into account also if the
exercising of voting rights is suspended.
(2) Information on all shares with voting rights shall be
indicated in information on the proportion of voting rights,
indicating shares of each category separately.
(3) Upon calculating the proportion of voting rights, a person
shall sum up all voting rights which arise from the shares with
voting rights issued by one issuer, depository receipts issued
thereto, the financial instruments referred to in Section 60,
Paragraph one, Clause 4 of this Law, if the rights arising from
the financial instruments referred to in Section 60, Paragraph
one, Clause 3 of this Law are to be exercised.
(4) Upon determining the amount of an indirectly acquired
holding of a person, the voting rights specified in Section 8 of
this Law shall also be taken into account.
(5) Upon calculating the proportion of voting rights, the
amount of directly and indirectly acquired holding and the amount
of holding to be acquired directly and indirectly shall be summed
up, if the rights arising from the financial instruments referred
to in Section 60, Paragraph one, Clause 3 of this Law are to be
exercised.
(6) The proportion of the voting rights of the financial
instruments referred to in Section 60, Paragraph one, Clause 3 of
this Law shall be calculated, taking into account to a full
extent the principal shares to be obtained from exercising the
rights arising from financial instruments. If it is intended to
perform the settlement of accounts for financial instruments only
in cash, the proportion of voting rights shall be calculated with
delta correction, multiplying the amount conditioned by the
principal shares by delta coefficient of financial instruments.
The person shall sum up all financial instruments which are
related to the same issuer, and shall include information in the
notification on all such financial instruments. Upon calculating
the total amount of all principal shares, the person shall take
into account only the long positions of financial instruments,
without performing the clearing of long and short positions of
the same issuers.
(7) The methods for determination of the delta coefficient
referred to in Paragraph six of this Section and the methods for
calculating the proportion of voting rights for financial
instruments the reference of which is a share basket or index,
shall be determined by Commission Delegated Regulation (EU)
2015/761 of 17 December 2014 supplementing Directive 2004/109/EC
of the European Parliament and of the Council with regard to
certain regulatory technical standards on major holdings
(hereinafter - Regulation No 2015/761).
(8) Within the meaning of this Chapter the principal shares
are shares with voting rights issued by an issuer whose shares
have been admitted to trading on a regulated market, which may be
obtained by the acquirer of the financial instruments referred to
in Section 60, Paragraph one, Clause 3 of this Law according to
an official agreement.
(9) In order to simplify the calculation of voting rights of
shares, a joint-stock company shall, on the last date of each
calendar month, if increase or decrease in the number of shares
with voting rights or equity has arisen during such month, update
information on the total number of shares with voting rights and
equity, distributing it in accordance with the procedures laid
down in Section 64.2 of this Law.
[26 May 2016; 20 June 2019]
Section 61.2 Notification
Procedures and Content of a Notification
(1) A person shall notify a joint-stock company and
concurrently also Latvijas Banka by submitting a relevant
notification (hereinafter in this Chapter - the notification)
when the proportion of its voting rights as a result of
acquisition, disposal of shares, increasing or decreasing of
share capital or any other events, exceeds or becomes less than
the proportion of voting rights laid down in Section 61,
Paragraph one or two of this Law.
(2) If the notification is provided in accordance with the
requirements of Section 60, Paragraph one, Clause 4 of this Law
and the base asset of the financial instrument includes shares
issued by several joint-stock companies (share basket or index),
the notification shall be provided to each relevant joint-stock
company and concurrently also to Latvijas Banka.
(3) The notification shall include information on:
1) distribution of voting rights on the day of submission of
the notification expressed in figures, as a percentage of the
share capital and of the number of shares with voting rights
according to their acquisition or disposal;
2) commercial companies in which the person has control and
with the intermediation of which the shareholder holds voting
rights;
3) day on which the proportion of voting rights specified in
Section 61, Paragraph one or two of this Law was reached or
exceeded, or decreased;
4) identity of a shareholder, even if the shareholder is not
entitled to exercise the voting rights in accordance with the
provisions of Section 8 of this Law, and identity of the natural
or legal person which is entitled to exercise the voting rights
on behalf of the shareholder.
(4) The person shall indicate separately in the notification
the proportion of voting rights which arises for him or her from
the shares, depository receipts issued thereto, the financial
instruments referred to in Section 60, Paragraph one, Clause 4 of
this Law and the benefits, if the rights arising from the
financial instruments referred to in Section 60, Paragraph one,
Clause 3 of this Law are to be exercised.
(5) The person shall indicate separately in the notification
the financial instruments referred to in Section 60, Paragraph
one, Clause 3 of this Law, separating such financial instruments
which grant the right to perform settlement of accounts in cash,
from such financial instruments which grant the right to obtain
or alienate financial instruments in performing settlement of
accounts with financial instruments.
(6) If the notification was already provided in case of
acquiring the financial instruments referred to in Section 60,
Paragraph one, Clause 3 of this Law, the person shall repeatedly
submit the notification, if he or she has acquired principal
shares in such quantity that as a result of acquisition the
proportion of voting rights of such person in equity of one
issuer reaches or exceeds the proportion of voting rights
specified in Section 61, Paragraph one or two of this Law.
(7) A form approved by the regulations of Latvijas Banka shall
be used for the notification.
[26 May 2016; 23 September 2021 / Amendment
regarding the replacement of the words "regulatory provisions"
with the word "regulations" and amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 61.3 Notification
Term and Distribution of a Notification
(1) A notification must be submitted to a joint-stock company
and concurrently also to Latvijas Banka without delay, however,
not later than within four trading days after the day when the
person:
1) finds out about acquiring of voting rights or disposal
thereof, or a possibility to exercise them or, by taking into
consideration the circumstances, he or she should have found out
thereof regardless of the day on which acquiring or disposal of
voting rights, or the possibility of exercising of voting rights
enters into effect. Within the meaning of this Clause, it shall
be regarded that a person finds out regarding acquiring,
disposing of voting rights or a possibility to exercise them not
later than within two trading days after the transaction day;
2) is informed of such event as a result of which the
proportion of voting rights of the person reaches, exceeds or
becomes less than the proportion of voting rights specified in
Section 61, Paragraph one or two of this Law.
(2) In order to determine the trading days referred to in
Paragraphs one and three of this Section and Section
61.4 of this Law, a trading day calendar of the home
Member State of the issuer shall be used which has been published
by the relevant regulated market operator on its website.
Latvijas Banka shall publish on its website the trading day
calendar of each regulated market operator whose home Member
State is the Republic of Latvia.
(3) The joint-stock company shall, not later than within one
trading day from the day of receipt of the notification referred
to in this Section, distribute it in accordance with the
procedures laid down in Section 64.2 of this Law.
[26 May 2016; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 61.4 Notification
of a Joint-Stock Company Regarding Acquisition or Disposal of its
Shares
If the issuer of shares admitted to trading on a regulated
market acquires or disposes of his or her shares, depository
receipts issued thereto, or the financial instruments referred to
in Section 60, Paragraph one, Clauses 3 and 4 of this Law himself
or herself or by intermediation of another person who is acting
on its own behalf, but in the interests of the issuer, such
issuer shall distribute information on the acquired or disposed
of proportion of own shares as soon as possible, however, not
later than within four trading days, counting from the next day
after the day of acquiring or disposing, if such proportion
reaches, exceeds, or becomes smaller than five or ten per cent of
the total number of shares with voting rights.
[26 May 2016]
Section 61.5 Requirements
for Notification in Case of Indirect Holding
(1) Each shareholder or each person who has indirectly
acquired holding in accordance with Section 8 of this Law, shall
notify of the proportion of indirectly acquired holding when it
reaches, exceeds, or becomes smaller than that laid down in
Section 61, Paragraph one or two of this Law, if the proportion
of voting rights of each abovementioned person reaches, exceeds,
or becomes smaller than that laid down in Section 61, Paragraph
one or two of this Law.
(2) All persons who have entered into an agreement shall
provide a joint notification regarding the case referred to in
Section 8, Clause 1 of this Law.
(3) In the case specified in Section 8, Clause 8 of this Law,
if the shareholder issues a power of attorney regarding
representation in one meeting of shareholders, one notification
shall be provided on the day of issue of the power of attorney.
It shall also be indicated in the notification on how voting
rights will be distributed after the authorised person will not
be entitled to exercise the voting rights at his or her
preference anymore.
(4) In the case laid down in Section 8, Clause 8 of this Law,
if the authorised person has received one or several powers of
attorney for representation in one meeting of shareholders, one
notification shall be provided on the day of issue of the power
of attorney. It shall also be indicated in the notification on
how voting rights will be distributed after the authorised person
will not be entitled to exercise the voting rights at his or her
preference anymore.
(5) If the obligation to notify refers to several persons, one
joint notification may be submitted. Provision of a joint
notification shall not release such persons from responsibility
in relation to a notification who have a duty to provide such
notification.
[26 May 2016]
Section 61.6 Notification
Procedures when Holding is Acquired by an Investment Management
Company, Investment Firm and Their Parent Undertaking
(1) When calculating the proportion of shares with voting
rights referred to in Section 61, Paragraph one or two of this
Law, the parent undertaking of an investment management company
shall not sum up shares owned thereby with the shares managed by
a subsidiary investment management company in accordance with the
requirements of the laws and regulations, unless the subsidiary
investment management company exercises voting rights
independently from the parent undertaking of the investment
management company.
(2) The exception referred to in Paragraphs one and four of
this Section shall also apply to depository receipt issued for
shares and to the financial instruments referred to in Section
60, Paragraph one, Clauses 3 and 4 of this Law.
(3) Paragraph one of this Section shall not be applied, if the
parent undertaking of an investment management company or another
commercial company controlled thereby has made investments in the
same shares in which funds of investment funds managed by the
subsidiary investment management company are invested, and the
subsidiary investment management company is not entitled, at its
preference, to exercise the voting rights which are conferred by
these shares, it may exercise such voting rights only in
accordance with direct or indirect instructions given by the
parent undertaking of an investment management company or another
commercial company controlled by the parent undertaking. Within
the meaning of this Section, direct instruction is any
instruction given by the parent undertaking of an investment
management company or commercial company controlled thereby and
which specifies how the voting rights are to be exercised by the
subsidiary investment management company or investment firm in
the particular case. Within the meaning of this Section, an
indirect instruction is any general or particular instruction
given by the parent undertaking of an investment management
company or investment firm or a commercial company controlled
thereby that limits the discretion of the subsidiary investment
management company or investment firm in relation to the exercise
of the voting rights in order to serve specific business
interests of the parent undertaking of the investment management
company or investment firm or a commercial company controlled
thereby.
(4) When calculating the proportion of shares with voting
rights referred to in Section 61, Paragraph one or two of this
Law, the parent undertaking of an investment firm shall not sum
up the shares owned thereby with the shares which are
individually managed by a subsidiary investment firm according to
the authorisation of the investor within the meaning of Section
3, Paragraph four, Clause 4 of this Law, provided that the
subsidiary investment firm:
1) has received the licence for the provision of the
investment service specified in Section 3, Paragraph four, Clause
4 of this Law;
2) may exercise the voting rights arising from such shares
only according to instructions by a person not related to the
investment firm provided in writing or electronically, or it
ensures that investment portfolio individual management services
are provided regardless of all other services in accordance with
the conditions conforming to that provided for in the Law on
Investment Management Companies, applying relevant
mechanisms;
3) exercises its voting rights regardless of the parent
undertaking of the investment firm.
(5) Paragraph four of this Section shall not be applied, if
the parent undertaking of an investment firm or a commercial
company controlled thereby has made investments in the shares
which are managed by its subsidiary investment firm, and a
subsidiary investment firm is not entitled, at its preference, to
exercise the voting rights arising from the shares of managed
thereby, from depository receipt issued thereto, and it may
exercise such voting rights only according to direct or indirect
instructions given by the parent undertaking of the investment
firm or another commercial company controlled by the parent
undertaking of the investment firm.
(6) Paragraphs one and four of this Section shall be applied
in cases when a parent undertaking of the investment management
company or a parent undertaking of the investment firm
(hereinafter in this Section both together or each individually -
the parent undertaking) conforms to the following conditions:
1) it may not influence exercise of the voting rights arising
from the shares owned by its subsidiary investment management
company or subsidiary investment firm (hereinafter in this
Section both together or each individually - the subsidiary) and
depository receipts issued thereto with direct or indirect
instructions or in any other way;
2) a subsidiary may freely and independently from the parent
undertaking exercise the voting rights which arise from the
shares under its management and depository receipt issued
thereto.
(7) If the parent undertaking wishes to apply the exception
provided for in Paragraphs one and four of this Section, it
shall, without delay, send the following information to the
competent authority of the home Member State:
1) a list of subsidiaries, indicating the supervisory
authorities of each subsidiary or indicating that there are no
such supervisory authority. When providing such information, it
is not necessary to indicate the relevant issuers;
2) a certification that the parent undertaking has fulfilled
the conditions referred to in Paragraph six of this Section in
respect of each subsidiary thereof.
(8) The parent undertaking shall update the list referred to
in Paragraph seven, Clause 1 of this Section and notify the
competent authority of the home Member State of the issuer
thereon.
(9) If the parent undertaking wishes to apply the requirements
of Paragraphs one and four of this Section only for the financial
instruments referred to in Section 60, Paragraph one, Clause 3 of
this Law, it shall send the list referred to in Paragraph seven,
Clause 1 of this Section to the competent authority of the home
Member State of the issuer.
(10) Upon request of Latvijas Banka, the parent undertaking
has an obligation to prove that:
1) the organisational structure of the parent undertaking and
subsidiary is such that the subsidiary can exercise the voting
rights arising from the shares under its management independently
from the parent undertaking;
2) the persons who take decisions to exercise the voting
rights are acting independently;
3) if the parent undertaking is a client of the subsidiary or
it manages the same financial instruments as managed by the
subsidiary, a written agreement has been entered into between the
parent undertaking and subsidiary that both parties shall act
independently in respect of exercising the voting rights at
meetings of shareholders.
(11) Paragraph ten, Clause 1 of this Section shall be regarded
as conformed to, if the parent undertaking and subsidiary have
developed at least a policy and procedures which ensure
non-distribution of information related to exercising the voting
rights between the parent undertaking and subsidiary.
[26 May 2016; 21 June 2018; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 62. Derogations from the
Obligations to Notify
(1) The requirements of Section 61.2 of this Law
shall not apply to shares which are acquired only for the
purposes of clearing and settlement in a standard settlement
cycle, and also to shares in possession of a financial
intermediary, if the financial intermediary may exercise the
voting rights arising from the shares only according to the
instructions which are provided by the shareholder in writing or
electronically.
(2) The duration of the standard settlement cycle referred to
in Paragraph one of this Section shall be two trading days after
the day of entering into a transaction.
(3) The requirements of Section 61.2 of this Law
shall not apply to a case when a market maker has acquired or
lost such major holding which reaches or exceeds proportion of
five per cent, if the market maker is acting in such status,
provided that it:
1) has received the licence of the home Member State in
accordance with the requirements of laws and regulations;
2) does not participate in the management of the relevant
issuer, and also does not influence the issuer in any way in
order for the shares to be purchased or the share price to be
maintained;
3) fulfils the requirements of Section 62.1 of this
Law.
(4) A credit institution or an investment firm for which the
Republic of Latvia is the home Member State shall not, upon
calculating the proportion of voting rights, take into account
the shares with voting rights included in the trading portfolio,
depository receipts issued thereto, and the financial instruments
referred to in Section 60, Paragraph one, Clauses 3 and 4 of this
Law, if the total proportion of voting rights does not exceed
five per cent of all shares with voting rights and the
abovementioned voting rights are not exercised or otherwise used
in order to influence the work of administration institutions of
the joint-stock company (issuer) and the economic and financial
activities of the joint-stock company.
(5) The requirements of Section 8, Clause 3 and Section
61.2 of this Law shall not apply to the shares,
depository receipts issued thereto, and the financial instruments
referred to in Section 60, Paragraph one, Clauses 3 and 4 of this
Law which are granted to the participants of the European System
of Central Banks or which have been granted thereby by performing
their functions as monetary institutions, including to the shares
which are granted to the participants of the European System of
Central Banks or which they have granted according to a pledge
agreement, repurchase agreement, or similar agreement related to
liquidity, which is provided for the monetary policy purposes or
in payment system. It shall also apply to the abovementioned
transactions which last for a short time period, if the voting
rights arising from such shares are not exercised.
(6) The notification specified in Section 61.2 of
this Law shall not be provided, if shares, depository receipts
issued thereto, and the financial instruments referred to in
Section 60, Paragraph one, Clauses 3 and 4 of this Law are
acquired by the subsidiary and the notification has already been
provided by the parent undertaking or the parent undertaking
itself is a controlled commercial company and the notification
has been provided by its parent undertaking.
(7) If, in accordance with the procedures laid down in Section
61.2 of this Law, a person who has acquired shares in
the form of indirect holding, has provided a notification
regarding acquisition of shares, depository receipts issued
thereto, and the financial instruments referred to in Section 60,
Paragraph one, Clauses 3 and 4 of this Law, the persons with the
help of whom the indirect acquisition of shares has taken place,
shall not be required to report on the acquisition of shares.
(8) The notification specified in Section 61.2 of
this Law shall not be provided, if voting rights arise from a
transaction with shares directed towards stabilisation of the
financial instrument and performed in accordance with the
provisions of Commission Regulation No 2273/2003, if voting
rights arising from shares are not exercised or have been
otherwise exercised in order to influence the work of
administration bodies of the issuer and its economic and
financial activities.
(9) The method for calculating the proportion of five per cent
referred to in Paragraphs three and four of this Section and the
cases when the notification requirements are not applicable to
transactions, shall be determined by Regulation No 2015/761.
[22 May 2008; 26 May 2016; 21 June 2018]
Section 62.1 Control of a
Market Maker
(1) If a market maker wants to use the exemption referred to
in Section 62, Paragraph three of this Law, it shall, as soon as
possible, however not later than within four trading days, notify
Latvijas Banka that it is acting or wants to act as a market
maker in respect of the financial instruments issued by the
particular issuer. If the market maker is no longer acting as a
market maker in respect of financial instruments issued by the
particular issuer, it shall, as soon as possible, however not
later than within four trading days, notify Latvijas Banka of his
decision.
(2) Latvijas Banka shall approve a sample form to be used for
the notifications referred to in Paragraph one of this
Section.
(3) If a market maker wants to use the exemption referred to
in Section 62, Paragraph three of this Section, Latvijas Banka
may request that the market maker indicates those financial
instruments with which it carries out trading as a market maker.
The market maker shall indicate the abovementioned financial
instruments by any verifiable means, but, if the market maker
fails to indicate precisely those financial instruments with
which it carries out trading as a market maker, Latvijas Banka
has the right to request that the market maker keeps such
financial instruments in a separate financial instrument account
for identification purposes.
[22 May 2008; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 63. Requirements for an
Issuer Registered in a Foreign Country
(1) An issuer the registered office of which is in a foreign
country has the right not to apply the requirements of Section
54, Paragraphs one, two, and nine, Section 54, Paragraph three,
Clause 6, Section 54, Paragraph eight, Sections 56, 57,
57.2, 58, and Section 61.1, Paragraph nine,
Section 61.3, Paragraph three and Section
61.4 of this Law if the information provided by the
issuer in accordance with the requirements of the legal acts of
its country is the same as that laid down in the laws and
regulations of the Republic of Latvia or it has been recognised
as equivalent by Latvijas Banka. Information provided by the
issuer the registered office of which is in a foreign country in
accordance with the requirements of the legal acts of the foreign
country shall be provided by him in accordance with the
procedures laid down in this Law.
(2) If transferable securities of an issuer the registered
office of which is in a foreign country are admitted to trading
on a regulated market, information provided thereby in the
foreign country and also important in Latvia even when it is not
regulated information within the meaning of this Law, shall be
distributed in accordance with the procedures laid down in
Section 64.2 of this Law.
(3) When a commercial company the registered office of which
is in a foreign country provides investment services for the
provision of which the permit for the provision of investment
services is required in a Member State, it need not sum up the
shares referred to in Section 61.6, Paragraphs one,
three, and five of this Law with the shares of its parent
undertaking if it as an investment management company or
investment firm conforms to such conditions for the independence
of activity that have been stipulated by Latvijas Banka.
(4) [22 May 2008]
[22 May 2008; 26 February 2009; 26 May 2016; 21 September
2017; 23 September 2021 / Amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 63.1 Recognition
of Information Provided by an Issuer Registered in a Foreign
Country as Equivalent
(1) If the registered office of an issuer is in a foreign
country and its management report is prepared in accordance with
the requirements of the legal acts of the relevant foreign
country, it shall be regarded as equivalent to the requirements
of Section 56, Paragraph one, Clause 2 of this Law, if at least
the following is provided therein:
1) a clear review regarding the development of commercial
activities and the financial results of activities of the issuer,
and also a review on the main risks and uncertainties faced
thereby. The review shall provide a comprehensive and complete
analysis of the results of the development of the commercial
activities and financial activities of the issuer, taking into
account the amount and complexity of the transactions of the
issuer. Indicators of the results of main financial and, where
possible, non-financial activities which characterise the
relevant field of commercial activities, shall be included in the
analysis referred to in this Clause insofar as it is necessary
for understanding the results of the development of commercial
activities and financial activities;
2) information on any important events since the end of the
previous financial year;
3) information on foreseeable further development of the
issuer.
(2) If the registered office of an issuer is in a foreign
country and the legal acts of the foreign country provide for a
requirement to submit, in addition to the management report for
interim periods, condensed financial statements, the management
report for interim periods prepared by such issuer shall be
regarded as equivalent to the requirements of Section 57,
Paragraph three, Clause 2 of this Law if it includes information
on at least the following:
1) the relevant interim period;
2) foreseeable development of the issuer in the next six
months of the financial year;
3) the largest transactions with related parties. This
requirements shall apply to a capital company the shares of which
are admitted to trading on a regulated market, if such
information has not been already provided.
(3) If the registered address of an issuer is in a foreign
state and legal acts of the foreign state provide for a
requirement that a person or persons of the issuer are
responsible for the preparation of financial information for a
year or half-year, particularly in respect of conformity of
preparation of financial statements with the applicable
regulations for preparing financial statements or with accounting
standards, also regarding veracity of the statement on
responsibility of the management, a statement of the management's
responsibility prepared by such issuer shall be regarded as
equivalent to the requirements of Section 56, Paragraph one,
Clause 3 and Section 57, Paragraph three, Clause 3 of this
Law.
(4) In cases when the registered address of an issuer is in a
foreign country and legal acts of the foreign country does not
provide for the requirement to submit, in addition to the
consolidated annual report, also annual statement of a capital
company, the prepared consolidated annual statement shall be
regarded as conforming to the provisions of Section 56, Paragraph
two of this Law if the consolidated financial statements have
been prepared in accordance with international financial
reporting standards or equivalent international financial
reporting standards.
(41) In addition to international financial
reporting standards in respect of consolidated financial
statements and consolidated financial statements of interim
periods of six-months, the following shall be regarded as
equivalent international financial reporting standards:
1) international financial reporting standards provided that
notes to the inspected or audited financial statements includes a
clear and direct notification that this financial statement
conforms to the International Accounting Standard 1 "Presentation
of financial statements" adopted by Commission Regulation (EC) No
1274/2008 of 17 December 2008 amending Regulation (EC) No
1126/2008 adopting certain international accounting standards in
accordance with Regulation (EC) No 1606/2002 of the European
Parliament and of the Council as regards International Accounting
Standard (IAS) 1;
2) Generally Accepted Accounting Principles of Japan;
3) Generally Accepted Accounting Principles of the United
States of America;
4) Generally Accepted Accounting Principles of the People's
Republic of China;
5) Generally Accepted Accounting Principles of Canada;
6) Generally Accepted Accounting Principles of Korea.
(42) An issuer the registered office of which is in
a foreign country shall distribute a notification about the date
on which it will switch to international financial reporting
standards in accordance with the procedures laid down in Section
64.2 of this Law, and Latvijas Banka shall revoke the
requirement for the recognition of equivalence in respect of such
issuer from the date referred to in the notification.
(43) In cases when a registered office of an issuer
is in a foreign country and it does not use international
financial reporting standards or equivalent international
financial reporting standards, the consolidated annual statement
prepared shall be regarded as conforming to the requirements of
Section 56, Paragraph two of this Law, if it comprises
information on:
1) calculation of dividends and ability to disburse dividends.
This requirement shall apply to issuers of shares;
2) liquidity of the issuer and minimum capital requirements,
if such requirements have been laid down in the legal acts of the
relevant foreign country.
(5) The issuer, upon request of the competent authority of the
home Member State, shall submit to it information examined by a
sworn auditor on its non-consolidated financial statements which
is related to information included in the consolidated annual
statement. Such information may be prepared in accordance with
the requirements of the legal acts of the relevant foreign
country.
(6) If the registered office of an issuer is in a foreign
country and in accordance with the requirements of the legal acts
of this foreign country the issuer does not prepare a
consolidated annual statement, but the financial statement
thereof is prepared in accordance with the international
accounting standards approved by the European Commission and
international financial reporting standards or in accordance with
the requirements of the legal acts of a foreign country which are
equivalent to the requirements of the international accounting
standards approved by the European Commission and international
financial reporting standards, the financial statement prepared
by such issuer shall be regarded as conforming to the
requirements of Section 56, Paragraphs three and four of this
Law. The financial statement of the issuer shall be audited.
(7) If the financial statement of a foreign issuer is not
prepared in accordance with the requirements of Paragraph six of
this Section, such issuer shall additionally indicate in the
financial statement also data which are calculated in accordance
with the requirements of the international accounting standards
approved by the European Commission and international financial
reporting standards.
(8) If the registered office of an issuer is in a foreign
country and the requirements of such foreign country provide that
the total time period for the receipt of information on acquiring
or terminating a major holding and distribution thereof is seven
trading days or less, it shall be regarded that the requirement
of the legal acts of such foreign country is equivalent to that
laid down in Section 61.3, Paragraph one of this Law.
The time periods within which the issuer is informed of acquiring
or terminating a major holding and the information received is
distributed, may differ from that laid down in Section
61.3, Paragraphs one and three of this Law.
(9) The requirements of the legal acts of a foreign country
shall be regarded as equivalent to the requirements of Section
61, Paragraph one of this Law, if the issuer the registered
office of which is in this foreign country has an obligation to
comply with the following requirements:
1) if the issuer is authorised to keep its shares which form
up to five per cent of the proportion of the voting rights, it
shall, each time when such proportion is reached or exceeded,
provide a notification thereon;
2) if the issuer is authorised to keep its shares which form
five to 10 per cent of the proportion of the voting rights, it
shall, each time when proportion of five or 10 per cent is
reached or exceeded, provide a notification thereon;
3) if the issuer is authorised to keep its shares which form
more than 10 per cent of the proportion of the voting rights, it
shall, each time when proportion of five or 10 per cent is
reached or exceeded, provide a notification thereon.
(10) If the registered office of an issuer is in a foreign
country and the requirement, that within 30 calendar days after
increase or decrease in the number of shares with voting rights
or share capital the issuer distributes such information, is laid
down in the legal acts of such foreign country, it shall be
regarded that the requirement of such foreign country is
equivalent to the requirement of Section 61, Paragraph eight of
this Law.
(11) If the registered office of an issuer is in a foreign
country and the requirement to provide information on the place,
time, and agenda of the meeting of shareholders is laid down in
the legal acts of such foreign country, it shall be regarded that
such requirement of the laws and regulations of such foreign
country in respect of the content of the abovementioned
information is equivalent to the requirements of Section 54,
Paragraph two, Clause 1 and Section 54, Paragraph three, Clause 1
of this Law.
(12) The requirements of the legal acts of a foreign country
shall be regarded as equivalent to the requirements of Paragraphs
one and five of Section 61.6 of this Law, if they
provide that the commercial companies referred to in Section 63,
Paragraph three of this Law conform to the following
conditions:
1) the subsidiary which is an investment management company or
investment firm exercises the voting rights arising from the
financial instruments under its management freely and
independently from its parent undertaking;
2) in case of any conflict of interest a subsidiary which is
an investment management company or investment firm votes
independently from the parent undertaking or interests of the
commercial company controlled thereby.
(13) The parent undertaking referred to in Paragraph twelve of
this Section shall conform to the requirements of Section
61.6, Paragraph seven, Clause 1 and Paragraph nine of
this Law, and also provide confirmation that the parent
undertaking has fulfilled the conditions referred to in Paragraph
twelve of this Section in respect of each subsidiary investment
management company or subsidiary investment firm thereof.
(14) The parent undertaking referred to in Paragraph twelve of
this Section shall prove Latvijas Banka that it has fulfilled the
obligation laid down in Section 61.1, Paragraph
6.5 of this Law.
(15) If the registered office of an issuer is in a foreign
country and the legal acts of the foreign country provide for an
obligation to publish accounts for interim periods for the first
three, six, and nine, months, it shall be regarded that such
requirement is equivalent to the requirements of Section 57,
Paragraph one and Section 57.2, Paragraph one of this
Law.
[22 May 2008; 26 February 2009; 8 November 2012; 26 May
2016; 23 September 2021 / Amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 64. Consequences of Failure
to Give Notice
[22 May 2008]
Section 64.1 Use of
Languages for the Submission of the Regulated Information
(1) If the home country of the issuer is the Republic of
Latvia and transferable securities of the relevant issuer are
admitted to trading on a regulated market only in the Republic of
Latvia, the regulated information shall be provided in the
official language.
(2) If the home country of the issuer is the Republic of
Latvia and transferable securities of the relevant issuer are
admitted to trading on a regulated market in both, in the
Republic of Latvia and in one or several Member States, the
regulated information shall be provided in the official language
and - depending on the choice of the issuer - either in a
language accepted by the competent authorities of the relevant
Member States or in a language customary in the sphere of
international finance.
(3) If transferable securities are admitted to trading on a
regulated market in one or several Member States, except for the
Republic of Latvia, the regulated information, at the choice of
the issuer, shall be provided either in a language accepted by
the competent authorities of the relevant Member States or in a
language customary in the sphere of international finance.
(4) If the home country of the issuer is not the Republic of
Latvia and transferable securities of such issuer are admitted to
trading only on a regulated market in the Republic of Latvia, but
are not admitted to trading on a regulated market of the country
of origin of the issuer, the regulated information, at the choice
of the issuer, shall be provided in the official language or in a
language customary in the sphere of international finance.
(5) If admission of transferable securities to trading on a
regulated market is requested by other persons, other than
issuer, the requirements of Paragraphs one, two, and three of
this Section shall apply to a person who has requested an
authorisation to admit transferable securities to trading on a
regulated market, but not to the issuer.
(6) Shareholders, acquirers of depository receipts, and
persons who are entitled to acquire, dispose of, or exercise
voting rights in one or several cases which are referred to in
Section 8 of this Law may provide the regulated information to a
joint-stock company in a language customary in the sphere of
international finance.
(7) In cases when transferable securities the denomination of
one unit of which is at least EUR 100 000, or if the value of
debt securities is expressed in a currency other than euro, the
denomination of one unit of which is at least an equivalent of
EUR 100 000 on the day of issue, are admitted to trading on a
regulated market in one or several Member States, the regulated
information, at the choice of the issuer or a person who has
sought admission of transferable securities to trading on a
regulated market shall be provided to the public in a language
accepted by Latvijas Banka and competent authorities of the
relevant host Member State or in a language customary in the
sphere of international finance.
(8) If a Member State brings an action to the court regarding
the content of the regulated information, then the costs incurred
for the translation of the necessary information shall be covered
in accordance with the legal acts of the Member States.
(9) The requirements of Paragraph seven of this Section shall
apply also to those persons owning transferable securities the
denomination of one unit of which is at least EUR 50 000, or if
the value of debt securities is expressed in a currency other
than euro, the denomination of one unit of which is at least
equivalent of EUR 50 000, and such securities have been admitted
to trading on a regulated market in the European Union before 31
December 2010 until the day when such securities are deleted.
[26 February 2009; 13 January 2011; 22 March 2013; 19
September 2013; 21 September 2017; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 64.2 Distribution
of the Regulated Information and Access to the Regulated
Information
(1) An issuer or a person who has sought admission of
transferable securities to trading on a regulated market shall
disclose the regulated information by using mass media or other
information distribution channels (hereinafter in this Section -
mass media) by taking into account the provisions of this Section
and in such a way which ensures distribution of information for
the widest possible public and wherever possible concurrently for
his or her home Member State and other Member States, and
concurrently shall send the regulated information to the official
storage system of his or her home Member State in accordance with
the procedures laid down in this Section.
(2) The procedures for establishing and maintaining the
official storage system, including security requirements of the
official storage system and requirements for the distribution of
the regulated information, and also the procedures for sending
information to the official storage system shall be determined by
Latvijas Banka. The requirements for preparation, insertion, and
searching of the regulated information, for the procedures for
assigning identifiers to the European electronic access point
shall be determined by the directly applicable legal acts of the
European Union regarding harmonisation of the disclosure
requirements in relation to information on the issuers whose
securities are admitted to trading on a regulated market.
(3) The regulated information shall be distributed to the mass
media as non-revised full text. In respect of the regulated
information referred to in Sections 56, 56.1, 57, and
57.2 of this Law, this requirement shall be regarded
as fulfilled, if it is indicated in the notification provided to
the mass media on which website the regulated information is
distributed in addition to the official storage system.
(31) The regulated information shall be provided to
the mass media so as to:
1) ensure a reference to the source of the regulated
information and communications security, reduce the risk that
data could be changed or unauthorised access thereto could be
possible;
2) be explicitly clear that it is the regulated information by
clearly indicating the relevant issuer, subject of the regulated
information, and also the time and date when the regulated
information is provided.
(32) In order to guarantee security in respect of
transfer of the regulated information to the mass media, the
issuer or person who has sought admission of transferable
securities to trading on a regulated market, shall as soon as
possible rectify communication errors or interferences, if any
have occurred during the information transfer process. The issuer
or person who has sought admission of transferable securities to
trading on a regulated market is not liable for systemic errors
or deficiencies of those mass media to which the regulated
information is transferred.
(4) The regulated information shall be freely available to any
interested person for at least 10 years since the placement
thereof in the official storage system.
(5) An issuer or a person who has sought admission of
transferable securities to trading on a regulated market has no
right to charge investors for provision of the regulated
information referred to in this Law.
(6) In order to ensure that information published in
accordance with the laws and regulations is easily available to
any interested person, Latvijas Banka shall post a list with
website addresses of regulated market operators, the Enterprise
Register, and also official storage systems of other Member
States on its website.
(7) The requirements for electronic reporting format of
financial statements for insertion of the financial statement in
the European electronic access point shall be determined by the
directly applicable legal acts of the European Union regarding
harmonisation of the disclosure requirements in relation to
information on the issuers whose securities are admitted to
trading on a regulated market.
[22 May 2008; 26 February 2009; 15 October 2009; 22 March
2012; 26 May 2016; 21 September 2017; 21 June 2017; 23 September
2021 / Amendment regarding the replacement of the word
"Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 64.3 Rights of
Latvijas Banka
(1) In order to ensure conformity with the provisions of
Section 54, and also Division D, Chapters III and IV of this Law
by having regard to the requirements of the laws and regulations
governing personal data protection, Latvijas Banka has the
following rights in addition to the rights laid down in the Law
on Latvijas Banka and the rights laid down in this Law:
1) to request information and documents necessary for
performance of the tasks thereof from sworn auditors, issuers,
shareholders, acquirers of depository receipts, persons who are
entitled to acquire, dispose of, or exercise voting rights in one
or several cases that are referred to in Section 8 of this Law,
and also from persons who have control over commercial companies
or who are controlled thereby;
2) to request within the time period and in accordance with
the procedures laid down thereby that the issuer, in accordance
with Paragraph one, Clause 1 of this Section, discloses the
information requested by Latvijas Banka to the public if Latvijas
Banka regards it as necessary. If the issuer or persons who have
control over a commercial company or who are controlled thereby
fail to comply with the requirement of Latvijas Banka, Latvijas
Banka is entitled to publish such information upon its own
initiative after having listened to the opinion of the
issuer;
3) to request an issuer, shareholder, acquirer of a depository
receipt, holder of other financial instruments, or persons who
have the right to acquire, dispose of, or exercise voting rights
in one or several cases that are referred to in Section 8 of this
Law, to notify information requested by the requirements of the
laws and regulations governing operation of financial instruments
market, and also, where appropriate, to request to provide
additional information or documents;
4) to suspend or request that regulated market operator
suspend trading in securities for a time period up to 10 days, if
it has a justified reason to consider that the issuer has
infringed the requirements of the laws and regulations governing
operation of financial instruments market;
5) to prohibit trading in transferable securities on a
regulated market, if it discovers that the requirements of the
laws and regulations governing operation of financial instruments
market are violated, or there are substantiated suspicions of
such violation;
6) to supervise, if the issuer publishes information in a
timely manner in order to ensure effective and equivalent access
to information for the public in all Member States in which
transferable securities are admitted to trading on a regulated
market, and also to implement the necessary measures, if the
requirements of the relevant laws and regulations are not
fulfilled;
7) to publicly notify the fact that an issuer, shareholder,
acquirer of a depository receipt, holder of other financial
instruments, or persons who have the right to acquire, dispose
of, or exercise voting rights in one or several cases that are
referred to in Section 8 of this Law, have not fulfilled the
requirements of the laws and regulations governing operation of
financial instruments market;
8) to verify that the regulated information is prepared in
conformity with the requirements for preparing financial
statements, and to implement the necessary measures if any
violations have been established;
81) to verify whether the regulated information
truly and fairly reflects information on the issuer, his
activities and corporate governance;
9) to verify on site the fulfilment of the requirements of the
laws and regulations governing operation of financial instruments
market;
10) to request information and documents necessary for the
performance of its tasks from a market maker, including an
agreement entered into between the market maker and regulated
market operator or issuer, if any;
11) to request the following data from the issuer or person
who has sought admission of transferable securities to trading on
a regulated market, regarding provision of the regulated
information to the mass media:
a) given name and surname of the person who has transferred
the regulated information to the mass media;
b) security observed during the process of transfer of the
regulated information;
c) data and time when the regulated information was
transferred to the mass media;
d) information medium by which the regulated information was
transferred;
e) data regarding any restrictions, if any, for disclosure of
the regulated information stipulated by the issuer.
(2) If Latvijas Banka establishes that the issuer of another
Member State or a shareholder of such issuer, acquirer of a
depository receipt, holder of other financial instruments, or a
person who has the right to acquire, dispose of, or exercise
voting rights in one or several cases that are referred to in
Section 8 of this Law, has violated the requirements of the laws
and regulations governing operation of financial instruments
market, he or she shall notify such facts to the competent
authority of the home Member State and the European Securities
and Markets Authority.
(3) If Latvijas Banka has informed the competent authority of
the relevant home Member State in accordance with the
requirements of Paragraph two of this Section, however, the
implemented measures turned out ineffective and the persons
referred to in Paragraph two of this Section continue to violate
or fail to fulfil the requirements of the laws and regulations
governing operation of financial instruments market, Latvijas
Banka is entitled to implement all the necessary measures in
order to protect the interests of investors, and also shall
inform the European Commission and the European Securities and
Markets Authority thereof in accordance with the requirements of
Section 147 of this Law.
(4) [26 May 2016]
[22 May 2008; 22 March 2012; 26 May 2016; 21 September
2017; 23 September 2021 / Amendment regarding the
replacement of the words "Law on the Financial and Capital Market
Commission" with the words "Law on Latvijas Banka" and amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 64.4
Responsibility of a Sworn Auditor
If a sworn auditor provides information to Latvijas Banka
requested thereby in accordance with Section 64.3,
Paragraph one, Clause 1 of this Law, it shall not be considered
as violation of information disclosure prohibition, and the sworn
auditor shall not be held liable in accordance with the laws and
regulations or agreement entered into between the sworn auditor
and a capital company.
[23 September 2021 / Amendment regarding the replacement of
the word "Commission" with the words "Latvijas Banka" shall come
into force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Chapter V
Share Take-over Bid
[31 March 2022]
Section 65. Scope of this
Chapter
[31 March 2022]
Section 66. Mandatory Share
Take-over Bid
[31 March 2022]
Section 67. Voluntary Share
Take-over Bid
[31 March 2022]
Section 68. Competing Share
Take-over Bid
[31 March 2022]
Section 69. General Provisions for a
Share Take-over Bid
[31 March 2022]
Section 69.1 Supervision
of a Take-over Bid
[31 March 2022]
Section 70. Procedures for
Submitting a Share Take-over Bid Prospectus
[31 March 2022]
Section 71. Prospectus for a Share
Take-over Bid
[31 March 2022]
Section 72. Procedures for Revising
a Prospectus for a Share Take-over Bid
[31 March 2022]
Section 72.1 Mutual
Recognition of a Prospectus for Take-over Bid
[31 March 2022]
Section 73. Disclosure of
Information on a Share Take-over Bid
[31 March 2022]
Section 74. Setting of Price in a
Mandatory Share Take-over Bid
[31 March 2022]
Section 74.1 Rights of a
Shareholder to Request Buy-Back of Shares in Case of Failure to
Express the Mandatory Share Take-over Bid
[31 March 2022]
Section 75. Procedures for Amending
Provisions of a Share Take-over Bid
[31 March 2022]
Section 76. Procedures for
Withdrawal of a Share Take-over Bid
[31 March 2022]
Section 77. Duties of a Target
Company
[31 March 2022]
Section 78. Prohibition against
Hindering the Procedure of a Share Take-over Bid
[31 March 2022]
Section 79. Notification on Results
of a Share Take-over Bid
[31 March 2022]
Section 80. Accounting
[31 March 2022]
Section 81. Final Share Buy-back
[31 March 2022]
Section 82. Examination of Documents
of a Final Share Buy-back
[31 March 2022]
Section 83. Disposal of Shares in
Favour of a Person who Performs the Final Share Buy-back
[31 March 2022]
Section 83.1 Request of
Minority Shareholders to Buy Back Shares
[31 March 2022]
Chapter VI
Prohibition to Use Inside Information and Market
Manipulation
Section 84. Scope of this
Chapter
(1) This Chapter, in addition to that provided for in
Regulation No 596/2014, shall determine the rights and
obligations of Latvijas Banka as the competent authority within
the meaning of Regulation No 596/2014 in supervising the use of
inside information and preventing manipulations in financial
markets.
(2) In order to ensure the fulfilment of the rights and
obligations referred to in Paragraph one of this Section,
Latvijas Banka shall issue regulations determining:
1) the information to be considered inside information and
disclosable to the public;
2) the cases when a delay of publishing inside information may
mislead the public or immediate disclosure if information may
endanger the lawful interests of an issuer or a participant of
the emissions trading market;
3) the requirements in relation to the procedures by which a
person performing administration duties or persons closely
affiliated therewith shall notify of the transactions
performed.
[12 December 2019; 23 September 2021 / Amendment
regarding the replacement of the words "regulatory provisions"
with the word "regulations" and amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 84.1 Liability
for Unlawful Use, Disclosure, of and Manipulations with Inside
Information in Financial Markets
(1) A person shall be held criminally liable for unlawful use
of inside information in financial markets, recommendation to
another person, or incitation of another person to engage in the
use of inside information in financial markets in the cases
provided for in the Criminal Law, if the violation of the
prohibition referred to in Article 14(a) or (b) of Regulation No
596/2014, and also the activities provided for in Article 8 of
this Regulation are established. In other cases when the
violation of the prohibition referred to in Article 14(a) or (b)
of Regulation No 596/2014, and also the activities provided for
in Article 8 of this Regulation are established, liability shall
set in for the person in accordance with Section 148 of this
Law.
(2) If inside information of the financial market is or has
been at the disposal of a person and the action of a person is
lawful in accordance with Article 9 of Regulation No 596/2014, it
shall not be considered that the abovementioned person has
unlawfully used such information and engaged in the use of inside
information in financial markets in relation to acquisition or
disposal of securities.
(3) A person shall be held criminally liable for unlawful
disclosure of inside information of financial market, if the
prohibition of unlawful disclosure of inside information referred
to in Article 14(c) of Regulation No 596/2014, and also the
activities provided in in Article 10 of this Regulation have been
established. It shall not be considered that a person has
unlawfully disclosed inside information of financial market, if
disclosure of information takes place when the person carries out
work, official or professional duties or when disclosure is
considered market sounding conducted in accordance with Article
11(1), (2), (3), (4), (5), (6), (7), and (8) of Regulation No
596/2014.
(4) A person shall be held criminally liable in the cases
provided for in the Criminal Law for manipulations in financial
markets, if the violation of the prohibition of manipulations
referred to in Article 15 of Regulation No 596/2014 has been
established, upon the person committing any of the following
activities:
1) entering into a transaction, placing an order to trade or
any other behaviour which:
a) gives, or is likely to give, false or misleading signals as
to the supply of, demand for, or price of, a financial
instrument, or a related spot commodity contract;
b) secures, or is likely to secure, the price of one or
several financial instruments, a related spot commodity contract
at an abnormal or artificial level, unless the person entering
into a transaction or placing an order to trade establishes that
such transaction, order or behaviour have been carried out for
legitimate reasons, and conform with an accepted market practice
in the relevant market place;
2) entering into a transaction, placing an order to trade or
any other activity or behaviour which affects or is likely to
affect the price of one or several financial instruments or a
related spot commodity contract, which employs a fictitious
device or any other form of deception or contrivance;
3) disseminating information through the media, including the
internet, or by any other means, which gives, or is likely to
give, false or misleading signals as to the supply of, demand
for, or price of, a financial instrument or a related spot
commodity contract or secures the price of one or several
financial instruments or a related spot commodity contract at an
abnormal or artificial level;
4) transmitting false or misleading information, providing
false or misleading data, or any other behaviour which
manipulates the calculation of a benchmark.
(5) In cases when a person is not to be held criminally liable
for manipulations in financial markets, however, the activities
referred to in Paragraph four of this Section and Article 12 of
Regulation No 596/2014 are established, the liability of the
person shall set in in accordance with Section 148 of this
Law.
[26 May 2016]
Section 85. Prohibition to Use
Inside information
[26 May 2016 / See Paragraph 55 of Transitional
Provisions]
Section 86. List of Holders of
Inside Information
[26 May 2016 / See Paragraph 55 of Transitional
Provisions]
Section 86.1 Notification
Regarding a Transaction in Financial Instruments
[26 May 2016 / See Paragraph 55 of Transitional
Provisions]
Section 87. Duty to Publish Inside
Information and Derogations therefrom
[26 May 2016 / See Paragraph 55 of Transitional
Provisions]
Section 88. Prohibition against
Market Manipulation
[26 May 2016 / See Paragraph 55 of Transitional
Provisions]
Section 88.1 Accepted
Market Practice
[26 May 2016 / See Paragraph 55 of Transitional
Provisions]
Section 89. Duty to Refrain from
Executing a Transaction
[26 May 2016 / See Paragraph 55 of Transitional
Provisions]
Section 90. Rights of Latvijas
Banka
In order to ensure conformity with the provisions of
Regulation No 596/2014 and this Chapter, in addition to the
rights laid down in the Law on Latvijas Banka and other rights
laid down in this Law, Latvijas Banka has the following
rights:
1) to request and receive from the financial instrument market
participants the records of telephone conversations and other
types of data transmission records;
2) to request from market participants standardised
information and reports on transactions with derived instruments
of goods in related spot markets, and also to directly access
such trading systems;
3) to assign credit institutions and investment firms to
suspend operations with financial instruments in the account of a
person or movement of funds in the account of a person for the
period laid down in the decision of Latvijas Banka;
4) to temporarily suspend trade in financial instruments;
5) to request the financial instrument market participants to
cease any activities which are contrary to the provisions of
Regulation No 596/2014 and this Chapter;
6) to temporarily restrict the activities of a financial
instrument market participant;
7) to request, within the time period specified thereby, that
the issuer or another person which has disclosed or distributed
false or misleading information, publishes a notification
regarding amending of the previously provided information in
accordance with the procedures laid down in Regulation No
596/2014;
8) to address law enforcement authorities with an application
regarding initiation of criminal proceedings.
[26 May 2016; 23 September 2021 / Amendment
regarding the replacement of the words "Law on the Financial and
Capital Market Commission" with the words "Law on Latvijas Banka"
and amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 91. Civil Liability
[26 May 2016 / See Paragraph 55 of Transitional
Provisions]
Division E
Central Securities Depository
[14 September 2017]
Section 92. Operation of the Central
Securities Depository
The central securities depository shall operate in accordance
with Regulation No 909/2014, this Law and other laws, the
regulations of Latvijas Banka and the articles of association of
the relevant central securities depository.
[14 September 2017; 23 September 2021 / Amendment regarding
the replacement of the words "regulatory provisions" with the
word "regulations" and amendment regarding the replacement of the
word "Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 92.1 Continuity
of the Operation of the Central Securities Depository
(1) If the central securities depository cannot provide the
services referred to in Section A of Annex to Regulation No
909/2014 due to insolvency, liquidation, or other reasons, the
central securities depository shall transfer the information
(including accounting data and data of registers) which is
necessary to ensure the continuity of the provision of services
to members of the central securities depository and issuers to
another central securities depository which has received a
permission of Latvijas Banka for the operation of the central
securities depository or, in accordance with the procedures laid
down in Article 23 of Regulation No 909/2014, has obtained the
right provide services of the central securities depository in
the Republic of Latvia.
(2) The central securities depository shall continue the
provision of services and Latvijas Banka shall perform
supervision of the central securities depository until the moment
when another central securities depository commences the
provision of the relevant services of the depositary.
[14 September 2017; 23 September 2021 / Amendment regarding
the replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 92.2 Rounding as
a Result of the Corporate Actions of Financial Instruments
If, as a result of corporate actions involving financial
instruments, a new issue or several new issues are registered by
joining several existing issues of financial instruments or
dividing an existing issue of financial instruments, then the
number of financial instruments due to an investor as a result of
such reorganisation is rounded down to a whole number. The losses
incurred as a result of such rounding by persons who own
financial instruments are compensated according to the procedures
specified in the decision taken by the administrative body of the
relevant issuer on joining or division of issues.
[14 September 2017]
Section 93. Informing of Persons who
Own Financial Instruments and of Corporate Actions Involving
Financial Instruments
(1) The investment firms and credit institutions which have
not opened accounts of financial instruments with the central
securities depository for holding of their financial instruments
and financial instruments of the clients, but holding of
financial instruments recorded in the central securities
depository is ensured with intermediation of another investment
firm or credit institution, have an obligation to carry out the
following upon request of such investment firm or credit
institution in the accounts of which it holds financial
instruments recorded in the central securities depository, and
according to the time period stipulated by such investment firm
or credit institution:
1) to provide information on persons who own financial
instruments or who have financial instruments in their
possession;
2) to distribute information to clients on meetings of owners
of financial instruments and at least such corporate actions
involving financial instruments when an issuer has specified the
right of option by owners of financial instruments in relation to
the benefits to be received;
3) to submit a lock-up assignment to this investment firm or
credit institution in respect of financial instruments of those
persons who own financial instruments and who wish to participate
in meetings of owners of financial instruments.
(2) The central securities depository shall provide for in an
agreement with its member that its member, clients of the member,
and other persons who are holding financial instruments recorded
in the relevant central securities depository for the benefit of
third parties include the obligations specified in Paragraph one
of this Section in mutual agreements, insofar as it is not in
contradiction with the applicable legal acts of the relevant
country.
[14 September 2017]
Section 94. Regulations of the
Central Depository
[14 September 2017]
Section 95. Participants of the
Central Depository
[14 September 2017]
Section 95.1 Substantive
Changes in the Information Submitted for Licensing
(1) In the case referred to in Article 16(4) of Regulation No
909/2014 Latvijas Banka shall assess the conformity of the
planned changes with the requirements of the laws and regulations
governing the operation of the central securities depository.
Latvijas Banka has the right to express objections against the
planned changes within 20 working days after the receipt thereof
if it detects a non-conformity of the planned changes with the
requirements of the laws and regulations. If Latvijas Banka has
the obligation to consult with other supervisory or monitoring
institutions according to the cooperation agreement entered into
on the basis of Article 24(4) of Regulation No 909/2014, Latvijas
Banka is entitled to extend such time period up to 40 working
days by sending a relevant notification to the central securities
depository.
(2) If Latvijas Banka has not expressed objections within the
time periods referred to in Paragraph one of this Section, the
central securities depository is entitled to introduce the
planned changes.
[14 September 2017; 23 September 2021 / Amendment regarding
the replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 95.2 Control in
the Central Securities Depository
(1) Such person may be a shareholder in the central securities
depository which conforms to Article 27(6) of Regulation No
909/2014.
(2) Acquisition and change of control in the central
securities depository shall be implemented in conformity with
Article 27(7) and (8) of Regulation No 909/2014.
(3) After receipt of the information referred to in Article
27(7) of Regulation No 909/2014 Latvijas Banka shall assess the
financial stability of the person and the financial validity of
the planned acquisition of control in order to ensure stable and
diligent management of such central securities depository in
which it is planned to acquire control, and also the potential
impact of the person on the management and operation of the
central securities depository. Latvijas Banka shall take the
following criteria into account during the assessment
process:
1) the impeccable reputation of the person and conformity with
the requirements laid down for shareholders of the central
securities depository;
2) the impeccable reputation and the professional experience
of the person who, as a result of the planned acquisition of
control, will manage the operation of the central securities
depository;
3) the financial stability of the person, in particular in
relation to the type of the performed or planned economic
activity in the central securities depository where the
acquisition of control is planned;
4) whether the central securities depository will be able to
conform to the regulatory requirements laid down in the laws and
regulations and whether the structure of such group of
undertakings where the central securities depository is going to
be incorporated will not restrict the possibilities of Latvijas
Banka to perform the supervisory functions vested to it by law,
to ensure an efficient exchange of information among supervisory
authorities, and to determine the allocation of supervisory
powers among the supervisory authorities;
5) whether there are substantiated suspicions that in relation
to the planned acquisition of control, actual or attempted money
laundering or terrorism or proliferation financing has been
committed, or that the planned acquisition of the holding could
increase such a risk.
(4) During the assessment period specified in Article 27(8) of
Regulation No 909/2014, but not later than on the fiftieth
working day of the assessment period, Latvijas Banka has the
right to request additional information on the persons referred
to in this Section in order to assess the conformity of such
persons with that laid down in Paragraphs one and three of this
Section.
(5) When requesting additional information referred to in
Paragraph four of this Section, Latvijas Banka has the right to
suspend the assessment period once until the day when such
information is received, but not more than for 30 working days.
If Latvijas Banka has suspended the assessment period, such
suspension time shall not be included in the assessment
period.
(6) Latvijas Banka shall determine the requirements in
relation to information which is provided to Latvijas Banka by
the person who wishes obtain control in the central securities
depository in order to be able to assess the conformity of such
person with the criteria of Paragraphs one and three of this
Section.
(7) Persons who have obtained control in the central
securities depository without conforming to the procedures laid
down in this Section may not exercise voting rights of shares
owned by him or her, but the decisions of the meeting of
shareholders that have been taken by exercising the voting rights
of those shares shall be invalid as of the moment of taking
thereof and making of entries in the commercial register and
other public registers may not be requested on the basis of such
decisions. Latvijas Banka shall, without delay, inform the
relevant shareholders and the central securities depository of
this fact.
[14 September 2017; 23 September 2021 / Amendment regarding
the replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 95.3 Notification
of Changes after Obtaining the Licence
The central securities depository shall, within seven days
after changes in the composition of the executive or supervisory
board of the central securities depository, submit a notification
to Latvijas Banka on the changes which have occurred.
Concurrently with the notification, the central securities
depository shall submit documents of the newly appointed member
of the executive or supervisory board which are referred to in
Article 13 of Commission Delegated Regulation (EU) 2017/392 of 11
November 2016 supplementing Regulation (EU) No 909/2014 of the
European Parliament and of the Council with regard to regulatory
technical standards on authorisation, supervisory and operational
requirements for central securities depositories (hereinafter -
Regulation No 2017/392).
[14 September 2017; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 96. Administrative Bodies of
the Central Securities Depository and Their Obligations
(1) The central securities depository shall, without delay,
but not later than within five days after a meeting of the
executive or supervisory board of the central securities
depository, inform Latvijas Banka of the decisions taken at the
relevant meeting of the executive or supervisory board. The
central securities depository shall submit minutes of these
meetings to Latvijas Banka as soon as they have been signed.
(2) The relevant administrative body of the central securities
depository has an obligation, upon its own initiative or upon
request of Latvijas Banka, to remove members of the executive or
supervisory board from the office without delay if they do not
conform to the requirements of Article 27 of Regulation No
909/2014.
(3) The procedures for the establishment and operation of user
committees of the central securities depository, and also their
composition shall be approved by the supervisory board of the
central securities depository.
[14 September 2017; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 97. Requirements for Members
of the Executive and Supervisory Boards
[14 September 2017]
Section 98. Election to Supervisory
Board of Representatives of Participants of the Central
Depository
[14 September 2017]
Section 99. Rights and Obligations
of the Central Depository
[14 September 2017]
Section 99.1 Accounts for
Funds of the Central Securities Depository
(1) The central securities depository is entitled to open cash
accounts in the central bank of a Member State or a foreign
country if it provides such service, or in a credit institution
to ensure the settlements of funds for the transfer orders
submitted in the settlement system of financial instruments, and
also settlements of funds for corporate actions involving
financial instruments. The central securities depository shall
keep separate the resources transferred into the account of funds
from its own funds.
(2) The funds referred to in Paragraph one of this Section
shall not be used for satisfying claims of creditors of the
central securities depository. This requirement shall also apply
to cases when insolvency proceedings have been declared for the
central securities depository.
[14 September 2017]
Section 99.2 Initial
Register
(1) The initial register shall be kept by the central
securities depository which is the successor to rights and
liabilities of the Latvian Central Depository.
(2) Apart from financial instruments, also rights to funds
which have been received as a result of buy-back of financial
instruments and corporate actions involving financial instruments
and which are applicable to persons owning the financial
instruments listed in the initial register may be accounted in
the initial register.
(3) The central securities depository shall keep separate the
monies referred to in Paragraph two of this Section from its own
funds. The central securities depository shall keep such funds at
Latvijas Banka or a credit institution, informing the relevant
institution that such funds are the property of third parties
being held by the central securities depository.
(4) The central securities depository is entitled to place the
funds referred to in Paragraph two of this Section in highly
liquid low-risk debt securities and use the income (hereinafter
in this Section - the interest) obtained from investment,
including them into its revenues. If, upon investing the funds
referred to in Paragraph two of this Section, losses occur, the
central securities depository shall cover them from its
resources, but not more than in the amount of the interest
received in the last 10 years. The central securities depository
shall keep separate such debt securities from its own assets. If
the central securities depository keeps such securities in an
account with a third party, such account is identified as the
nominal account.
(5) Such debt securities which conform to the requirements of
Article 46(3) and (6) of Regulation No 909/2014 are considered as
debt securities which are highly liquid and which have low risk
level.
(6) The funds referred to in Paragraph two of this Section and
the securities referred to in Paragraph four of this Section
shall not be used for satisfying claims of creditors of the
central securities depository. This requirement shall also apply
to the cases when the central securities depository has been
declared insolvent in accordance with the procedures laid down in
law.
(7) The central securities depository is entitled to deduct
expenditures related to the storage of such resources from the
funds accounted in the initial register.
[14 September 2017]
Section 100. Supervision of the
Central Depository
[14 September 2017]
Section 100.1 Accounts of
the Central Securities Depository
(1) The central securities depository shall ensure at least
the following accounts of financial instruments in the settlement
system of financial instruments to which the laws and regulations
of Latvia are applicable:
1) participant's account - an account of financial instruments
in which the financial instruments owned by the central
securities depository participant are listed;
2) account of participant's clients - an account of financial
instruments in which the financial instruments owned or held by
clients of the central securities depository participant are
jointly listed;
3) individual account - an account of financial instruments in
which the financial instruments owned or held by one client of
the central securities depository participant are listed with or
without identification of the client of the participant.
(2) Such credit institution or investment firm with the
intermediation of which the individual account has been opened
and with which the client of the participant has entered into a
contract for the servicing of the individual account shall be
responsible for the enforcement of the requirements of Division F
of this Law in relation to the client of the participant in whose
name the individual account has been opened.
[14 September 2017]
Section 100.2 Servicing
the Account of the Central Securities Depository Participant
after Suspending the Activity of the Participant
(1) If insolvency proceedings have been initiated for the
central securities depository participant within the meaning of
Section 1, Paragraph one, Clause 11 of the law On the Settlement
Finality in Payment and Financial Instrument Settlement Systems,
the central securities depository shall, without delay as soon as
such information has become known thereto, suspend the activity
of such participant in the settlement system of financial
instruments.
(2) If the activity of the central securities depository
participant has been suspended in the financial instrument
settlement system in the case referred to in Paragraph one of
this Section, the central securities depository shall complete
the settlements of such transfer orders which are in effect in
accordance with the law On Settlement Finality in Payment and
Financial Instrument Settlement Systems. Afterwards, the central
securities depository is entitled to execute the following
transfers of the suspended participant in the financial
instrument settlement system:
1) transfers resulting in a decrease in the balance on
accounts of the clients of this participant;
2) transfers necessary for the fulfilment of corporate actions
on financial instruments.
(3) Until the moment when the administrator or liquidator is
appointed in accordance with the laws and regulations governing
insolvency proceedings or liquidation, the execution of the
transfers not referred to in Paragraph two of this Section shall
require obtaining the consent of the supervisory authority of the
relevant participant.
[14 September 2017; 26 October 2023]
Section 100.3 Reporting
on Potential and Actual Violations of Regulation No 909/2014
[12 December 2019]
Section 100.4 Supervision
of the Central Securities Depository
(1) In addition to the rights laid down in Regulation No
909/2014 and the Law on Latvijas Banka, Latvijas Banka has the
following rights for the performance of the supervisory
functions:
1) to become acquainted with all documents, account books, and
databases of the central securities depository, and also to take
statements, to make true copies (copies) therefrom;
2) to request revocation of decisions of the administrative
bodies of the central securities depository, if they do not
conform to Regulation No 909/2014, other laws and regulations
governing the operation of the central securities depository, the
articles of association or other documents of the central
securities depository, or may significantly affect the financial
state of the central securities depository;
3) to restrict the provision of services of the central
securities depository, if it is necessary in order to ensure
stable functioning of the financial market, including to request
that such activities are terminated which are in contradiction to
Regulation No 909/2014, this Law, and other laws and
regulations;
4) if it is justified with the circumstances indicated in
Clause 3 of this Paragraph, to request that the central
securities depository:
a) restricts or suspends the activity of the participant of
the maintained settlement system of financial instruments in the
system;
b) restricts, suspends, or terminates the link within the
meaning of Article 2(29) of Regulation No 909/2014 with another
central securities depository;
5) to issue regulations which determine the information to be
provided by the central securities depository to Latvijas Banka
on the services provided thereby and its operation, including
reports for prudential supervision, reports on activities in the
settlement systems of financial instruments which are maintained
by the central securities depository, and also the procedures and
time periods for the provision of such information.
(2) If a shareholder has acquired control in the central
securities depository without conforming to the procedures laid
down in Section 95.2 of this Law and has exercised its
voting rights in a meeting of shareholders for the election of
members of the supervisory board of the central securities
depository, Latvijas Banka has the right to suspend the activity
of members of the executive and supervisory boards of the central
securities depository and to authorise representatives of
Latvijas Banka to perform the functions of the administrative
bodies of the central securities depository until the moment when
all violations are rectified.
(3) The central securities depository shall, without delay,
inform Latvijas Banka if it has become aware or suspects that its
participant systematically does not comply with the requirements
laid down for the activity in the central securities
depository.
[14 September 2017; 23 September 2021 / Amendment regarding
the replacement of the words "Law on the Financial and Capital
Market Commission" with the words "Law on Latvijas Banka",
amendment regarding the replacement of the words "regulatory
provisions" with the word "regulations", and amendment regarding
the replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 100.5
Restrictions Applicable to the Central Securities Depository
(1) If Latvijas Banka detects that the central securities
depository does not comply with or Latvijas Banka has grounds for
assuming that, within 12 months from the day when it took the
decision on implementation of the activities referred to in this
Section, the central securities depository will not comply with
the requirements laid down in this Law, Regulation No 909/2014,
the directly applicable legal acts which have been issued by the
European Union authorities and which are subjected to the
abovementioned Regulation, or decisions or regulations of
Latvijas Banka which have been issued in accordance with Section
100.4, Paragraph one, Clause 5 of this Law, or if the
operation of the central securities depository endangers its
stability or solvency, the security or stability of the financial
sector of Latvia, threatens to cause significant losses to
national economy of the State, then Latvijas Banka is entitled to
implement one or more of the following activities, upon taking a
decision:
1) to give binding written instructions to members of the
executive and supervisory boards of the central securities
depository which are necessary for the prevention of such
situation;
2) to impose restrictions for the rights and activities of the
central securities depository, including to suspend the provision
of services of the central securities depository in full or in
part, and also to determine restrictions for performance of
liabilities;
3) to appoint one or more authorised persons of Latvijas Banka
in the central securities depository;
4) to request that the central securities depository reduces
or does not perform distribution of profits or interest payments
to shareholders, if it does not cause non-performance of
liabilities;
5) to request that the central securities depository provides
additional reports or provides reports more frequently, including
reports on capital and liquidity items of the central securities
depository and reports on the items of the initial register;
6) to request that, after payment of taxes, the central
securities depository directs profits for strengthening of own
funds;
7) to request that the central securities depository
determines such restriction on the variable part of the
remuneration of officials and employees which is expressed as
percentage of net income and allows the central securities
depository to maintain a stable capital base;
8) to request that the central securities depository improves
its strategy, procedures, and measures to be implemented for the
fulfilment of the requirements of Regulation No 909/2014;
9) to request that the central securities depository draws up
a plan for renewing conformity with the requirements of
Regulation No 909/2014 and other laws and regulations,
determining the time periods for the implementation of the
measures included in the plan;
10) to request that the central securities depository
mitigates risks characteristic to its activity, services, or
systems;
11) to request that the central securities depository narrows
or restricts commercial activity or refused such fields of
activity which excessively endanger its stability.
(2) Latvijas Banka is entitled to implement one or more of the
activities referred to in Paragraph one of this Section also if
the activity of a commercial company involved in the
consolidation group of the central securities depository
endangers or may endanger sound operation of the central
securities depository.
[14 September 2017; 23 September 2021 / Amendment regarding
the replacement of the words "regulatory provisions" with the
word "regulations" and amendment regarding the replacement of the
word "Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 100.6 Appointing
of an Authorised Person in the Central Securities Depository
(1) An authorised person shall be appointed by Latvijas Banka
for a time period which does not exceed one year. If, within a
year from appointing the authorised person, the circumstances
referred to in Section 100.5, Paragraph one of this
Law have not been rectified, Latvijas Banka may extend such time
period for a period which does not exceed one year. A person may
not be appointed to be an authorised person without his or her
written consent.
(2) The objective of activities, tasks, and functions of an
authorised person, the scope and time period of authorisation,
the amount of remuneration of an authorised person, the amount of
expenditures allowed for the carrying out of the tasks of an
authorised person, and also other regulations considered as
essential by Latvijas Banka shall be laid down in the decision of
Latvijas Banka to appoint an authorised person.
(3) If several authorised persons are appointed, in addition
to the provisions of Paragraph one of this Section the
distribution of the scope of the powers of authorised persons and
their mutual subordination shall be determined in the decision to
appoint an authorised person.
(4) Appointing of an authorised person in the central
securities depository shall not restrict the rights of
shareholders specified in the Commercial Law.
[14 September 2017; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 100.7
Requirements for an Authorised Person
(1) The following may be an authorised person in the central
securities depository:
1) a natural person who conforms to that specified in
Paragraphs two and three of this Section;
2) a capital company the members of the executive board of
which meet that specified in Paragraph three of this Section and
the majority of members of the executive board of which meet that
specified in Paragraph two of this Section.
(2) A natural person who has the following may be appointed as
an authorised person in the central securities depository:
1) State recognised second level higher vocational education
or higher academic education and corresponding qualification;
2) corresponding competence and sufficient professional work
experience;
3) impeccable reputation;
(3) The following natural person may not be appointed as an
authorised person in the central securities depository:
1) who is recognised as the related party of the central
securities depository within the meaning of Section 1, Paragraph
four of this Law;
2) against whom insolvency proceedings have been completed or
initiated as against a debtor or who is considered to be the
debtor's representative in an insolvency case and this case has
not been terminated;
3) who has been convicted of a crime against the State, a
criminal offence against the property, general security and
public order, management procedures or jurisdiction or a criminal
offence in the national economy or service of public authorities
regardless of extinguishing or setting aside of the criminal
record;
4) against whom criminal prosecution has been initiated or who
is a suspect in criminal proceedings;
5) who has been convicted of committing the criminal offence
laid down in Clause 3 of this Paragraph, although released from
serving his or her punishment due to limitation period, clemency
or amnesty;
6) against whom criminal proceedings for committing the
criminal offence laid down in Clause 3 of this Paragraph are
terminated due to limitation period or amnesty;
7) to whom rights have been restricted in accordance with the
procedures laid down in the Criminal Law to perform in a specific
commercial activity or take up specific offices;
8) who has been a member of the administrative body of a
commercial company or a procurator in a commercial company and as
a result of his or her negligence or intentionally has driven
such commercial company to insolvency subject to criminal
punishment.
(4) If the decision to appoint an authorised person in
accordance with Section 100.8, Paragraph one, Clause 3
of this Law provides that the authorised person shall manage the
central securities depository, then, in addition to that
specified in Paragraphs one, two, and three of this Section, only
the capital company referred to in Paragraph one of this Section
or such natural person who is an employee of Latvijas Banka or
has been appointed to the position of the administrator of
insolvency proceedings in accordance with the Insolvency Law may
be such authorised person.
[14 September 2017; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 100.8 Rights and
Obligations of the Authorised Person
(1) Latvijas Banka may determine the following rights and
obligations of an authorised person in the decision to appoint an
authorised person:
1) to convene a meeting of shareholders of the central
securities depository, a meeting of the supervisory board and the
executive board and to participate therein with the right to
propose the issues to be considered at either meeting;
2) to decide on a permission for the central securities
depository to make payments, to conclude new transactions, and
also to amend or terminate current transactions;
3) to perform the management of the central securities
depository.
(2) If the decision to appoint an authorised person specifies
his or her rights in accordance with Paragraph one, Clause 1 of
this Section, the decision of the relevant administrative body of
the central securities depository shall not be taken, if the
authorised person objects to it.
(3) If Latvijas Banka takes the decision to suspend the
activity of the supervisory board, the executive board, and a
procurator of the central securities depository, and to impose a
prohibition for the central securities depository to act with the
property thereof, and also with the property belonging to the
third parties in the possession or ownership thereof, the
authorised person shall obtain this right.
(4) If the right to represent the central securities
depository has been laid down for the authorised person, then
Latvijas Banka shall publish the decision on determination of
such rights on its website.
(5) For the performance of his tasks the authorised person is
entitled:
1) to issue binding orders to all administrative bodies and
employees of the central securities depository;
2) not to conform to the restrictions specified in the
articles of association, by-laws, and other documents of the
central securities depository;
3) to act with the property of the central securities
depository, if the objective of such activities is to ensure
continuity of the activity of the central securities
depository;
4) to draw up and approve financial statements of the central
securities depository.
(6) An authorised person may implement the authorisation to
convene a meeting of shareholders and to determine its agenda
only with the consent of Latvijas Banka.
(7) The authorised person has an obligation to provide a
report on his or her activities to Latvijas Banka within the time
period stipulated thereby and to immediately notify Latvijas
Banka of the findings which may have an impact on the financial
standing of the central securities depository.
(8) The authorised person, when performing his or her tasks,
shall take care of the interests of national economy, the safety
and stability of the financial sector of Latvia, and also careful
and prudent management of the central securities depository.
(9) The authorised person is entitled to resign from the
fulfilment of his or her duties by submitting a substantiated
submission to Latvijas Banka to which a report on activities of
the authorised person regarding the whole time period of his or
her activities is appended.
(10) Latvijas Banka shall examine the submission of the
authorised person regarding refusal from the fulfilment of the
obligations and, within one month from the day of receipt of the
abovementioned submission, decide on its further action. Until
taking such decision is taken and matters are handed over, the
authorised person shall continue the fulfilment of the
obligations assigned to him or her.
[14 September 2017; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 100.9
Remuneration of the Authorised Person
(1) Latvijas Banka shall disburse remuneration to the
authorised person and shall cover the expenditures necessary for
the performance of his or her tasks in the amount specified in
the decision to appoint an authorised person. The central
securities depository shall compensate the costs specified in
this Paragraph to Latvijas Banka within the time period laid down
thereby.
(2) The authorised person does not have the right to receive
any remuneration or other income for the performance of his or
her tasks in addition to that provided for in the decision to
appoint an authorised person.
[14 September 2017; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 100.10
Cooperation with the Authorised Person
(1) Members of the executive and supervisory boards,
employees, other representatives, and shareholders of the central
securities depository have an obligation to cooperate with the
authorised person and, upon his or her request, to transfer
objects and information to him or her which are necessary for the
performance of the functions of the authorised person.
(2) The authorised person shall immediately notify Latvijas
Banka of a failure to comply with the provisions referred to in
Paragraph one of this Section, and also of other obstacles for
the performance of his or her tasks.
[14 September 2017; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 100.11 Expiry of
Authorisation of the Authorised Person
(1) Latvijas Banka shall supervise the activity of the
authorised person.
(2) The authorisation of the authorised person shall
expire:
1) upon expiry of the time period specified in the decision to
appoint an authorised person;
2) by the decision of Latvijas Banka on revocation of the
authorised person;
3) upon the authorised person refusing from the fulfilment of
his or her obligations in accordance with Section
100.8, Paragraphs nine and ten of this Law.
(3) Latvijas Banka shall decide on revocation of the
authorised person if it detects that the authorised person does
not comply with the provisions of this Law or other laws and
regulations governing the operation of the central securities
depository or does not conform to the requirements laid down in
this Law.
(4) Upon expiry of authorisation, the authorised person shall
transfer files to Latvijas Banka or a person laid down thereby
within the time period laid down by Latvijas Banka.
[14 September 2017; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Division E.1
Data
Reporting Services
[28 April 2022 / See Paragraph 78
of Transitional Provisions]
Section 100.12 Right to
Provide Data Reporting Services
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 100.13 General
Requirements for Data Reporting Service Providers
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 100.14
Requirements for Members of the Executive and Supervisory Board
of the Data Reporting Service Provider
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 100.15 Documents
to be Submitted by the Data Reporting Service Provider for the
Receipt of the Permit
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 100.16 Procedures
for Granting the Permit
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 100.17 Procedures
for the Cancellation of the Permit
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 100.18
Organisational Requirements for Approved Publication
Arrangements
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 100.19
Organisational Requirements for Consolidated Tape Providers
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 100.20
Organisational Requirements of Approved Reporting Mechanisms
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Division F
Investment Services
Chapter VII
General Provisions
Section 101. Right to Provide
Investment Services and Ancillary Investment Services
(1) Only investment firms and credit institutions, insurance
brokers, investment management companies, and also alternative
investment fund managers in accordance with the procedures laid
down in the laws and regulations governing their activities are
entitled to provide investment services in the Republic of
Latvia. Foreign investment firms the branches of which have
received a permit in accordance with the procedures laid down in
the Law on Investment Firms are also entitled to provide
investment services in the Republic of Latvia. A regulated market
operator which has received the licence to operate a regulated
market and the permit to operate the MT facility in accordance
with the procedures laid down in Section 103.1 of this
Law is also entitled to operate the MT facility. A regulated
market operator which has received the licence to operate a
regulated market and the permit to operate the OT facility in
accordance with the procedures laid down in Section
103.1 of this Law is also entitled to operate an OT
facility.
(11) An insurance broker shall obtain the licence
for the provision of investment services in accordance with the
procedures laid down in Chapter VIII of this Law and comply with
the requirements set out for the activities of an investment
firm.
(2) Credit institutions registered in the Republic of Latvia
and branches of foreign credit institutions, and also credit
institutions registered in other Member States shall be regarded
as credit institutions within the meaning of Division F of this
Law.
(3) Investment firms and branches of foreign investment
companies, and also investment firms registered in other Member
States shall be regarded as investment firms within the meaning
of Division F of this Law.
(31) [21 June 2018]
(4) Investment services and ancillary investment services
shall be regarded as investment services and ancillary investment
services which are provided in the Republic of Latvia, if
they:
1) are provided by a commercial company registered in the
Republic of Latvia;
2) are provided by a commercial company or natural person
registered outside the Republic of Latvia or by a natural person
whose place of residence is not in the Republic of Latvia, but
the language, type or content of the advertising or offering of
investment services and ancillary investment services indicate
that the relevant service is being offered in the Republic of
Latvia;
3) are offered virtually from the Internet protocol address
area granted to the Republic of Latvia or if at least one of the
measures necessary for receipt of the service is to be conducted
with a person whose location or address is in the Republic of
Latvia.
(5) Investment firms and credit institutions providing
investment services shall conform to this Law, regulations of
Latvijas Banka and administrative acts issued in relation
thereto, and also internal policy and procedures.
(6) Latvijas Banka shall establish and maintain a register of
investment firms and of those credit institutions which have the
right to provide investment services and ancillary investment
services in the Republic of Latvia. The register shall include
the type of the investment service or ancillary service for the
provision of which the investment firm has obtained the licence
or the rights for the provision of which a credit institution has
obtained in accordance with the procedures laid down in the law.
Latvijas Banka shall post the register on its website. Latvijas
Banka shall inform the European Securities and Markets Authority
of all issued licences and permits.
(7) The provisions of Division F of this Law shall not apply
to:
1) insurers and reinsurers;
2) commercial companies included within a group of companies
which provide investment services only to other commercial
companies included within such group of companies;
3) persons providing investment services on an occasional
basis only within the scope of their professional activities if
profession activities of such persons are regulated by special
laws and regulations and code of conduct which do not preclude
them from provision of investment services;
4) commercial companies providing investment services only to
their own members of the executive and supervisory boards and
employees, and where such commercial companies are not included
within a group of companies - also to the members of the
executive or supervisory boards and employees of commercial
companies included in the same group of companies;
5) the operation of investment management companies,
alternative investment fund managers licensed in the Republic of
Latvia, of investment management companies and alternative
investment fund managers registered in a Member State which
provide management services insofar as it is not related to the
provision of investment services and ancillary services, and also
the function of a custodial bank or holder of the funds in
conformity with that laid down in the Law on Investment
Management Companies, the Law on Alternative Investment Funds and
Managers Thereof, and the Private Pension Fund Law;
6) persons dealing on own account in financial instruments
other than commodity derivatives or emission allowances or
derivatives thereof and not providing any other investment
services or performing any other investment activities in
financial instruments other than commodity derivatives or
emission allowances or derivatives thereof unless such
persons:
a) are market makers;
b) are members of or participants in a regulated market or the
MT facility, on the one hand, or have direct electronic access to
a trading venue, on the other hand, except for non-financial
entities who make transactions on a trading venue which are
objectively measurable as reducing risks directly relating to the
commercial activity or treasury financing activity of those
non-financial entities or their groups;
c) apply a high-frequency algorithmic trading technique;
d) deal on own account when executing client orders;
7) the members of the European System of Central Banks and
other national bodies performing similar functions, and other
public bodies charged with or intervening in the management of
the public debt, and also international financial institutions
established by two or more Member States which have the purpose
of mobilising funding and providing financial assistance to the
benefit of the members of such international financial
institutions which are experiencing or threatened by severe
financing problems;
8) [21 June 2018];
9) persons who, upon carrying out the professional activities
non-regulated by this Law, provide investment advice and do not
receive a separate remuneration for it;
10) [21 June 2018];
11) [21 June 2018];
12) operators with compliance obligations under the
requirements of the law On Pollution who, when dealing in
emission allowances, do not execute client orders and who do not
provide any investment services or perform any investment
activities other than dealing on own account, provided that those
persons do not apply a high-frequency algorithmic trading
technique;
13) transmission system operators within the meaning of the
Electricity Market Law or the Energy Law when carrying out their
tasks under the abovementioned laws or Regulation (EC) No
714/2009 of the European Parliament and of the Council of 13 July
2009 on conditions for access to the network for cross-border
exchanges in electricity and repealing Regulation (EC) No
1228/2003, or under Regulation (EC) No 715/2009 of the European
Parliament and of the Council of 13 July 2009 on conditions for
access to the natural gas transmission networks and repealing
Regulation (EC) No 1775/2005, or under other legal acts adopted
in accordance with the abovementioned Regulations, and any person
which provides services on behalf of such operators;
14) central securities depositories insofar as they are
governed in the directly applicable legal acts of the European
Union;
15) persons dealing on own account, including market makers,
concluding transactions in commodity derivatives or emission
allowances or derivatives thereof, excluding persons who deal on
own account when executing client orders;
16) persons providing investment services, other than dealing
on own account, in commodity derivatives or emission allowances
or derivatives thereof to the customers or suppliers of their
main activity;
17) crowdfunding service providers in conformity with the
definition used in Article 2(1)(e) of Regulation (EU) 2020/1503
of the European Parliament and of the Council of 7 October 2020
on European crowdfunding service providers for business, and
amending Regulation (EU) 2017/1129 and Directive (EU)
2019/1937.
(8) That specified in Paragraph seven, Clause 13 of this
Section shall only apply to the persons referred to in this
Clause, if they provide investment services in relation to
commodity derivatives, only to carry out the activities referred
to in Paragraph seven, Clause 13 of this Section. The
abovementioned shall not apply to the operation of the secondary
market, inter alia, the platform for secondary trading in
financial transmission rights within the meaning of Commission
Regulation (EU) 2016/1719 of 26 September 2016 establishing a
guideline on forward capacity allocation.
(9) The activity of the persons referred to in Paragraph
seven, Clauses 15 and 16 of this Section shall be ancillary
activity to their main activity within the scope of a group of
commercial companies. If the persons referred to in Paragraph
seven, Clauses 15 and 16 of this Section are not part of a group
of commercial companies the main activity of which is the
provision of investment services or the provision of the
financial services laid down in the Credit Institution Law, or
making of the market in relation to commodity derivatives, the
abovementioned persons shall not apply the high-frequency
algorithmic trading technique and shall, upon request of Latvijas
Banka, inform it of the fact that they use the exemption referred
to in Paragraph seven, Clauses 15 and 16 of this Section, and
also shall provide an explanation on the reasons due to which
they regard the activity referred to in Paragraph seven, Clauses
15 and 16 of this Section as ancillary activity to their main
activity.
(10) The persons to whom exemption is applied in accordance
with Paragraph seven, Clauses 1, 5, or 15 and 16 of this Section
need not comply with the conditions laid down in Clause 6 of the
abovementioned Paragraph in order to conform to the exemption
criteria.
(11) The subjects referred to in Paragraph seven of this
Section shall comply with the requirements of Sections
133.14 and 133.15 of this Law.
(12) Investment firms and credit institutions which, on an
organised, frequent, systematic, and substantial basis, deal on
own account when executing client orders outside a regulated
market, the MT facility, or the OT facility shall operate in
accordance with Title III of Regulation (EU) No 600/2014.
(13) Without prejudice to that specified in Articles 23 and 28
of Regulation (EU) No 600/2014 in relation to all transactions in
financial instruments which are not concluded on a multilateral
system or systematic internaliser shall comply with the
provisions of Title III of Regulation (EU) No 600/2014.
(14) Regulation No 2017/565 shall determine the cases when the
activity referred to in Paragraph seven, Clause 3 of this Section
is considered as an activity that is performed irregularly.
(15) Commission Delegated Regulation (EU) 2017/592 of 1
December 2016 supplementing Directive 2014/65/EU of the European
Parliament and of the Council with regard to regulatory technical
standards for the criteria to establish when an activity is
considered to be ancillary to the main business shall determine
the criteria according to which it shall be detected whether the
activities referred to in Paragraph seven, Clauses 15 and 16 of
this Section are to be considered an ancillary activity within
the scope of a group of commercial companies.
(16) An investment firm and a credit institution have an
obligation to ensure the fulfilment of the requirements of the
law throughout the period of operation of the licence or permit
issued by Latvijas Banka.
[4 October 2007; 22 May 2008; 9 July 2013; 26 May 2016; 14
September 2017; 21 June 2018; 20 June 2019; 31 March 2022; 28
April 2022; 23 September 2021 / Amendment regarding the
replacement of the words "regulatory provisions" with the word
"regulations" and amendment regarding the replacement of the word
"Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 102. Rights of Investment
Firms to Provide Investment Services and Ancillary Investment
Services
(1) An investment brokerage company is entitled to provide
investment services and ancillary investment services in
conformity with the requirements of this Law and the Law on
Investment Firms.
(2) The requirements of this Law are not applied to commercial
companies which provide only the ancillary investment services
referred to in Section 3, Paragraph five, Clauses 2, 3, 4, 5, and
6 of this Law.
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 103. Right of a Credit
Institution, Insurance Brokers, Investment Management Companies,
and Alternative Investment Fund Managers to Provide Investment
Services and Ancillary Investment Services
(1) Credit institutions licensed in the Republic of Latvia,
branches of foreign credit institutions, insurance brokers,
investment management companies, and alternative investment fund
managers which have obtained a licence for the performance of
their main activity in accordance with the procedures laid down
in the laws and regulations governing their activity shall, prior
to the commencement of the provision of investment services and
ancillary investment services, submit to Latvijas Banka the
following documents:
1) a description of provision of investment services and
ancillary investment services and control procedures thereof;
2) regulations for the protection of the accounting database
for documentation of financial instruments;
21) a description of procedures for identification
of those transactions which are performed by using inside
information or with a view to commit manipulations in a financial
instrument market;
3) the articles of association of the division providing
investment services and ancillary investment services. If it is
intended to provide investment services and ancillary investment
services in branches of a credit institution or in constituent
bodies regarded as equivalent in terms thereto, the credit
institution shall also specify in the articles of association the
provision of investment services and ancillary investment
services by those constituent bodies;
4) [21 June 2018];
5) a document describing and explaining how the strategy of
the credit institution, a branch of a foreign credit institution,
the insurance broker, the investment management company, and the
alternative investment fund manager, in accordance with Section
126.3 of this Law, includes the exercise of the rights
of a shareholder, if it is intended to provide portfolio
management services by including such shares of a joint-stock
company in the portfolio the registered office of which is in a
Member State and the shares of which are admitted to trading on a
regulated market of the Member State.
(2) Credit institutions licensed in the Republic of Latvia,
branches of foreign credit institutions, insurance brokers,
investment management companies, and alternative investment fund
managers are entitled to commence the provision of investment
services and ancillary investment services provided that, within
30 days from the date of submitting the documents referred to in
Paragraph one of this Section, they have not received any
objections from Latvijas Banka.
(3) Credit institutions to be established and branches of
credit institutions to be opened which are proposing to provide
investment services and ancillary investment services, shall
submit to Latvijas Banka the documents referred to in Paragraph
one of this Section concurrently with other documents submitted
thereby to Latvijas Banka, in accordance with laws and other
regulatory enactments, in order to obtain the licence for the
commencement of operations of a credit institution.
(4) Credit institutions registered in Member States are
entitled to commence the provision of investment services and
ancillary investment services in the Republic of Latvia upon the
moment when, in accordance with the law, they are entitled to
commence activity as a credit institution in the Republic of
Latvia with or without the opening of a branch.
(5) A credit institution has the right to provide investment
services and ancillary investment services with the
intermediation of an investment firm or credit institution in
conformity with Section 128.1, Paragraphs eight, nine,
and ten of this Law.
[9 June 2005; 4 October 2007; 26 May 2016; 21 June 2018; 20
June 2019; 28 April 2022; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 103.1 Right of a
Market Operator to Provide an Investment Service for the
Operation of a Multilateral Trading Facility and Organised
Trading Facility
(1) A market operator registered in the Republic of Latvia
which, in accordance with the procedures laid down in the law,
has received the licence to operate a regulated market shall
submit the following documents to Latvijas Banka before
commencement of operation of the MT facility or OT facility:
1) in the event of a service for the operation of the DT
facility - the draft provisions referred to in Sections
133.4 and 133.5 of this Law;
2) in the event of a service for the operation of the OT
facility - the draft provisions referred to in Sections
133.4 and 133.6 of this Law;
3) amendments to the documents referred to in Section 30,
Paragraph one, Clauses 3, 4, 5, 6, 7, 8, and 9 of this Law, if
such amendments are to be made in relation to the operation of
the MT facility or OT facility.
(2) A market operator registered in the Republic of Latvia is
entitled to commence the operation of the MT facility or OT
facility, if, within 30 days from the date of submitting the
documents referred to in Paragraph one of this Section, it has
not received any objections from Latvijas Banka.
(3) A market operator registered in another Member State is
entitled to operate the MT facility or OT facility in the
Republic of Latvia, if he has obtained the right to provide such
investment service in the home country. The market operator
registered in other Member State is entitled to commence the
operation of the MT facility or OT facility in the Republic of
Latvia in accordance with the provisions of Section
113.2 of this Law.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 103.2 Provision
of Investment Services with Intermediation of Tied Agents
(1) An investment firm and credit institution have the right
to use tied agents in order to, on behalf of the investment firm
or credit institution, advertise and offer investment services
provided by the company or receive orders from clients or
potential clients and to transmit such order to the investment
firm or credit institution, to place financial instruments and
provide investment advice regarding such financial instruments
and services which are offered by the abovementioned investment
firm or credit institution. The investment firm and credit
institution have the right to use the tied agent, if he is
registered with the register of tied agents referred to in
Paragraph six of this Section.
(2) The following natural person with the capacity to act may
be a tied agent's responsible person and employee directly
involved in the performance of activities related to the
provision of investment services referred to in Paragraph
one:
1) who has attained eighteen years of age;
2) who has acquired at least secondary education;
3) who has acquired the necessary professional knowledge
regarding investment service to be distributed and financial
instruments to be offered in order to be able to ensure the tasks
of the tied agent laid down in Paragraph one of this Section;
4) who has impeccable reputation and to whom none of the
restrictions referred to in Paragraph three of this Law
apply.
(3) The following person may not be a tied agent's responsible
person and employee directly involved in the performance of
activities related to the provision of investment services
referred to in Paragraph one:
1) who has been convicted for committing an intentional
criminal offence;
2) who has been convicted for committing an intentional
criminal offence, even if the person has been released from
serving the sentence because of expiry of the limitation period,
clemency or amnesty;
3) against whom a criminal matter for the committing of an
intentional criminal offence has been discontinued because of the
expiry of the limitation period or amnesty;
4) who has been held criminally liable for committing an
intentional criminal offence, however, the criminal matter
against him or her has been terminated for reasons other than
exoneration.
(4) An investment firm and credit institution shall ensure
training of the tied agent's responsible person and of those
employees who are directly involved in performance of activities
related to the provision of the investment services referred to
in Paragraph one of this Section in order to provide them with
the necessary knowledge regarding investment services which are
distributed with intermediation of a tied agent.
(5) An investment firm and credit institution shall be
responsible for conformity with the criteria laid down in
Paragraphs two and three of this Section by the tied agent's
responsible person and employees who are directly involved in
performance of activities related to the provision of the
investment services referred to in Paragraph one of this
Section.
(51) An investment firm and credit institution
which wish to use the tied agent shall submit a relevant
submission to Latvijas Banka for the registration of the tied
agent with the register of tied agents by indicating the
information referred to in Paragraph six of this Section, and
append a certification that the tied agent's responsible person
and employees conform to the criteria laid down in Paragraphs two
and three of this Section.
(52) Latvijas Banka shall, within 10 working days
after receipt of the submission referred to in Paragraph
5.1 of this Section, register the tied agent with the
register of tied agents or send a refusal to the investment firm
or credit institution to register the tied agent if it does not
conform to the criteria laid down in Paragraphs two and three of
this Section.
(6) Latvijas Banka shall maintain the register of tied agents
in which the following information shall be entered:
1) the firm name or the given name and surname (for a natural
person) of a tied agent, registration number, registered office,
phone number or telefax number, and electronic mail address;
2) the given name and surname of the tied agent's responsible
person;
3) the Member State in which the tied agent carries out the
activities related to the provision of the investment services
referred to in Paragraph one of this Section.
(7) The register of tied agents shall be available to the
public on the website of Latvijas Banka, it shall be publicly
reliable and any person has the right to become acquainted with
it.
(8) A tied agent shall, when carrying out his or her
professional activity, fully disclose information to the clients
on his or her status and the investment firm or credit
institution represented by him or her. The investment firm or
credit institution on behalf of which the tied agent is acting
shall be completely and unconditionally responsible for the
professional activities of the tied agent.
(9) An investment firm and credit institution shall supervise
the conformity of activity of the selected tied agent with the
requirements laid down in this Law. The investment firm and
credit institution shall, without delay, notify Latvijas Banka if
the tied agent selected thereby does not conform to the
requirements of this Section or has violated the requirements of
this Law.
(10) Latvijas Banka shall cancel registration of the tied
agent and exclude the tied agent from the register of tied agents
if:
1) the tied agent has infringed the requirements of this
Law;
2) the tied agent has infringed the requirements of the laws
and regulations governing prevention of the laundering of
proceeds from crime;
3) the tied agent who is acting in a Member State, in
conformity with the principle of freedom of establishment and
provision of services, has infringed the requirements contained
in the laws protecting the public interests and other laws and
regulations governing financial instruments market;
4) the tied agent requests to cancel the entry in the register
of tied agents;
5) the tied agent is liquidated.
(11) If the administrative act issued by Latvijas Banka
regarding cancellation of the entry in the register of tied
agents is contested or appealed, it shall not suspend the
operation of such act.
(12) A tied agent - legal person - has an obligation himself
or herself or upon proposal of Latvijas Banka to remove the tied
agent's responsible person or employee directly involved in the
performance of activities related to the provision of the
investment services referred to in Paragraph one of this Section
from office without delay if:
1) it is detected that he or she has caused a situation which
may endanger interests of the clients of the tied agent;
2) he or she fails to comply with the requirements laid down
in Paragraph two of this Section or any of the restrictions laid
down in Paragraph three of this Section may be applied to him or
her;
3) he or she has infringed the requirements of the laws and
regulations governing prevention of the laundering of proceeds
from crime;
4) he or she has infringed the requirements of this Law.
(13) If an administrative act issued by Latvijas Banka
regarding removal of the persons referred to in Paragraph twelve
of this Section from the office is contested and appealed, it
shall not suspend the operation of such administrative act.
[4 October 2007; 21 June 2018; 23 September 2021 /
Amendment to Paragraphs eleven and thirteen, and also
amendment regarding the replacement of the word "Commission" with
the words "Latvijas Banka" shall come into force on 1 January
2023. See Paragraph 73 of Transitional Provisions]
Section 104. Restriction on the
Provision of Investment Services
(1) The right of Latvijas Banka to restrict the right of an
investment firm to provide one or several investment services and
to hold financial instruments is determined by the Law on
Investment Firms.
(2) Latvijas Banka is entitled to restrict the right of a
credit institution to provide one or several investment services
and to hold financial instruments if:
1) the credit institution has not complied with the
requirements set forth in laws or other regulatory
enactments;
2) the credit institution has not followed the administrative
instructions included in the administrative acts of Latvijas
Banka issued in relation thereto or in the administrative acts
issued by other institutions which ensure the implementation of
this Law, and also the regulations of Latvijas Banka subordinated
thereto;
3) Latvijas Banka has applied an intensified supervision
procedure upon the credit institution;
4) Latvijas Banka has received an application for insolvency
or takes the decision itself on the submission to a court of an
application for insolvency of the credit institution;
5) Latvijas Banka has received a submission for the
liquidation of the credit institution;
6) the credit institution performs any activities which
threaten or may threaten the financial stability, insolvency, or
reputation of this credit institution.
(3) If Latvijas Banka restricts the right of an investment
firm or credit institution to hold financial instruments, it has
the right to require the investment firm or credit institution to
transfer all financial instruments belonging to any clients to
another investment firm or credit institution entrusted with
holding the financial instruments.
[9 June 2005; 15 June 2006; 4 October 2007; 28 April 2022;
23 September 2021 / Amendment regarding the replacement of
the words "regulatory provisions" with the word "regulations" and
amendment regarding the replacement of the word "Commission" with
the words "Latvijas Banka" shall come into force on 1 January
2023. See Paragraph 73 of Transitional Provisions]
Chapter VIII
Licensing of Investment Firms
[28 April 2022 / See Paragraph 78
of Transitional Provisions]
Section 105. General Requirements
for Obtaining Licence
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 105.1
Requirements for Shareholders (Members) of an Investment Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 106. Requirements for
Officials of an Investment Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 106.1 Provisions
Regarding the Total Number of Positions of a Member of the
Supervisory Board and Executive Board to be Held by a Member the
Supervisory Board and Executive Board of an Investment Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 107. Documents Submitted by
an Investment Firm for Obtaining the Licence
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 107.1 Additional
Requirements for the Preparation of Information
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 108. Procedures for Granting
the Licence
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 108.1
Notification of Changes after Obtaining the Licence
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 109. Change of Investment
Services and Ancillary Investment Services Specified in the
Licence
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 110. Re-registration of the
Licence
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 111. Procedures for
Cancelling the Licence
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Chapter
VIII.1
Permit for a Holding Company and Licence
(Permit) for an Investment Firm belonging to a Third-Country
Group
[28 April 2022 / See Paragraph 78
of Transitional Provisions]
Section 111.1 Additional
Requirements for Holding Companies
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 111.2 Additional
Requirements for an Investment Firm of a Third-Country Group
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Chapter IX
Provision of Investment Services in the Internal Market of the
European Union
Section 112. Procedures by which a
Credit Institution Registered in a Member State Commences
Provision of Investment Services and Ancillary Investment
Services in the Republic of Latvia
(1) A credit institution registered in a Member State is
entitled to provide only such investment services and ancillary
investment services in the Republic of Latvia for the provision
of which the credit institution has obtained a permit in the home
country thereof.
(2) An investment firm registered in a Member State shall
commence the provision of investment services and ancillary
investment services in the Republic of Latvia in conformity with
the procedures laid down in the Law on Investment Firms.
(3) [28 April 2022]
(4) [28 April 2022]
(5) [28 April 2022]
(6) [28 April 2022]
(7) If a credit institution registered in another Member
State, upon commencing the provision of investment services and
ancillary investment services in the Republic of Latvia, plans to
use tied agents registered in its home Member State, the
supervisory body of the home state of the credit institution
shall, within one month after receipt of information, notify the
identifying data of such tied agents to Latvijas Banka which the
credit institution plans to use for the provision of investment
services in Latvia. Latvijas Banka shall publish a list of tied
agents on its website.
(8) If a credit institution uses a tied agent registered
outside its home Member State, such tied agent shall be
considered equivalent to a branch and the requirements of the
laws and regulations for a branch of a credit institution shall
apply thereto.
[4 October 2007; 21 June 2018; 28 April 2022; 23 September
2021 / Amendment regarding the replacement of the word
"Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 113. Procedures by which a
Credit Institution Licensed in the Republic of Latvia Commences
the Provision of Investment Services and Ancillary Investment
Services in Another Member State
(1) A credit institution registered in the Republic of Latvia
is entitled to provide only such investment services and
ancillary investment services in another Member State for the
provision of which it has obtained a permit from Latvijas
Banka.
(2) An investment firm registered in the Republic of Latvia
shall commence the provision of investment services and ancillary
investment services in another Member State in accordance with
the procedures laid down in the Law on Investment Firms.
(3) [28 April 2022]
(4) [28 April 2022]
(41) [28 April 2022]
(42) [28 April 2022]
(5) [28 April 2022]
(51) [28 April 2022]
(6) [28 April 2022]
(7) [28 April 2022]
(8) [28 April 2022]
(9) [28 April 2022]
(10) [28 April 2022]
(11) A credit institution which wishes to commence the
provision of investment services and ancillary investment
services in any of Member States without opening a branch, but
using tied agents registered in another Member State, the
identifying data of tied agents, a description of the planned use
of such agents and organisational structure, inter alia,
reporting channels, and also the type of involvement of such
agents in the corporate structure of the credit institution shall
be indicated in addition to the information referred to in
Paragraph three of this Section.
(12) Latvijas Banka shall examine the submission for the
commencement of the provision of investment services and
ancillary investment services in other Member State by using a
tied agent registered in such Member State, within one month
after receipt of all necessary documents prepared and drawn up in
accordance with the requirements of this Law, and inform the
supervisory authority of the relevant Member State and the
relevant credit institution of the decision thereof in
writing.
(13) Latvijas Banka shall, within three months after receipt
of all the necessary documents prepared and drawn up in
conformity with the requirements of this Law, take the decision
not to allow the credit institution to commence the provision of
investment services and ancillary investment services in any of
the Member States by using tied agents if the structure or
financial situation of the credit institution does not conform to
the planned activity. Latvijas Banka shall inform the supervisory
authority of the relevant Member State and the credit institution
of its decision in writing.
(14) The tied agent of a credit institution may commence
activity if Latvijas Banka has received a notification of the
supervisory authority of the relevant Member State or two months
have passed since the day when Latvijas Banka has sent the
notification referred to in Paragraph twelve of this Section to
the supervisory authority of the relevant Member State.
(15) If a credit institution uses a tied agent registered
outside its home Member State, such tied agent shall be
considered equivalent to a branch and the requirements of the
laws and regulations for a branch of a credit institution shall
apply thereto.
(16) A credit institution shall, not later than one month
prior to making any amendments to the information referred to in
Paragraph eleven of this Section or the intended termination of
activities at the branch, inform Latvijas Banka and the
supervisory authority of the relevant Member State in writing of
making amendments.
[4 October 2007; 21 June 2018; 28 April 2022; 23 September
2021 / Amendment regarding the replacement of the word
"Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 113.1 Procedures
for the Commencement of Activities in Another Member State as an
Operator of a Multilateral Trading Facility and an Operator of an
Organised Trading Facility Licensed in the Republic of Latvia
(1) An operator of the MT facility or an operator of the OT
facility licensed in the Republic of Latvia is entitled to
commence activity in another Member State to facilitate access by
investment firms and credit institutions registered in such
Member State to the MT facility or OT facility.
(2) An operator of the MT facility or an operator of the OT
facility licensed in the Republic of Latvia who wishes to
commence activities in any of the Member States shall submit a
submission to Latvijas Banka where it shall specify such Member
State.
(3) Latvijas Banka shall, within one month after receipt of
the submission, send a notification to the supervisory authority
of the relevant Member State. An operator of the MT facility or
an operator of the OT facility may commence activities from the
day when the supervisory authority of the relevant Member State
has received the notification of Latvijas Banka.
(4) Latvijas Banka shall, upon request of the supervisory
authority of the relevant Member State, send identifying data on
an investment firm or credit institution registered in the
Republic of Latvia which is a member or participant to the MT
facility or OT facility in such Member State.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 113.2 Procedures
for the Commencement of Activities in the Republic of Latvia as
an Operator of a Multilateral Trading Facility and an Operator of
an Organised Trading Facility Licensed in Another Member
State
(1) An operator of the MT facility or an operator of the OT
facility registered in another Member State is entitled to carry
out activities in the Republic of Latvia to promote access by
investment firms and credit institutions registered in the
Republic of Latvia to the MT facility or OT facility.
(2) An operator of the MT facility or an operator of the OT
facility registered in another Member State is entitled to
commence activities in the Republic of Latvia if Latvijas Banka
has received a relevant notification from the supervisory
authority of the home country of the operator of the MT facility
or the operator of the OT facility.
(3) Latvijas Banka has the right to request identifying data
on members or participants of the MT facility or OT facility
registered in the Republic of Latvia from the supervisory
authority of the home country of the operator of the MT facility
or the operator of the OT facility.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 113.3 Additional
Requirements for the Provision of Investment Services in the
Internal Market of the European Union
(1) A more detailed information to be notified to the subjects
referred to in this Chapter shall be determined by Commission
Delegated Regulation (EU) 2017/1018 of 29 June 2016 supplementing
Directive 2014/65/EU of the European Parliament and of the
Council on markets in financial instruments with regard to
regulatory technical standards specifying information to be
notified by investment firms, market operators and credit
institutions.
(2) The sample forms, templates, and procedures necessary for
the exchange of the information referred to in this Chapter shall
be determined by Commission Implementing Regulation (EU)
2017/2382 of 14 December 2017 laying down implementing technical
standards with regard to standard forms, templates and procedures
for the transmission of information in accordance with Directive
2014/65/EU of the European Parliament and of the Council.
[21 June 2018; 20 June 2019]
Chapter
IX.1
Foreign Investment Firms
[21 June 2018]
Section 113.4 Rights of
Foreign Investment Firms to Provide Investment Services and
Ancillary Investment Services
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 113.5 Provision
of Investment Services Upon Initiative of a Client
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 113.6 Procedures
for the Cancellation of the Permit
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Chapter X
Annual Statements of an Investment Firm
Section 114. Rights of the
Commission
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 115. Annual Statements of an
Investment Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 116. Evaluation Principles
for Items in the Annual Statements of an Investment Firm
[29 May 2008]
Section 117. Report by Management on
the Annual Statements of an Investment Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 118. Verification of the
Annual Statements of an Investment Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 119. Duties of an Investment
Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Chapter XI
Requirements Regulating Activities of an Investment Firm
[24 April 2014]
Section 119.1 General
Provisions
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 120. Initial Capital of an
Investment Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 121. Own Funds of an
Investment Firm
[24 April 2014]
Section 121.1
Requirements for Capital Buffers, Restrictions of Distribution
and Capital Conservation Plan
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 122. Restrictions of
Exposures of an Investment Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 122.1 Risk
Management and Action Plans
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 122.2 Drawing up
of a Recovery Plan and an Adjustment Plan
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 122.3 Calculation
of Own Funds Requirements for Benchmark Portfolios of an
Investment Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 123. Subordinated
Capital
[29 March 2007]
Section 123.1 Capital of
an Investment Firm for Covering of Risks
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 123.2 Disclosing
of Information Related to Regulatory Requirements
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 123.3 Level of
Maintenance of Sufficient Capital for Risk Coverage of an
Investment Firm
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 123.4 Level of
Application of Plans, Policies, Procedures and Mechanisms of
Investment Firms
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 123.5 Application
of the Optionality Provided for in Regulation No 575/2013,
Procedures for the Provision of Statements and Reports,
Assessment of Macroprudential or Systemic Risk and Action
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Chapter XII
Provision of Investment Services
Section 124. General
Requirements
(1) An investment firm shall, in accordance with the licence
issued thereto for the provision of investment services within
the term of operation of the licence, fulfil and comply with the
requirements of this Law and the Law on Investment Firms.
(11) [28 April 2022]
(12) [28 April 2022]
(13) [28 April 2022]
(14) [28 April 2022]
(15) [28 April 2022]
(16) [28 April 2022]
(17) [28 April 2022]
(2) A credit institution providing investment services or
ancillary investment services shall fulfil and comply with the
following requirements:
1) establish relevant constituent bodies for the provision of
investment services and ancillary investment services and ensure
the administration, internal supervision, and review, audit of
such constituent bodies, including the determination of
procedures by which employees of such constituent bodies may
receive investment services from this division, and also from
another credit institution or investment firm;
2) ensure that the head of this constituent body is a person
who is competent in investment matters and who has an impeccable
reputation;
3) ensure the execution of transactions to be made in
financial instruments and the confidentiality of client financial
instrument accounts and transactions, in conformity with the
requirements of the law;
4) take security measures for the processing, storage, and
transmission of data, in accordance with the requirements of this
Law, the regulations of Latvijas Banka, and internal rules of
procedure;
5) ensure that the financial instruments of clients and the
credit institution's own financial instruments are permanently
held separately;
6) ensure storage for five years of the supporting documents
of transactions made in financial instruments and other services
provided and transactions made, and also conformity with the
requirements brought forward in the regulations of Latvijas Banka
and Regulation 2017/565 related to the completion and keeping of
supporting documents. Latvijas Banka is entitled to extend the
time period laid down in this Clause for up to seven years;
7) ensure compliance with the requirements for the storage of
supporting documents also in relation to recordings of telephone
conversations or electronic communications relating to
transactions made when dealing on own account and the provision
of services that relate to the reception, transmission, and
execution of client orders. Such telephone conversations and
electronic communications shall also include those that are
intended to agree on transactions that would be concluded when
dealing on own account or in the provision of services that
relate to the reception, transmission, and execution of client
orders, even if those conversations or communications do not
result in the conclusion of such transactions. In order to ensure
the fulfilment of the requirements for the storage of supporting
documents in relation to recording of telephone conversations or
electronic communications, a credit institution:
a) shall take all reasonable steps to record relevant
telephone conversations and electronic communications, made with,
sent from, or received by equipment provided by the credit
institution to an employee or contractor or the use of which by
an employee or contractor has been accepted or permitted by the
credit institution;
b) shall make known that telephone communications or
conversations between the credit institution and its clients that
result or may result in transactions will be recorded. Such a
notification may be made once - before the provision of the
investment service to clients;
c) shall not provide, by telephone, investment services and
activities to clients who have not been notified in advance about
the recording of their telephone communications or conversations,
where such investment services and activities relate to the
reception, transmission, and execution of client orders;
d) may place client orders using other channels of
communication and concurrently ensuring that such communication
takes place in a form that can be saved. The relevant
face-to-face conversation with a client may be recorded by using
written minutes or notes. Such orders shall be considered
equivalent to orders received by telephone;
e) shall implement all reasonable measures to prevent an
employee or contractor from making, sending, or receiving
relevant telephone conversations and electronic communications on
privately-owned equipment which the investment firm is unable to
record or copy;
8) ensure continuous and systematic provision of investment
services and ancillary investment services by using corresponding
systems, means, and procedures;
9) implement all the necessary administrative and
organisational measures in order to prevent the negative effect
of the conflict of interest referred to in Section 127 of this
Law on the interests of clients;
10) have reasonable security mechanisms in place designed to
guarantee the security and authenticity of the means of transfer
of information, to minimise the risk of data corruption and
unauthorised access and to prevent information leakage prior to
publishing thereof, always preserving data confidentiality.
(21) Additional requirements for the provision of
investment services are determined by Regulation No 2017/565.
(3) [21 June 2018]
(4) [21 June 2018]
[4 October 2007; 13 January 2011; 24 April 2014; 21 June
2018; 28 April 2022; 23 September 2021 / Amendment
regarding the replacement of the words "regulatory provisions"
with the word "regulations" and amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 124.1 Status of a
Client
(1) A person to whom an investment firm and credit institution
provide investment services and ancillary investment services may
have the status of a professional client, retail client, or
eligible counterparty.
(2) Professional clients in respect to all investment services
and instruments are:
1) persons licensed or regulated for operation in a financial
market in the Republic of Latvia or in another country:
a) credit institutions;
b) investment firms;
c) other licensed or regulated financial institutions;
d) investment funds and investment management companies;
d1) alternative investment funds and managers of
alternative investment funds;
e) insurers;
f) pension funds and managers of pension funds;
g) commodity dealers;
h) companies which are dealing on their own account in the
markets of options, futures or other derivatives markets or
markets of the base asset of the derivative the only purpose of
which is to restrict financial risk in the market of derivatives,
or which are dealing on the account of other participants of
these markets or make prices for them and which are guaranteed by
the participants of settlement system in this market, if
responsibility for ensuring the fulfilment of the agreements
entered into by such companies is undertaken by the participants
of settlement system in this market,
i) other institutional investors;
2) commercial companies and other legal persons which conform
to two of the abovementioned three requirements:
a) own funds - not less than EUR 2 million;
b) net turnover - not less than EUR 40 million;
c) balance sheet value - not less than EUR 20 million;
3) State institutions managing government debt, national
central banks, the World Bank, the International Monetary Fund,
the European Central Bank, and other international financial
authorities;
4) other institutional investors the principal activity of
which is investing in financial instruments, including those that
are engaged in securitisation of financial assets or financing of
other transactions and those that are making such investments in
large amounts;
5) a person who is recognised in another country as a
professional client in accordance with the procedure that is
equivalent to that laid down in this Section.
(3) An investment firm or credit institution shall inform the
client of his or her status prior to the commencement of
provision of investment services and ancillary investment
services.
(4) The client has the right to request the investment firm or
credit institution to assign another status of a client thereto.
A retail client may acquire the status of a professional client
in accordance with the procedures laid down in Paragraphs five,
six, and seven of this Section. A professional client may acquire
the status of a retail client in accordance with the procedures
laid down in Paragraphs nine and ten of this Section. An
investment firm and credit institution shall inform the client of
such rights in accordance with the procedures laid down in
Section 126.1 of this Law.
(5) An investment firm or credit institution which provides
investment services and ancillary investment services is entitled
to recognise as a professional client any person who is not
referred to in Paragraph two of this Section, but who has
expressed the relevant request, the knowledge and experience of
which has been evaluated by the investment firm and credit
institution, and which conforms to at least two of the following
criteria:
1) the person has performed transactions of significant amount
in the relevant market - at least 10 transactions per quarter
during preceding four quarters;
2) the value of the financial instrument portfolio of the
person which comprises financial resources and financial
instruments exceeds EUR 500 000;
3) the person has at least one year experience in the
financial sector in a position where knowledge in respect of
transactions and services that the person is planning to perform
or receive as a client, is necessary.
(6) An investment firm or credit institution shall, prior to
recognising the person referred to in Paragraph five of this
Section as a professional client, evaluate his or her competence,
experience, and knowledge in order to get certification that, by
taking into account the specifics of the intended transactions or
services, the client is able to take an investment decision
independently and is aware of the relevant risks.
(7) The status of a professional client may be assigned to the
person referred to in Paragraph five of this Section in general
or in respect of certain type of investment service, type of
transaction, of particular transaction or product. A person who
wants to be recognised as a professional client shall submit a
submission to an investment firm or credit institution,
indicating the type of investment service, transaction, or
product therein in respect of which he or she wants to receive
the status of a professional client. The investment firm or
credit institution shall, prior to assigning the status of a
professional client to the person, warn in writing of the right
of investor protection which he or she may lose in the status of
a professional client, and the person shall sign a certification
that he or she has received such warning and is aware of the
consequences from the loss of such right. A written agreement
shall be entered into regarding assignment of a professional
status.
(8) A person who is recognised as a professional client shall
provide information to an investment firm or credit institution
in accordance with the procedures referred to in Paragraphs five,
six, and seven of this Section on the changes in his or her
activities which may affect the conformity of such person with
the requirements defined for the status of a professional client.
The investment firm or credit institution which receives
information that a client does not meet the requirements defined
for a professional client, shall take the decision to withdraw
such status and inform the relevant person thereof in
writing.
(9) The status of a retail client may be assigned to a
professional client in general for all services to be provided or
for separate types of investment services, transactions, or
products. A professional client who wishes that the status of a
retail client is assigned to him or her, shall submit a
submission to an investment firm or credit institution,
indicating therein the type of investment service, transaction,
or product in respect of which he or she wants to receive the
status of a retail client.
(10) In order for a professional client to be assigned the
status of a retail client, an investment firm or credit
institution and the person who is regarded as a professional
client, shall enter into a written agreement. Such agreement
shall provide for the types of investment services, transactions,
or products to which the status of a retail client is
applied.
(11) An investment firm or credit institution which provides
investment services and ancillary investment services shall draw
up and approve internal policy and procedure which ensure
compliance with the requirements of this Section in respect of
the status of a client.
[4 October 2007; 13 January 2011; 9 July 2013; 19 September
2013; 21 June 2018; 26 October 2023]
Section 124.2 Eligible
Counterparties
(1) An eligible counterparty may be an investment firm, credit
institution, insurance company, investment management company,
pension fund and management companies thereof, other financial
institutions which are licensed and carry out activities in
accordance with the legal acts of a Member State or foreign
country governing financial services, governments of the
countries and other State institutions which are managing
government debt, central bank and supranational
organisations.
(11) An investment firm and credit institution may
apply the status of an eligible counterparty also to the persons
referred to in Section 124.1, Paragraph two, Clause 1,
Sub-clauses "g", "h", "i", Clauses 2 and 3 of this Law.
(2) An investment firm and credit institution which are
entitled to provide the investment services referred to in
Section 3, Paragraph four, Clause 1, 2, or 3 of this Law may
commence transactions or engage in transactions with an eligible
counterparty, without applying the requirements laid down in
Sections 126, 126.1, 126.2, 128 (except for
Section 128, Paragraph seven), Section 128.1,
Paragraph one, Sections 128.2 and 128.3 of
this Law.
(21) An investment firm and credit institution
shall act honestly, fairly, and professionally in relationships
with eligible counterparties and implement fair, clear and not
misleading communication, taking into account the nature of the
eligible counterparty and its commercial activity.
(3) Before provision of investment services and ancillary
investment services, an investment firm and credit institution
shall inform the companies referred to in Paragraph one of this
Section of the status of an eligible counterparty applied
thereto.
(4) The persons referred to in Paragraph one of this Section
have the right to request in accordance with the procedures laid
down in Section 124.1 of this Law that an investment
firm or credit institution assigns the status of a professional
or retail client to them. If the person referred to in Paragraph
one of this Section does not directly indicate which status - the
status of a professional or retail client - should be assigned to
him or her, the investment firm and credit institution shall
assign the status of a professional client to him or her.
(5) In order to apply the status of an eligible counterparty
to the persons referred to in Section 124.1, Paragraph
two, Clause 1, Sub-clauses "g", "h", "i", Clauses 2 and 3, an
investment firm and credit institution shall obtain a consent of
such person. The consent may be obtained in respect of investment
services to be provided in general, to individual investment
services or individual transactions.
(6) If a potential client of an investment firm and credit
institution is the commercial company equivalent to the
commercial companies referred to in Paragraph 1.1 of
this Section which is registered in another Member State, the
investment firm and credit institution may apply the status of
the eligible counterparty thereto, in conformity with the
provisions of this Section.
(7) Additional requirements for the application of the
provisions of this Section are determined by Regulation No
2017/565.
[4 October 2007; 22 May 2008; 21 June 2018; 31 March
2022]
Section 125. Right to Financial
Instruments
(1) Financial instruments belong to the acquirer thereof from
the moment they are registered in the financial instrument
account of such acquirer.
(2) Entry in the participant's account shall be proof that
financial instruments registered in the central securities
depository are owned by the central securities depository
participant.
(21) Entry in the individual account shall be proof
that financial instruments registered in the central securities
depository are owned by a client of the central securities
depository participant upon whose assignment the abovementioned
individual account has been opened with the central securities
depository, identifying the participant's client in the central
securities depository.
(22) Entry in the client's account which has been
opened with the participant shall be proof that financial
instruments registered in the central securities depository are
owned by a client of the central securities depository
participant upon whose assignment an individual account has been
opened with the central securities depository, without
identifying the participant's client in the central securities
depository.
(23) In the case which is not referred to in
Paragraphs two, 2.1, 2.2, and three of this
Section, entry in the financial instrument account of the person
opened with an investment firm or credit institution shall be
proof that financial instruments are owned by the abovementioned
person.
(24) A relevant entry in the financial instrument
account - entry certifying the ownership of financial instruments
- shall be proof of pledge right in relation to financial
instruments.
(3) An investment firm and credit institution or the central
securities depository may open such a financial instrument
account for the central securities depository participant or
participant's client in which the financial instruments within
the holding of such client, participant, or participant's client
are listed (nominal account).
(4) An investment firm and credit institution are liable for
ensuring that the transactions made in financial instruments are
registered without delay and the financial instruments acquired
as a result of such transactions are registered in the financial
instrument accounts of clients.
(41) [21 June 2018]
(42) [21 June 2018]
(43) [21 June 2018]
(5) Financial instruments which belong to a client of the
central securities depository participant, a client of an
investment firm, or a client of a credit institution may not be
used for the satisfaction of claims by creditors of the central
securities depository participant, creditors of the investment
firm, or creditors of the credit institution. This requirement
shall also apply to cases where insolvency proceedings have been
declared to the central securities depository participant,
investment firm, or credit institution.
(51) Financial instruments that have been recorded
in the financial instrument account which has been opened with a
settlement system of financial instruments maintained by the
central securities depository and in which financial instruments
owned or held by a participant or one or several clients of a
participant are accounted may not be used for the satisfaction of
claims by creditors of the central securities depository. This
requirement shall also apply to cases when insolvency proceedings
have been declared for the central securities depository.
(6) Financial instruments for which an investor has submitted
to an investment firm or credit institution a disposal order on
the basis of which the investment firm or credit institution has
initiated the execution of the transaction, may not be used for
the satisfaction of claims of creditors of the alienor.
(7) Such financial instruments owned by legal persons which
have been recorded in a financial instrument account opened with
an investment firm or credit institution or an individual account
in which financial instruments owned by a client of the central
securities depository participant are accounted, and such
financial instruments owned by investment firms and credit
institutions which have been recorded in a participant's account,
may be seized only by an order of a bailiff in accordance with
the procedures laid down in the Civil Procedure Law.
(8) Such financial instruments owned by natural persons which
have been recorded in a financial instrument account opened with
an investment firm or credit institution or an individual account
in which financial instruments owned by a client of the central
securities depository participant are accounted may be seized
only by an order of a bailiff in accordance with the procedures
laid down in the Civil Procedure Law or arrested in accordance
with the procedures laid down in the Criminal Procedure Law.
(9) Recovery against such financial instruments owned by legal
persons which have been recorded in a financial instrument
account opened with an investment firm or credit institution or
an individual account in which financial instruments owned by a
client of the central securities depository participant are
accounted, and such financial instruments owned by investment
firms and credit institutions which have been recorded in a
participant's account, may be directed only on the basis of an
order by a bailiff, in accordance with the procedures laid down
in the Civil Procedure Law or upon request by the tax
administration - in cases provided for in tax laws, but upon
request by the State Revenue Service - also in cases provided for
in other laws.
(10) Recovery against such financial instruments owned by
natural persons which have been recorded in a financial
instrument account opened with an investment firm or credit
institution or an individual account in which financial
instruments owned by a client of the central securities
depository participant are accounted may be directed only on the
basis of an order by a bailiff, in accordance with the procedures
laid down in the Civil Procedure Law, or on the basis of a
decision of the tax administration on recovery of late tax
payments - in accordance with the law On Taxes and Fees.
[4 October 2007; 14 September 2017; 21 June 2018]
Section 125.1 Use of
Client Financial Instruments
(1) Financial instruments which are owned by a client of an
investment firm or credit institution may not be used in
transactions of the investment firm or credit institution when
dealing on its own account or on account of another client,
including in securities financing transactions. Such requirement
shall not be applied, if the client has given a prior consent to
the use of its financial instruments with special conditions
stipulated by the client and such consent has been certified with
the signature of the client or a certification equivalent to a
signature and the use of the client financial instruments is
restricted with the conditions to which the client has
agreed.
(2) Financial instruments which are owned by clients of an
investment firm or credit institution and which are accounted in
a nominal account opened with the third party and where financial
instruments of several clients are kept together may not be used
in securities financing transactions or other transactions of the
investment firm or credit institution when dealing on its own
account, except when at least one of the following provisions is
fulfilled in addition to the requirements of Paragraph one of
this Section:
1) all clients the financial instruments owned by which are
kept in a nominal account have given prior consent to
transactions of such type;
2) the investment firm or credit institution has a system or
controls at its disposal which ensure that only financial
instruments owned by a client who has given prior consent are
being used.
(3) An investment firm and credit institution shall, in the
case referred to in Paragraph two of this Section, keep account
of financial instruments which provides information on clients
the financial instruments of which have been used to ensure
corresponding distribution of losses if such have occurred.
(4) An investment firm and credit institution shall implement
respective measures to prevent unauthorised use of financial
instruments of clients in its own interests or in the interests
of any person, inter alia:
1) by entering into an agreement with the client on measures
which should be implemented by the investment firm and credit
institution in the event of insufficient security in the account
of the client on the day of settlement;
2) by especially supervising its projected ability to supply
securities on the day of settlement and by introducing corrective
measures, if it is not possible;
3) by especially supervising and requesting, without delay, to
ensure securities which have not been supplied on or after the
day of settlement.
(5) An investment firm and credit institution shall determine
special procedures in relation to all clients to ensure that the
person borrowing client financial instruments provides a
corresponding security, and the investment firm and credit
institution shall supervise continuous conformity of such
security and implement the necessary measures to ensure that its
remainder remains corresponding to the value of client financial
instruments.
(6) An investment firm and credit institution shall not
conclude title transfer financial collateral arrangements with
retail clients for the purpose of securing or covering present or
future, actual or contingent or prospective obligations of
clients.
[21 June 2018]
Section 125.2 Use of a
Non-conforming Title Transfer Financial Collateral
Arrangement
(1) An investment firm and credit institution shall take into
account - and shall be able to prove that it has adequately taken
into account - the link between the use of a title transfer
financial collateral arrangement and the liabilities of a client
in relation to the investment firm or credit institution and the
assets of the client to which the investment firm or credit
institution applies the provisions arising from the title
transfer financial collateral arrangement.
(2) When assessing and documenting the conformity of the use
of a title transfer financial collateral arrangement, the
investment firm and credit institution shall take into account
all the following circumstances:
1) whether there is only a very weak link between the
liabilities of the client in relation to the investment firm or
credit institution and the use of the title transfer financial
collateral arrangement, including whether the potential relation
of the client in relation to the investment firm or credit
institution is small or insignificant;
2) whether the amount of funds or financial instruments of the
client to which the provisions arising from the title transfer
financial collateral arrangement are applied significantly exceed
the liabilities of the client or is even unlimited, if the client
has any liabilities at all in relation to the investment firm or
credit institution;
3) whether the provisions arising from the title transfer
financial collateral arrangement are applicable to the financial
instruments or funds of all clients, regardless of the type of
liabilities of each client in relation to the investment firm or
credit institution.
(3) When applying the provisions arising from the title
transfer financial collateral arrangement, the investment firm
and credit institution shall, for the professional clients and
eligible counterparties, especially indicate the related risks
and impact which can be left on financial instruments and funds
of the client by any provisions arising from the title transfer
financial collateral arrangement.
[21 June 2018]
Section 125.3 Management
Procedures in Relation to the Safeguarding of Client Assets
(1) An investment firm and credit institution shall appoint
one employee who has sufficient skills and authorisation and who
is specifically responsible for the issues as to whether the
investment firm and credit institution fulfil their obligations
in the field of the safeguarding and separate holding of the
financial instruments and funds of the client.
(2) In order to ensure complete conformity with the
requirements of Sections 125.1, 125.2, 129,
129.1, 129.2, and 131.1 of this
Law, an investment firm and credit institution may decide whether
the appointed employee performs only this task or can efficiently
fulfil his or her duties while concurrently fulfilling other
duties.
[21 June 2018]
Section 126. Contract for the
Provision of Investment Services and Ancillary Investment
Services
(1) Prior to commencement of the provision of investment
services and ancillary investment services, an investment firm
and credit institution shall enter into a contract with the
client for the provision of investment services and ancillary
investment services in which the rights and obligations of the
parties and other conditions by which the investment firm or
credit institution shall provide services to its client shall be
indicated. The rights and obligations of the contracting parties
may be specified by referring to other documents.
(2) The requirements for the content of the contract are
determined by Regulation No 2017/565.
(3) The contract may be entered into in writing (in paper form
or using another durable medium).
(4) Prior to entering into a contract for the provision of
investment services and ancillary investment services, an
investment firm and credit institution have an obligation to
inform the client of the procedures by which complaints and
disputes arising from such contract are to be examined
out-of-court.
[21 June 2018]
Section 126.1 Types of
Exchange of Information Related to Investment Services
(1) An investment firm and credit institution shall provide
the information intended for a client, using a durable
medium.
(2) An investment firm or credit institution shall ensure an
option in respect of changing the type of exchange of
information. The type of exchange of information in which the
investment firm and credit institution provide information to a
client shall be provided for in the contract for the provision of
investment services.
(3) An investment firm or credit institution shall provide
information intended for the client electronically, if:
1) provision of information in electronic form is suitable for
conditions in which transactions between the investment firm or
credit institution and the client are made or will be made;
2) the client to whom information will be provided has been
offered a possibility to choose whether he or she will receive
information in printed form or electronically, and the client has
specifically indicated that he or she wants to receive
information in such form.
(4) An investment firm or credit institution is entitled to
provide information intended for the client which is not
addressed to him or her personally, via the Internet, provided
that the following conditions are met:
1) the client has approved that Internet is available to him
or her;
2) the client has specifically indicated that he or she agrees
to provision of information in such form;
3) the client has been electronically notified of the website
address and place on the website where information is
available;
4) information is updated in a timely manner;
5) information is constantly available on the website so long
as it is justifiably necessary for the client in order to be able
to verify it.
[4 October 2007; 21 June 2018]
Section 126.2 Suitability
of Investment Service and Ancillary Investment Service and
Conformity Thereof with the Interests of a Client
(1) In order to determine the suitability of investment
service for a client, an investment firm or credit institution
shall request information from the client or potential client on
his or her experience and knowledge in the investment field in
relation to the particular investment service or product offered
or requested, if the investment firm or credit institution
provides investment service other than investment advice or
portfolio management. If it is intended to offer a bundle of
services or products to a client in accordance with Section 128,
Paragraph 12.5 of this Law, the assessment shall
encompass the overall suitability of the bundled package for the
client.
(11) In order to determine whether the investment
service which is investment advice or portfolio management is
suitable for a client, an investment firm or credit institution
shall request information from the client or potential client on
his or her experience and knowledge in the investment field in
relation to the particular investment service or product, the
financial situation of the person, including his ability to bear
losses, to investment objectives, including the risk tolerance of
the person. If the investment advice includes a bundle of
services or products in accordance with Section 128, Paragraph
12.5 of this Law, the evaluation shall encompass the
overall suitability of the bundled package for the client.
(21) An investment firm and credit institution
shall use the information which is obtained in accordance with
Paragraph 1.1 of this Section in order to determine,
giving due consideration to the nature and extent of the service
offered, that the particular recommended transaction, when
providing investment advice, or the transaction entered into,
when providing portfolio management:
1) is appropriate for the objective of the relevant
client;
2) is such that the client is able to financially undertake
any investment risks related to his or her investment
objectives;
3) is such that the client has the necessary experience and
knowledge to understand the risk related to the transaction or
management of his or her portfolio.
(3) An investment firm and credit institution shall use the
information obtained in accordance with Paragraph one of this
Section in order to determine whether the client has the
necessary knowledge to understand the risks related to the type
of offered service or product.
(4) Information on knowledge and experience of a client or
potential client in the investment field shall include
information on:
1) the types of service, transaction and financial instrument
with which the client is familiar;
2) the transactions of the client in financial instruments -
their nature, amount, frequency, and time period during which
they were made;
3) the level of education and profession or relevant former
profession of the client or potential client.
(5) When requesting the information referred to in Paragraph
four of this Section, an investment firm and credit institution
shall take into account such factors as the status of a client
(retail client, professional client), the type and amount of
service to be provided, the type of product or intended
transaction, the complexity of a service and risks related
thereto.
(6) Information on investment objectives of a client or
potential client, where appropriate, shall contain information on
a time period during which the client wants to keep investment,
his or her choice in relation to undertaking of risk, risk
profile, and investment purposes.
(7) Information on the financial position of a client or
potential client, where appropriate, shall contain information on
his or her sources and amount of regular income, his or her
assets, including liquid assets, investments and immovable
properties and on his or her regular financial obligations.
(8) An investment firm and credit institution are not entitled
to encourage the client not to provide the information referred
to in this Section.
(9) If, during provision of investment advice or portfolio
management, an investment firm or credit institution has not
obtained the information referred to in Paragraph 1.1
of this Section, it is not entitled to recommend financial
instruments for a client or potential client or to manage his or
her portfolio.
(91) During the provision of investment advice or
portfolio management which is related to the change of financial
instruments, an investment firm or credit institution shall
obtain the necessary information on the investment of a client
and shall analyse the costs and benefits of the change of
financial instruments. During the provision of investment advice,
an investment firm or credit institution shall inform the client
whether the benefits created by such change of financial
instruments exceed the costs related thereto. The change of
financial instruments is the selling of a financial instrument
and purchase of another financial instrument or exercising of the
right to make changes in relation to the existing financial
instrument during the provision of investment advice or portfolio
management.
(10) If an investment firm or credit institution, on the basis
of information obtained in accordance with Paragraph one of this
Section, considers that the relevant product or service is not
suitable for a client, it shall warn the client. If the client
refuses to provide the information referred to in Paragraph one
of this Section to the investment firm and credit institution or
if the investment firm or credit institution has information that
such information is incomplete or does not contain the last
changes, the investment firm or credit institution shall warn the
client or potential client that it is not possible to evaluate
the suitability of the intended service or product for the
client. If the investment firm or credit institution has warned
the client, but the client has not provided additional
information, it shall not be responsible for the consequences
caused by refusal of the client to provide information, provision
of incomplete information, or failure to give a notice on changes
in the previously provided information.
(11) The warnings referred to in Paragraph ten of this Section
may be issued in a standardised form.
(12) If an investment firm or credit institution provides only
the investment services referred to in Section 3, Paragraph four,
Clause 1 or 2 of this Law with or without the ancillary
investment services referred to in Section 3, Paragraph five,
Clauses 1, 3, 4, 5, 6, and 7 of this Law, it shall not request
the information referred to in Paragraph one of this Section from
the client if all of the following conditions are in effect:
1) the service applies to the following financial
instruments:
a) shares which are admitted to trading on a regulated market
of a Member State or an equivalent market of a foreign country,
or on the MT facility, except for shares that embed a
derivative;
b) bonds or other forms of debt securities admitted to trading
on a regulated market or on an equivalent market of a foreign
country, or on the MT facility, except for those that embed a
derivative or incorporate a structure which makes it difficult
for the client to understand the risk involved with the relevant
financial instruments;
c) money market instruments, except for those that embed a
derivative or incorporate a structure which makes it difficult
for the client to understand the risk involved with the relevant
financial instruments;
d) investment certificates of investment funds, except for
structured investment certificates of investment funds in
accordance with Article 36(1) of Commission Regulation (EU) No
583/2010 of 1 July 2010 implementing Directive 2009/65/EC of the
European Parliament and of the Council as regards key investor
information and conditions to be met when providing key investor
information or the prospectus in a durable medium other than
paper or by means of a website;
e) structured deposits, except for those that incorporate a
structure which makes it difficult for the client to understand
the risk associated with structured deposits and the reward or
cost of exiting the product before term;
f) other non-complex financial instruments;
2) the service is provided upon initiative of a client or
potential client;
3) the client or potential client has been clearly informed
that in provision of this service the investment firm or credit
institution does not evaluate the suitability of the investment
service or offered instrument for the client and that, therefore,
the client does not enjoy appropriate protection;
4) the investment firm and credit institution conform to the
requirements laid down in Section 127 of this Law and Regulation
No 2017/565 for the prevention of a conflict of interest.
(121) If an investment firm or credit institution
provides investment services to a client together with the
ancillary investment service referred to in Section 3, Paragraph
five, Clause 2 of this Law, when determining suitability of the
investment service for the client, it shall take into account the
structure of the financial product which forms as a result of
provision of the abovementioned ancillary investment service.
(122) When applying Paragraph twelve of this
Section, a market of a foreign country shall be considered
equivalent to a regulated market, if the European Commission
takes the decision on equivalence according to the specified
examination procedure.
(13) [21 June 2018]
(14) The requirements of this Section shall not be applied in
respect of professional clients, because the professional client
is regarded as a client who has the required experience and
knowledge in relation to products, transactions, and services in
respect of which the client is classified as a professional
client and as such who is able to undertake risk for any loss
that may be caused by the investment.
(15) [21 June 2018]
(16) If a credit agreement relating residential property which
is subject to the provisions of the Consumer Rights Protection
Law regarding creditworthiness assessment of a consumer apply has
as a prerequisite the provision to the same consumer of
investment services in relation mortgage bonds specifically
issued to secure the financing of and having identical terms as
the credit agreements relating to residential property, in order
for the loan to be payable, refinanced or redeemed, the
abovementioned service shall not be subject to the obligations
set out for the investment firm and credit institution in this
Section.
(17) The measures and provisions for the fulfilment of the
requirements laid down in this Section are determined by
Regulation No 2017/565.
[4 October 2007; 22 March 2012; 21 June 2018; 20 June 2019;
31 March 2022]
Section 126.3 Disclosure
of the Engagement Policy
(1) If an investment firm and credit institution are entitled
to provide a portfolio management service, including in the
portfolio shares of such joint-stock company the registered
office of which is in a Member State and the shares of which are
admitted to trading on a regulated market of the Member State
(hereinafter in this Section - the joint-stock company), the
investment firm and credit institution shall draw up a policy
(hereinafter in this Section - the engagement policy) providing a
description and explanation as to how the exercise of the rights
of a shareholder in the management of such joint-stock company is
included in the strategy of the investment firm and credit
institution.
(2) The engagement policy shall describe how the investment
firm and credit institution supervise the activity of the
joint-stock company in at least the following issues:
1) strategy;
2) results and risks of financial and non-financial
activity;
3) capital structure;
4) social impact;
5) impact on the environment;
6) corporate management.
(3) In addition to the information referred to in Paragraph
two of this Section, the engagement policy shall describe how the
investment firm and credit institution:
1) implement a dialogue with the joint-stock company;
2) exercise voting rights and other rights arising from stocks
in the joint-stock company, including providing for the criteria
for the determination of less significant votes;
3) cooperate with other shareholders of the joint-stock
company;
4) communicate with interested persons of the joint-stock
company;
5) manage the actual and potential conflict of interest in
relation to engagement in the management of the joint-stock
company.
(4) An investment firm and credit institution shall, each year
by 1 August, publish a report on the implementation of the
engagement policy. The report shall be provided for the period
from the day when the engagement policy is published for the
first time or the last report on the implementation of the
engagement policy is published. The report shall additionally
include the following information:
1) general information as to how the investment firm and
credit institution have exercised the voting rights;
2) an explanation of the most significant votes;
3) information on the use of the services of proxy
advisors.
(5) In addition to the information referred to in Paragraph
four of this Section, an investment firm and credit institution
shall make public its votes in the meetings of shareholders of
the joint-stock company. The investment firm and credit
institution need not disclose the votes which, according to the
engagement policy, are to be considered insignificant.
(6) An investment firm and credit institution need not apply
one or more of the requirements of this Section. If the
investment firm and credit institution do not apply any of the
requirements of this Section, they shall provide information on
which requirement is not being applied and the justification for
such action.
(7) An investment firm and credit institution shall ensure
public and free access to the information referred to in
Paragraphs two, three, four, five, and six of this Section on its
website.
(8) An investment firm and credit institution shall comply
with the requirements of Section 127 of this Law in relation to
investments into shares of a joint-stock company and
participation in the management of a joint-stock company.
[20 June 2019]
Section 127. Conflict of
Interest
(1) An investment firm and credit institution shall implement
all the corresponding measures in order to identify and prevent
conflict of interest which may arise during the provision of
investment services and ancillary investment services between the
investment firm or credit institution, including employees, tied
agents thereof, the persons who control, directly or indirectly,
the investment firm or credit institution, and a client, and also
between clients thereof, including identify and prevent such
conflict of interest which might arise as a result of inducement
of third parties within the meaning of Section 133.18
or as a result of the remuneration policy and other incentive
principles by the investment firm.
(2) In order to identify the types of conflict of interest
which may arise upon providing investment services and ancillary
investment services, an investment firm and credit institution
shall take into account situations when the investment firm or
credit institution, its affiliated person or the person who
controls, directly or indirectly, the investment firm or credit
institution:
1) is likely to make a financial gain, or avoid a financial
loss, at the expense of the client;
2) has an interest in the outcome of a service provided to the
client or of a transaction performed on behalf of the client,
which is not in the interests of the client;
3) is interested to act in favour of another client or group
of clients;
4) carries out the same professional activity as the
client;
5) receives or will receive an inducement from another person
in relation to a service provided to the client, in the form of
funds, commodities, or services, other than the standard fee for
that service.
(3) In order to ensure fulfilment of the requirements of
Paragraph one of this Section, an investment firm and credit
institution shall develop, approve, and introduce the policy for
the prevention of conflict of interest corresponding to the size,
organisation and type, amount and complexity of its professional
activity. If the investment firm and credit institution are in a
group of commercial companies, the policy for the prevention of
conflict of interest shall also provide for the prevention of
such conflict of interest which may arise due to the activity or
structure of another commercial company within the group.
(4) In the policy for the prevention of conflict of interest
an investment firm and credit institution shall:
1) identify, with reference to the specific investment
services and types of ancillary investment services provided by
or on behalf of the investment firm and credit institution or a
third party, the circumstances which constitute or may give rise
to a conflict of interest entailing a material risk of damage to
the interests of one or more clients;
2) determine the necessary procedures and measures to be
implemented to prevent conflict of interest.
(5) When determining procedures and measures for the
prevention of conflict of interest, an investment firm and credit
institution shall ensure their commensurability with the size and
professional activities of the investment firm or credit
institution, or of the group to which it belongs, and to the
materiality of the risk of damage to the interests of
clients.
(6) In fulfilling the requirements referred to in Paragraph
four, Clause 2 of this Section, an investment firm and credit
institution shall provide for the following in conformity with
its structure and types of investment services provided:
1) effective procedures to prevent or control the exchange of
information between the affiliated persons engaged in activities
involving a risk of a conflict of interest, if the exchange of
such information may harm the interests of one or more
clients;
2) separate supervision of the affiliated persons whose
principal duties involve carrying out activities on behalf of
clients or providing services to clients or who otherwise
represent different interests that may conflict with the
interests of the client, including those of the investment firm
or credit institution;
3) prevent any direct link between the remuneration or income
gained by the affiliated persons the activities of which are
related to the provision of different management services, if the
conflict of interest may arise in relation to the activities
carried out while providing management services;
4) measures to prevent or limit a third party from exercising
inappropriate influence on the course of provision of investment
services or ancillary investment services;
5) measures to prevent or control the simultaneous or
sequential involvement of the affiliated person in provision of
different investment services or ancillary investment services,
if such involvement may impair the proper management of conflict
of interest;
6) other additional procedures and measures if it is necessary
to prevent arising of conflict of interest in activities of the
affiliated persons.
(7) If organisational or administrative measures which have
been stipulated by an investment firm and credit institution in
accordance with the requirements of this Section for the
management of conflict of interest are not sufficient to ensure
with due confidence that risk of damage to the interests of
clients will be prevented, the investment firm or credit
institution shall clearly disclose the nature or sources of
conflict of interest to the client, and also the measures to be
implemented to reduce such risks prior it has commenced provision
of the relevant investment service to the client, taking into
account the requirements of Section 126.1 of this
Law.
(71) The information referred to in Paragraph seven
of this Section is disclosed on a durable medium and, taking into
account the specific characteristics of the client, contains
sufficiently detailed information allowing the client to take a
decision based on the information in relation to the service as
regards which a conflict of interest arises.
(72) An investment firm shall comply with
Regulation No 2017/565 in relation to the management of conflict
of interest.
(8) An investment firm and credit institution shall store and
constantly update information on the types of those investment
services and ancillary investment services which have been
provided by the company or which have been provided on behalf of
it and which have caused or may give rise to the conflict of
interest that materially harms the interests of one or more
clients.
(9) An investment firm and credit institution shall establish
and introduce a system in order to ensure the fulfilment of the
requirements laid down in Regulation No 2017/565 in respect to
restrictions for making personal transactions.
(10) An investment firm and credit institution distributing
investment researches shall, for the prevention of conflict of
interest, implement the measures specified in Regulation No
2017/565 in addition to the requirements laid down in this
Section.
(11) In order to ensure the management of conflict of interest
in relation to transactions in financial instruments, an
investment firm and credit institution:
1) if financial instruments are designed for sale to clients,
shall maintain, operate, and review a process for the approval of
each financial instrument and significant adaptations of existing
financial instruments before it is marketed or distributed to
clients;
2) in the product approval process, shall specify the
identified target market of end clients within the relevant
category of clients for each financial instrument and shall
ensure that all relevant risks to such identified target market
are assessed and that the intended distribution strategy is
appropriate for the identified target market;
3) shall also regularly review financial instruments it offers
or markets, taking into account any event that could materially
affect the potential risk to the identified target market, to
assess at least whether the financial instrument remains
consistent with the needs of the identified target market and
whether the intended distribution strategy remains
appropriate;
4) if financial instruments are designed, shall make available
to any distributor all appropriate information on the financial
instrument and the product approval process, including the
identified target market of the financial instrument;
5) if financial instruments are offered or recommended which
it does not design, shall implement measures to obtain the
information referred to in Clause 4 of this Paragraph and to
understand the characteristics and identified target market of
each financial instrument.
[4 October 2007; 22 May 2008; 21 June 2018]
Section 127.1
Restrictions on Making Personal Transactions
[21 June 2018]
Section 127.2 Measures
for the Prevention of Conflict of Interest for Persons who
Develop Investment Research
[21 June 2018]
Section 128. Obligations in
Relations with Clients
(1) While providing investment services and ancillary
investment services, an investment firm and credit institution
have an obligation to act as an honest and careful proprietor and
to provide the services and ancillary investment services with
due professionalism and care for the interests of a client.
(11) An investment firm and credit institution
shall ensure that a specific target market is identified for the
financial instruments designed thereby for sale and such
financial instruments meet the needs of ends clients of an
identified target market, and also the strategy for the
distribution of the financial instruments is compatible with the
specific target market. The investment firm and credit
institution shall implement reasonable measures to ensure
distribution of financial instruments in the relevant target
market.
(12) An investment firm and credit institution
shall ensure that they understand the financial instruments they
offer or recommend, assess the compatibility of the financial
instruments with the needs of the clients to whom they provide
investment services, also taking account that specified in
Section 127, Paragraph eleven of this Law, and ensure that
financial instruments are offered or recommended only when this
is in the interest of the client.
(13) An investment firm and a credit institution
shall be exempt from that laid down in Paragraphs 1.1
and 1.2 of this Section and Section 127, Paragraph
eleven of this Law in the following cases:
1) the investment service provided thereby applies to bonds
which do not include any other derived instrument than the
possibility for the issuer to delete the bond early in full
amount by ensuring that in such case the issuer pays such amount
to the investor holding the bond which is equal to the net
current value of coupon payments expected until the end of the
term and the denomination of the bond;
2) financial instruments are traded or distributed only to
conforming counterparties.
(2) An investment firm or credit institution may not include
in the contracts entered into with a client for the provision of
investment services and provision of ancillary investment
services any provisions which would be contrary to that specified
in Paragraph one of this Section or covertly include consequences
which would in any way be directed against the client.
(3) An investment firm and credit institution shall ensure
that only such natural persons who have the necessary knowledge
and competence are entitled to provide investment advice or
information on financial instruments, investment services, or
ancillary investment services to clients on behalf of the
investment firm or credit institution. The investment firm and
credit institution shall, upon request of Latvijas Banka, provide
information confirming the fulfilment of the requirements laid
down in this Section.
(4) The requirements for the necessary knowledge and
competence of employees referred to in Paragraph three of this
Section shall be determined by Latvijas Banka.
(5) An investment firm and credit institution shall ensure
that all information addressed to clients or potential clients,
including marketing communications, is fair, clear, and not
misleading. Marketing communications shall be clearly
identifiable.
(6) An investment firm and credit institution shall, in a
timely manner, disclose the following information to a client or
potential client on the investment firm or credit institution and
its services, financial instruments, and investment strategies
offered, order execution venues, and other costs and
expenditures:
1) in relation to the provision of investment advice - prior
to the provision of investment advice - as to:
a) whether or not the investment advice is provided on an
independent basis;
b) whether the investment advice is based on a broad or on a
more restricted analysis of different types of financial
instruments, in particular, whether the range is limited to
financial instruments issued or provided by persons having close
links with the investment firm or credit institution, or any
other legal or economic relationships;
c) whether the investment firm or credit institution will
provide the client with a periodic assessment of the suitability
of the financial instruments recommended to that client;
2) in relation to financial instruments and proposed
investment strategies - appropriate guidance on and warnings of
the risks associated with investments in those instruments or in
respect of particular investment strategies and whether the
financial instrument is intended for retail or professional
clients, taking account of the identified target market of
financial instruments in accordance with the requirements of
Section 128, Paragraphs eleven and twelve of this Law;
3) in relation to all costs and expenditures - information
relating to both investment and ancillary investment services,
including the cost of advice, including the cost of the financial
instrument recommended or marketed to the client and information
how the client may pay for it, also encompassing any third party
payments.
(61) The information referred to in Paragraph six
of this Section on all costs and expenditures, except for costs
and expenditures caused by the occurrence of underlying market
risk of the financial instrument, shall be aggregated by the
investment firm and credit institution to allow the client to
understand the overall cost and the cumulative effect on return
of the investment. Upon request of the client, the investment
firm and credit institution shall provide such information in an
itemised breakdown. The investment firm and credit institution
shall provide the information on all costs and expenditures to
the client on a regular basis - at least annually during the
whole period when the investment service is provided.
(62) That specified in Paragraphs six and
6.1 of this Section shall be applied to professional
clients only in relation to investment advice and portfolio
management.
(63) If an agreement to buy or sell a financial
instrument has been concluded by using means of distance
communication which preclude prior provision of information on
costs and expenditures, an investment firm may, immediately after
conclusion of a transaction, provide such information either in
electronic or paper form if it is requested by a private client
and the following conditions are met:
1) the investment firm provides the client with a possibility
to receive the information on costs and expenditures by phone
prior to conclusion of the transaction;
2) the client has consented to receiving the abovementioned
information immediately after conclusion of the transaction;
3) prior to conclusion of the agreement, the investment firm
has informed the client of the possibility to postpone the
conclusion of the transaction until the moment when the client
receives the information.
(7) An investment firm and credit institution shall disclose
the information referred to in Paragraphs six, 6.1,
twelve, and 12.1 of this Section free of charge so
that clients or potential clients are reasonably able to
understand the nature and risks of the investment service,
ancillary investment service and of the specific type of
financial instrument offered and, consequently, to take
information-based decisions on making investments. Such
information shall be provided in electronic form, except for the
cases when the client or potential client is a private client who
receives information in paper form. The investment firm may
henceforth provide information to the abovementioned clients in
electronic form by informing the client at least two months in
advance that:
1) there is a possibility to choose between the receipt of
information in electronic or paper form;
2) the transition to electronic form will take place if,
within two months from the day of receipt of the notice, further
provision of information in paper form is not requested.
(8) The requirements for the content of such information
which, during the course of provision of the investment service,
is provided by an investment firm and credit institution to a
client on investment service, financial instruments, service
costs, and transactions made shall be determined by Latvijas
Banka.
(81) If an investment service is offered as part of
a financial product which is already subject to other provisions
of laws and regulations relating to credit institutions and
consumer credits with respect to information requirements, that
service shall not be additionally subject to the obligations set
out in Paragraphs five, six, 6.1, and seven of this
Section.
(82) If an investment firm or credit institution
informs the client that investment advice is provided on an
independent basis, that investment firm or credit institution
shall:
1) assess a sufficient range of financial instruments
available on the market which must be sufficiently diverse with
regard to their type and issuers or product providers to ensure
that the client's investment objectives can be suitably met and
must not be limited to financial instruments issued or provided
by:
a) the investment firm or credit institution itself or by a
person having close links with the investment firm or credit
institution;
b) another person with which the investment firm or credit
institution has such close legal or economic relationships as to
pose a risk of impairing the independent basis of the advice
provided;
2) not accept and retain fees, commissions, and any monetary
or non-monetary benefits paid or provided by any third party or a
person acting on behalf of a third party in relation to the
provision of the service to clients. Minor non-monetary benefits
that can enhance the quality of service provided to a client and
are of a scale and nature such that they could not be deemed to
impair the obligation of the investment firm or credit
institution to act in the best interest of the client must be
clearly disclosed and are excluded from this Clause.
(9) The execution of an order for a client shall not be
postponed and shall be executed without delay (except for the
cases specified in law), fairly and in accordance with the
instructions of the client regarding execution of the task. When
executing the task, the investment firm and credit institution
shall take into account the requirements laid down in Section
128.1 of this Law.
(10) An investment firm and credit institution shall, when
executing an order of the client, implement all the necessary
measures in accordance with the requirements of Section
128.2 of this Law, in order to achieve the best
possible results for the client.
(11) The investment firm and credit institution shall, in
accordance with the requirements of Section 126.1 of
this Law and the provisions of Latvijas Banka, provide adequate
reports to the client on the services provided. Those reports
shall include periodic communications to clients, taking into
account the type and the complexity of financial instruments
involved and the nature of the service provided to the client,
including, where applicable, the costs associated with the
transactions and services undertaken on behalf of the client.
(111) While providing investment advice, an
investment firm and credit institution shall, before the
transaction is made, provide the client with a statement on
suitability of the investment advice in a durable medium
specifying the advice given and how the abovementioned advice
meets the preferences, objectives, and other characteristics of
the retail client. If the agreement to buy or sell a financial
instrument is concluded using a means of distance communication
which prevents the prior delivery of the suitability statement,
the investment firm or credit institution may provide the written
statement on suitability in a durable medium immediately after
the client is bound by any agreement, provided both the following
conditions are met:
1) the client has consented to receiving the suitability
statement without undue delay after the conclusion of the
transaction;
2) the investment firm or credit institution has given the
client the option to delay the transaction in order to receive
the statement on suitability in advance.
(112) If an investment firm or credit institution
provides portfolio management or has informed the client that it
will carry out a periodic assessment of suitability, the periodic
report shall contain an updated statement on how the investment
meets the client's preferences, objectives, and other
characteristics of the retail client.
(113) That laid down in Paragraphs eleven,
11.1, and 1.2 of this Section shall not be
applied to professional clients, unless the professional client
has informed the investment firm or credit institution that it
wishes the application of the abovementioned requirements. The
investment firm or credit institution shall perform registration
of notifications of professional clients.
(12) If, in relation to the provision of investment services
or ancillary investment services, the investment firm or credit
institution pays any fees or commissions or provides any monetary
or non-monetary benefits to a third party which is not a client,
or to a person who is acting on behalf of a client, or receives
such fees or commissions, or monetary or non-monetary benefits
from a third party which is not a client, or from a person who is
acting on behalf of the client, it shall be regarded the the
investment firm or credit institution is not fulfilling the
requirements of Paragraph one of this Section and Section 127 of
this Law, except for the cases when such payments or
benefits:
1) are designed to enhance the quality of the service provided
to the client;
2) do not impair compliance with the obligation of the
investment firm or credit institution to act honestly, fairly,
and professionally in accordance with the best interest of its
clients.
(121) The existence, nature, and amount of the
payment or benefit referred to in Paragraph twelve of this
Section, or - in case where the amount cannot be ascertained -
the method for calculating that amount, must be clearly disclosed
to the client, in a manner that is comprehensive, accurate, and
understandable, prior to the provision of the relevant investment
services or ancillary investment services. Where applicable, the
investment firm or credit institution shall also inform the
client of mechanisms for transferring to the client the fee or
commission or transferring monetary or non-monetary benefit
received in relation to the provision of the investment services
or ancillary investment services.
(122) The payments or benefits which are necessary
for the provision of the relevant investment services or
ancillary investment services, including custody costs,
settlement and exchange fees, regulatory levies or legal fees,
and which by its nature cannot give rise to conflicts with the
obligations of the investment firm or credit institution to act
honestly, fairly, and professionally in accordance with the best
interests of its clients, shall not be subject to that specified
in Paragraph twelve of this Section.
(123) When managing the portfolio, an investment
firm and credit institution shall not accept and retain fees,
commissions, and any monetary or non-monetary benefits paid or
provided by any third party or a person acting on behalf of a
third party in relation to the provision of the service to
clients. Minor non-monetary benefits that can enhance the quality
of the services provided to a client and are of a scale and
nature such that they could not be deemed to impair the
obligation of the investment firm or credit institution to act in
the best interest of the client must be clearly disclosed and are
excluded from this Paragraph.
(124) An investment firm and credit institution
which provide investment services to clients shall not remunerate
or assess the performance of its staff in a way that conflicts
with its duty to act in the best interests of its clients. In
particular, they may not determine any system in relation to
remuneration, sales targets or other aspects that could provide
an incentive to its staff to recommend a particular financial
instrument to a retail client when the investment firm or credit
institution can offer a different financial instrument which
would better meet that client's needs.
(125) If an investment firm or credit institution
offers an investment service together with another service or
product as part of a package or as a condition for the same
agreement or package, the investment firm or credit institution
shall inform the client whether it is possible to buy the
different components separately and shall provide information to
the client on the costs and considerations of each component. If
the risks resulting from such an agreement or package offered to
a retail client are likely to be different from the risks
associated with the components taken separately, the investment
firm or credit institution shall provide an adequate description
of the different components of the agreement or package and the
way in which its interaction modifies the risks.
(126) More detailed measures to ensure that
investment firms and credit institutions comply with the
requirements laid down in this Section when providing investment
services or ancillary investment services to their clients are
determined by Regulation No 2017/565.
(127) If an investment firm or credit institution
which provides a portfolio management service or another
investment service, or ancillary investment service to a client
uses third party investment research and, if this third party
also ensures execution of orders of the client, it shall be
considered that the investment firm or credit institution has
complied with the requirements laid down in Section
133.20 of this Law and is entitled to receive
investment research in compliance with the following
conditions:
1) before the execution of the orders of the client or the
provision of research services, a contract has been concluded
between the investment firm or credit institution and the
provider of such service, specifying the proportion of joint
payments which relates to the execution of orders and the
proportion which relates to the investment research;
2) the investment firm or credit institution shall inform its
clients of the joint payments which are made thereby to third
parties for the execution of the orders of the client and the
investment research;
3) the investment research for which joint payments are made
shall apply to the issuers whose market capitalisation at the end
of the year when the financial instruments of the issuer were
admitted to trading at a trading venue or own funds at the end of
the financial year when the financial instruments of the issuer
were not admitted to trading at a trading venue did not exceed
one billion euros within the 36 month period before conducting
the respective research.
(128) The research referred to in Paragraph
12.7 of this Section shall be research material or
services which:
1) are related to one or more financial instruments or other
assets, or existing or potential issuers of financial
instruments;
2) are related to a specific industry or market and ensure an
informative overview of the financial instruments, assets, or
issuers of the relevant industry or market;
3) directly or indirectly recommend or suggest an investment
strategy and provide a reasoned view on the current or future
value or price of financial instruments or assets;
4) include an analysis, initial overview, and conclusions on
the basis of new or existing information which could be used in
an investment strategy and which would be relevant and improve
decisions of the investment firm or credit institution in respect
of clients from which a fee is collected for the respective
research.
(13) A client has the right to submit a complaint to an
investment firm and credit institution related to the provision
of investment services. The investment firm and credit
institution shall establish, implement, and conform to effective
procedures, in accordance with which complaints of retail clients
and potential retail clients are registered and examined, and
information is registered on measures taken in relation to such
complaints.
(14) Clients which are regarded to be consumers within the
meaning of the Consumer Rights Protection Law are entitled to
submit complaints to the Consumer Rights Protection Centre
regarding violations of the requirements of this Law and other
laws and regulations of consumer rights protection, if it is
related with the provision of investment services.
(15) Latvijas Banka shall provide opinions to clients on
complaints concerning violations of the requirements of this Law
or other laws and regulations if it is related to the provision
of investment services.
(16) If a client incurs losses due to incorrect information
provided by an investment firm or credit institution, or due to
the failure of the investment firm or credit institution to
fulfil the requirements of this Section, the client has the right
to request compensation for losses in accordance with the general
procedures laid down in laws and regulations.
[4 October 2007; 21 June 2018; 12 December 2019; 31 March
2022; 23 September 2021; 26 October 2023]
Section 128.1 Rules for
the Execution of Client Orders
(1) An investment firm and credit institution which have
received the licence to execute orders on behalf of clients shall
implement the necessary measures and implement procedures which
provide for the fair and expeditious execution of client orders,
relative to other client orders or the trading interests of the
investment firm or credit institution. The abovementioned
measures and procedures shall allow for the execution of
otherwise comparable client orders in accordance with the time of
their reception by the investment firm and credit
institution.
(11) The conditions and nature of the procedures
and measures which result in the fair and expeditious execution
of client orders and the situations in which or types of
transaction for which investment firms or credit institutions may
reasonably deviate from prompt execution so as to obtain more
favourable terms for clients shall be determined by Regulation No
2017/565.
(2) An investment firm and credit institution, and also the
parties related thereto shall not misuse the information at their
disposal relating to pending client orders.
(3) If a client has submitted a limit order on shares admitted
on a regulated market or being traded at trading venues and such
order under prevailing market conditions is not promptly
executed, the investment firm or credit institution, unless
expressly otherwise provided by the client, shall implement
measures in order to ensure execution of the abovementioned order
as soon as possible, by publicly disclosing information to the
market on such order in a manner which is easily accessible to
other market participants. It shall be considered that such
requirement has been conformed to if the investment firm or
credit institution has submitted the limit order at the trading
venue.
(4) Latvijas Banka has the right to exempt an investment firm
and credit institution from the obligation referred to in
Paragraph three of this Section to publicly disclose a limit
order that is large in scale compared with normal market size as
determined under Article 4 of Regulation No 600/2014.
(41) The methods which can be used by an investment
firm or credit institution to deem that it has met its obligation
to disclose not immediately executable client limit orders to the
market shall be determined by Regulation No 2017/565.
(5) An investment firm and credit institution have the right
to aggregate a client order with transaction on their own account
or with another client order, provided that the order aggregation
and allocation policy is developed and conformed to in the
institution. The order aggregation and allocation policy may be
included in the order execution policy and it shall provide for
the following:
1) orders may be aggregated only if it is unlikely that the
aggregation of orders and transactions will work overall to the
disadvantage of clients whose orders are to be aggregated;
2) the investment firm and credit institution have an
obligation before aggregation of orders or transaction to inform
each client whose order is to be aggregated with an order of
another client that the effect of aggregation may work to its
disadvantage in relation to a particular order;
3) fair allocation of aggregated orders and transactions
especially providing for an explanation how the volume and price
of orders determine allocation of orders in each particular
case;
4) procedures for allocation of aggregated client orders, if
the aggregated order is partially executed;
5) procedures for ensuring conformity with the requirements of
Paragraphs six and seven of this Section in respect of allocation
or reallocation of aggregated client orders and transactions on
own account.
(6) If an investment firm or credit institution has aggregated
transactions on its own account with one or more client orders,
it shall allocate or reallocate the relevant transaction in a way
that is not detrimental to the client.
(7) Where an investment firm or credit institution aggregate a
client order with a transaction on its own account and the
aggregated order is partially executed, it shall allocate related
transactions in priority sequence - at first to the client and
then to the company. If the investment firm or credit institution
is able to demonstrate on reasonable grounds that without
aggregation it would not have been able to execute the order on
such advantageous terms, or at all, it may apply proportional
income allocation in respect of the transaction on its own
account.
(8) An investment firm and credit institution which receive
the instructions or orders of a client with the intermediation of
another investment firm or credit institution regarding provision
of investment services may rely on the client information
provided by such another investment firm or credit institution,
and also to rely on all recommendations provided by another
investment firm or credit institution to the client in relation
to the service or transaction.
(9) An investment firm or credit institution which transmits
instructions or orders to another investment firm or credit
institution regarding provision of investment services and
ancillary investment services on behalf of a client shall be
responsible for:
1) completeness and precision of the transmitted
information;
2) suitability of consultations and recommendations provided
to the client.
(10) An investment firm and credit institution which receive
the instructions or orders of a client with the intermediation of
another investment firm or credit institution regarding provision
of investment services shall be responsible for the provision of
investment services or conclusion of transactions on the basis of
the information or recommendations provided by another investment
firm or credit institution to the client.
[4 October 2007; 21 June 2018; 23 September 2021 /
Amendment regarding the replacement of the word "Commission" with
the words "Latvijas Banka" shall come into force on 1 January
2023. See Paragraph 73 of Transitional Provisions]
Section 128.2 Ensuring
the Best Possible Results for a Client
(1) When executing an order on behalf of a client on
transactions in financial instruments, managing portfolio
according to the authorisation of investors or accepting or
transmitting for execution orders of a client on transactions
with financial instruments, an investment firm and credit
institution shall ensure the best possible results by taking into
account the price of the transaction, the costs, the execution
speed, the possibility for execution and settlement, the amount
of transaction, specifics or any other considerations in respect
of the execution of the order.
(2) In order to ensure the best result for clients, the
investment firm and credit institution shall, in accordance with
the requirements of Section 128.3 of this Law, draw up
and approve the order execution policy.
(3) [21 June 2018]
(4) An investment firm and credit institution are prohibited
from making transactions in financial instruments owned or
possessed by clients, if they, when entering into a contract on
provision of investment services, have not received a consent of
the client for the order execution policy thereof. The investment
firm and credit institution may make transactions outside a
regulated market, MT facility, or OT facility, upon receipt of a
prior consent of the client to each separate transaction or
providing for such possibility in the contract.
(5) An investment firm and credit institution have an
obligation to prove, upon request of a client, conformity of the
order execution with the order execution policy and to prove,
upon request of Latvijas Banka, that it complies with the
requirements of this Section and Section 128.3.
(6) If an investment firm and credit institution execute an
order on behalf of a retail client, the best possible result
shall be determined in terms of the total consideration,
representing the price of the financial instrument and the costs
related to execution, which shall include all expenses incurred
by the client as a direct result of the execution of the order,
including execution venue fees, settlement fees and any other
fees paid to persons involved in execution of the order.
(7) For the purposes of delivering the best possible results
for a client, if the client order on transaction in financial
instruments may be executed in more than one of the trading
venues listed in the order execution policy, an investment firm
and credit institution shall evaluate the results to be achieved
for the client on each trading venue and compare such results.
The investment firm and credit institution shall additionally
take into account commissions determined thereby and costs for
the execution of the order on each trading venue. When
determining commissions for executing the order, the investment
firm and credit institution are not entitled to unjustifiable
discriminate different trading venues.
(71) An investment firm and credit institution
shall not receive any remuneration, rebate, or non-monetary
benefit for routing client orders to a particular trading venue
or execution venue. Otherwise such action shall be deemed, within
the meaning of Section 133.18, a violation of such
governing requirements on conflict of interest or inducements as
set out in Sections 127 and 128 of this Law.
(72) For financial instruments subject to the
trading obligation specified in Articles 23 and 28 Regulation No
600/2014, each trading venue and systematic internaliser and -
for other financial instruments - each execution venue shall
publish free of charge the available data on the quality of
execution of transactions in these venues on at least an annual
basis. The abovementioned periodic reports shall include
information on price, costs, speed, and likelihood of execution
for individual financial instruments.
(73) An investment firm and credit institution
shall, after execution of the transaction on behalf of the
client, inform the client of the order execution venue.
(8) An investment firm and credit institution shall be
exempted from the obligation to deliver the best possible results
to a client according to the order execution policy, if the
client has provided special instructions on how transactions in
financial instruments are to be executed, regarding placement of
orders, when managing the portfolio of the client, regarding a
person to whom the client order is to be transmitted for
execution. In such case the investment firm and credit
institution shall follow the special instructions of the
client.
(9) Regulation No 2017/565 stipulates in more detail:
1) the criteria for determining the relative importance of the
different factors that may be taken into account when determining
the best possible result by considering the size and type of
order, and also whether the clients is a retail or professional
client;
2) factors that may be taken into account by the investment
firm and credit institution when reviewing their execution
measures and the circumstances under which changes to such
measures may be appropriate. In particular, the execution
measures shall be determined for the factors taken into account
for determining which venues enable investment firms or credit
institutions to obtain on a consistent basis the best possible
result for executing the client orders;
3) the type and extent of the information to be provided to
clients on their order execution policies.
(10) The specific content, the format, and the periodicity of
data relating to the quality of execution and to be published in
accordance with Paragraph 7.2 of this Section by
taking into account the type of trading venue and the type of
financial instrument concerned are determined by Commission
Delegated Regulation (EU) 2017/575 of 8 June 2016 supplementing
Directive 2014/65/EU of the European Parliament and of the
Council on markets in financial instruments with regard to
regulatory technical standards concerning the data to be
published by execution venues on the quality of execution of
transactions.
[4 October 2007; 21 June 2018; 23 September 2021 /
Amendment regarding the replacement of the word "Commission" with
the words "Latvijas Banka" shall come into force on 1 January
2023. See Paragraph 73 of Transitional Provisions]
Section 128.3 Order
Execution Policy
(1) If an investment firm and credit institution executes
client orders for transactions investment firm financial
instruments on behalf of the client, the client order execution
policy shall provide for the following regarding each category of
financial instruments:
1) information on trading venues on which the investment firm
and credit institution execute client orders. At least those
trading venues shall be provided for in the order execution
policy where the investment firm and credit institution plan to
ensure the best possible result in execution of client
orders;
2) factors which determined selection of the trading venue for
the relevant category of financial instruments.
(2) If the investment firm and credit institution manages
portfolio of investors according to the investors' authorisation
or accept and transmit client orders for execution on
transactions in financial instruments, it shall indicate
information in the order execution policy on institutions where
the investment firm and credit institution place orders or
transmit client orders for the execution. The investment firm and
credit institution are entitled to transmit client orders for
execution only to such institutions which have approved policy
that ensures the best possible result for the client.
(3) The investment firm and credit institution shall evaluate
efficiency of the client order execution policy on a regular
basis. The investment firm and investment institution shall, each
year or in case where material changes arise, which affect the
ability of the investment firm or credit institution to continue
to achieve the best possible result in respect of the client
order, by permanently using trading venues listed in the order
execution policy, review the order execution policy and order
execution measures. If material amendments are made to the order
execution policy, the investment firm and credit institution
shall inform the clients thereof.
(31) The investment firm and credit institution
which executes client orders shall summarise and make public on
an annual basis the top five execution venues for each category
of financial instruments in terms of trading volumes where they
executed client orders in the preceding year, and also shall make
public a summary of information on the quality of actual
execution of orders.
(4) If amendments are made to the list of order execution
venues which the investment firm or credit institution considers
as material, it shall make the relevant amendments to the order
execution policy and inform the clients thereof accordingly.
(5) An investment firm and credit institution shall, prior to
entering into a contract on provision of investment services,
inform the client of the order execution policy developed in
accordance with the procedures laid down in this Section. That
information shall explain clearly, in sufficient detail and in a
way that can be easily understood by clients, how orders will be
executed by the investment firm or credit institution on behalf
of the client.
(6) If an investment firm and credit institution provide in
their order execution policy a possibility to execute a client
order outside a regulated market, MT facility, of OT facility,
they shall expressly inform their clients of such
possibility.
(7) The content and format of such information which should be
made public by investment firms and credit institutions in
accordance with Paragraph 3.1 of this Section is
determined in more detail by Commission Delegated Regulation (EU)
2017/576 of 8 June 2016 supplementing Directive 2014/65/EU of the
European Parliament and of the Council with regard to regulatory
technical standards for the annual publication by investment
firms of information on the identity of execution venues and on
the quality of execution.
[4 October 2007; 22 May 2008; 21 June 2018; 20 June
2019]
Section 129. Holding of Client
Funds
(1) An investment firm is entitled to hold the client funds in
accordance with a written contract between the client and the
investment firm by taking corresponding measures to protect the
rights of clients and to preclude the use of the clients funds on
its behalf.
(2) The investment firm shall hold the client funds separately
in an account or accounts which have been separated and
identified separately from the accounts used for holding the
funds owned by the investment firm itself:
1) in a central bank of a Member State, if it provides such
service to investment firms or credit institutions;
2) in a credit institution registered in the Republic of
Latvia or in a credit institution registered in a Member State,
or in a credit institution registered in a foreign country;
3) in a money market fund which conforms to the requirements
referred to in Paragraph five of this Section.
(3) An investment firm is entitled to hold the client funds in
a money market fund only upon prior consent by the client. The
investment firm shall inform clients that the funds to be held in
the money market fund will not be held in accordance with the
requirements laid down in this Law regarding the protection of
client funds.
(4) When taking a decision on a credit institution or fund
where to hold funds belonging to the client, an investment firm
shall evaluate with proper skill and accuracy the competence and
reputation of such credit institution or fund on a financial
market, and also the requirements or case law in force in the
relevant country in respect of holding client funds that could be
detrimental to the client's interests. The investment firm shall,
once a year, evaluate repeatedly the competence of the selected
credit institution and conditions for holding client funds.
(41) If an investment firm holds client funds in
the credit institution or money market fund of the same group of
which the investment firm itself is part, it shall limit the
amount of funds held by the relevant investment firm in any unit
of such group or any combination of units of such group so that
the abovementioned funds would not exceed 20 per cent of the
total amount of client funds. The investment firm need not comply
with such restriction if it is able to prove that the
abovementioned requirements are not commensurate, taking into
account the nature, size, and complexity of its activity, and
also the safety offered by the abovementioned third parties, and
if the amount of client funds held by the investment firm is
small. The investment firm shall regularly review its assessments
performed in accordance with this Paragraph and submit its
initial assessment and reviewed assessments to Latvijas
Banka.
(5) A money market fund where an investment firm is entitled
to hold funds in accordance with Paragraph two of this Section
shall be an open investment fund which is licensed and supervised
in a Member State and meets the following criteria:
1) its primary investment objective is to maintain the net
asset value of the fund either constant at par, net of earnings,
or at the value of the investors' initial capital plus
earnings;
2) it invests, with a view to achieve that primary investment
objective, exclusively in high quality money market instruments
with a maturity or residual maturity of no more than 397 days, or
money market instruments the yield adjustments of which are
calculated on regular bases within this period, and the weighted
average maturity of which is 60 days. It may also make
investments on an ancillary basis in deposits with credit
institutions to achieve this objective;
3) its liquidity is secured through same day or next day
settlement.
(6) Within the meaning of this Section, a high quality money
market instrument shall be a money market instrument if the
investment firm itself performs a documented assessment of the
credit rating of money market instruments allowing it to deem
that the money market instrument is of high quality. If one or
several rating agencies registered with and supervised by the
European Securities and Markets Authority have provided rating of
such instrument, the investment firm shall take into account also
the abovementioned credit ratings in its internal assessment.
(61) An investment firm shall inform the parties
referred to in Paragraph two of this Section that funds
transferred by the investment firm for holding are owned by its
clients.
(62) An investment firm shall ensure that security
interests, liens (pledge right) or right to set-off over client
financial instruments or funds enabling a third party to dispose
of client's financial instruments or funds in order to recover
debts that do not relate to the client or provision of services
to the client are not permitted unless this is provided for by
applicable legal acts in a foreign country jurisdiction in which
the client funds or financial instruments are held. If the
investment firm has an obligation to enter into an agreement that
creates such security interests, liens (pledge right) or right to
set-off, the investment firm shall disclose the relevant
information to the client, indicating the risks associated with
the abovementioned agreement. If security interests, liens
(pledge right) or right to set-off are created by the investment
firm over financial instruments or funds of the client, or if the
investment firm has been informed that they are granted, they
shall be recorded in the client contract and the own accounting
documents of the investment firm to make the ownership status of
client assets clear.
(7) An investment firm shall perform accounting of such funds
belonging to each client which are held by the investment firm.
In accounting of funds belonging to clients, the investment firm
shall ensure that:
1) it is possible at any time to distinguish funds held for
one client from funds held for another client, or from funds of
the investment firm;
2) accounts are compared on a regular basis with the accounts
of that third party in which the funds of clients are held by the
company;
3) accounting entries and accounting ensure its accuracy and
particularly its conformity with the amount of client funds and
give an opportunity to use it as an inspection or audit
evidence.
(8) Funds belonging to a client of an investment firm may not
be used for the satisfaction of claims of creditors of the
investment firm. This requirement also applies to those cases
when an investment firm has been declared insolvent in accordance
with the procedures laid down in the law.
(81) An investment firm shall create adequate
organisational structure to minimise the risk of the loss or
diminution of client funds, or of rights in connection with those
funds, as a result of misuse of the assets, fraud, poor
administration, inadequate record-keeping, or negligence.
(9) If a credit institution holds the client funds necessary
for ensuring of transactions to be made in financial instruments
at a third party on behalf of clients without demonstrating the
abovementioned client funds on the balance sheet of the credit
institution, it shall comply with the requirements of Paragraphs
two, three, four, 4.1, five, six, 6.1,
6.2, seven, eight, and 8.1 of this
Section.
[4 October 2007; 22 May 2008; 26 February 2009; 26 May
2016; 21 June 2018; 28 April 2022; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 129.1 Holding of
Financial Instruments of Clients
(1) An investment firm and credit institution are entitled to
hold financial instruments of a client according to a written
contract of the client and the investment firm or credit
institution.
(2) An investment firm and credit institution shall hold the
financial instruments belonging to a client separately from its
own financial instruments.
(3) An investment firm and credit institution are entitled to
hold financial instruments belonging to a client at a third
party. When taking a decision on a third party with which to hold
financial instruments belonging to the client, the investment
firm and credit institution shall evaluate with proper skill and
accuracy the competence and reputation of such party on a
financial market, and also the requirements or market practice in
effect in the relevant country in respect of holding financial
instruments of clients that could be detrimental to the client's
interests. The investment firm and credit institution shall, once
a year, evaluate repeatedly the competence of the selected party
and conditions for holding financial instruments of a client.
(4) An investment firm and credit institution are entitled to
hold financial instruments belonging to a client only with such
third party which is subjected to the requirements in force in
the relevant country regarding separate holding of client
financial instruments and which is supervised.
(5) An investment firm and credit institution are not entitled
to deposit financial instruments belonging to a client with a
third party registered in a foreign country, if the holding of
financial instruments on behalf of third parties is not regulated
in the country unless one of the following conditions is met:
1) the nature of the financial instrument or of the investment
service connected with such instrument requires it to be
deposited with a third party in that third country;
2) the financial instruments are held on behalf of a
professional client, and the client has requested the investment
firm in writing to deposit them with a third party in that third
country.
(51) The requirements of Paragraphs four and five
of this Section shall also be applied if such third party has
delegated any of its functions in relation to holding and storage
of financial instruments to any other third party.
(6) An investment firm and credit institution shall account
the financial instruments of clients held thereby and store the
relevant accounting records. In accounting of financial
instruments belonging to clients, the investment firm and credit
institution shall ensure:
1) a possibility at any time to distinguish financial
instruments belonging to one client from financial instruments
belonging to another client, or from financial instruments
belonging to the investment firm or credit institution;
2) comparison of accounts on a regular basis with the accounts
of financial instruments of that third party where the investment
firm or credit institution holds the financial instruments of
clients;
3) accuracy and conformity of accounting entries and
accounting with the amount of financial instruments of clients
and give an opportunity to visually depict the accounting data in
a readable form to use them as inspection or audit evidence;
4) keeping of accounting registers of financial instruments in
a double entry accounting system;
5) making entries in client accounts on the basis of
supporting documents.
(7) An investment firm and credit institution which hold the
financial instruments belonging to a client with the third party
shall ensure that the financial instruments belonging to the
client are identifiable separately from the financial instruments
belonging to the third party or the company by using accounts
with different names in the accounting documents of the third
party or similar measures which ensure the same protection
level.
(71) An investment firm and credit institution
shall ensure that security interests, liens (pledge right) or
right to set-off over client financial instruments enabling a
third party to dispose of client's financial instruments in order
to recover debts that do not relate to the client or provision of
services to the client are not permitted unless this is provided
for by applicable legal acts in a foreign country jurisdiction in
which the client financial instruments are held. If the
investment firm and credit institution have an obligation to
enter into an agreement that creates such security interests,
liens (pledge right) or right to set-off, the investment firm and
credit institution shall disclose the relevant information to the
client, indicating the risks associated with the abovementioned
agreement. If security interests, liens (pledge rights) or right
to set-off are granted by the investment firm or credit
institution over client financial instruments, or if the
investment firm or credit institution has been informed that they
are granted, they shall be recorded in a client contract and the
own accounting documents of the investment firm or credit
institution to make the ownership status of client assets
clear.
(8) An investment firm and credit institution shall create
adequate organisational structure to minimise the risk of the
loss or diminution of client financial instruments, or of rights
in connection with those financial instruments, as a result of
misuse of the assets, fraud, poor administration, inadequate
record-keeping or negligence.
(9) Latvijas Banka may permit an investment firm which
executes orders of investors on transactions in financial
instruments to hold financial instruments on its behalf (to
undertake liabilities and risk arising from positions of
financial instruments on its behalf) if the following conditions
are met concurrently:
1) the reason for such positions of financial instruments are
solely the inability of the investment firm to match orders of
investors;
2) the total market value of such positions of financial
instruments does not exceed 15 per cent of the initial capital of
the investment firm which is laid down in the Law on Investment
Firms;
3) the investment firm fulfils the requirements laid down in
Articles 92, 93, 94, and 95 and Part four of Regulation (EU) No
575/2013;
4) such positions of financial instruments are of chance and
temporary nature, and they exist only for the time which is
necessary to make the abovementioned transaction in financial
instruments.
[4 October 2007; 22 May 2008; 22 March 2013; 15 December
2016; 21 June 2018; 28 April 2022; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 129.2 Report of a
Sworn Auditor on Holding of Client Funds and Financial
Instruments
An investment firm and credit institution shall ensure that a
sworn auditor controls at least annually if the measures
implemented by it are sufficient to fulfil the requirements laid
down in Sections 125.1, 125.2,
125.3, 129, and 129.1 of this Law. The
sworn auditor shall submit a written report to Latvijas Banka on
the control referred to in this Section.
[22 March 2012; 21 June 2018; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 130. Financial Instrument
Accounts
(1) Prior to opening a financial instrument account, an
investment firm or credit institution shall identify the person
who wishes open an account, and also determine whether the
financial instruments to be registered in the account will belong
to or be held by this person. The account in which the registered
financial instruments are financial instruments held by a person
shall be identified as a nominal account.
(2) The opening of financial instrument accounts without the
identification of a client is prohibited. This requirement also
applies to money accounts of clients opened by investment firms
which are opened to ensure making the transactions of clients in
financial instruments.
(3) In the case of an opening of a nominal account, the
identification of the account shall reflect information stating
that it is a nominal account and that the financial instruments
therein do not belong to the person opening the account.
(4) An investment firm and credit institution are only
entitled to open a nominal account if the person for whom the
nominal account is being opened acts in accordance with laws and
regulations the requirements of which for the identification of
clients are not less stringent than those laid down in the laws
and regulations of the Republic of Latvia.
(5) [4 October 2007]
(6) [9 June 2005]
(7) [4 October 2007]
(8) [4 October 2007]
(9) [4 October 2007]
[9 June 2005; 4 October 2007]
Section 130.1 Financial
Instrument and Money Account Statements
(1) An investment firm or credit institution shall, in
accordance with the mutual contract governing the holding of
financial instruments for the client, and also upon request of
the client, issue to the client a financial instrument account
statement on:
1) the transactions made within a specified period of time
with one, several or all of the financial instruments;
2) the transactions made during the entire period of existence
of the account with one, several or all of the financial
instruments, including on the securities financing
transactions;
3) a particular transaction with the financial
instruments;
4) the financial instruments owned by the client which are
registered in the account.
(2) Account statements shall specify the data identifying an
investment firm or credit institution, the data identifying a
client, the number of the account, the period of time for which
the transactions are reflected in the account, the date of issue
of the account statement, the data identifying the financial
instruments (name, ISIN code), the opening and ending balance
sheet of the account, the date on which the financial instruments
were registered in the account, the amount and price (if such is
known) of the financial instruments registered as a result of
each transaction made in financial instruments, the total amount
of financial instruments transferred into and written off from
the accounts within the period of time for which the account
statement has been issued.
(3) [26 October 2023]
(4) [26 October 2023]
(5) [26 October 2023]
(6) Additional requirements for the application of the
provisions of this Section are determined by Regulation No
2017/565.
[4 October 2007; 21 June 2018; 26 October 2023]
Section 131. Confidentiality of
Financial Instrument Accounts and Transactions
(1) An investment firm and credit institution have an
obligation to guarantee the confidentiality of financial
instrument accounts of clients, the client funds accounted by the
investment firm and referred to in Section 129 of this Law, and
the transactions made in financial instruments.
(2) A credit institution shall guarantee the confidentiality
of the financial instrument accounts of clients and transactions
made in financial instruments in conformity with the requirements
of the Credit Institution Law and Paragraphs eleven and twelve of
this Section.
(3) An investment firm shall guarantee the confidentiality of
the financial instrument accounts of clients, the client funds
accounted by the investment firm and referred to in Section 129
of this Law, and the transactions made in financial instruments,
in accordance with the requirements of this Law.
(4) An investment firm shall provide information on the
financial instrument accounts of natural persons, the client
funds accounted by the investment firm and referred to in Section
129 of this Law, and the transactions performed with such
financial instruments directly to such natural persons and to
their legal representatives.
(5) An investment firm shall provide information on the
financial instrument accounts of legal persons, the client funds
accounted by the investment firm and referred to in Section 129
of this Law, and the transactions made in financial instruments
to the authorised representatives of such legal persons, and also
to their management bodies upon request of the heads of such
bodies, and also to the parent undertakings of such legal persons
upon request of their management bodies.
(6) An investment firm shall, according to a written
agreement, provide information on the client, the financial
instrument accounts, the client funds accounted by the investment
firm and referred to in Section 129 of this Law, and the
transactions performed with their financial instruments to a
third party, provided that the client has unmistakably agreed to
provision of such information to the third party in the agreement
entered into with the investment firm.
(7) An investment firm shall provide information on financial
instrument accounts of natural and legal persons, the client
funds accounted by the investment firm and referred to in Section
129 of this Law and transactions performed with the financial
instruments to the extent necessary for the performance of the
relevant functions, in accordance with the procedures laid down
in laws, only to the following State authorities:
1) the court and Office of the Prosecutor, if the information
is required:
a) in criminal proceedings or in a case where the confiscation
of property may be applicable in cases specified by law;
b) in civil proceedings in which a civil claim arising from
criminal proceedings has been satisfied;
c) in civil proceedings regarding recovery proceedings for an
allowance (alimony) if there are no earnings or other property
against which recovery proceedings may be brought;
d) in civil proceedings regarding the division of such
financial instruments which are the joint property of
spouses;
e) in a case regarding the insolvency and bankruptcy of a
debtor;
f) in an inheritance case in case of the death of a
client;
2) the State Audit Office - on legal persons having State
property at the disposal thereof or which are financed from State
funds or which perform public procurements;
3) the State Revenue Service if:
a) a taxpayer fails to submit to the tax administration the
returns and tax calculations provided by the relevant tax
laws;
b) violations of the laws and regulations regarding accounting
records or taxes have been found during the tax audit examination
of a taxpayer;
c) a taxpayer fails to perform a tax payment in conformity
with the requirements of tax laws;
4) the Prevention of the Laundering of Proceeds from Crime
Service - in cases and according to the procedures laid down in
the law On the Prevention of Laundering of Proceeds Derived from
Crime;
5) the State security authorities - upon request of the
Prosecutor General or specially authorised prosecutor, if the
information is necessary to check links to terrorism of the
persons who own financial instruments.
(71) The information on the balance of financial
instrument accounts shall be provided to a sworn bailiff if such
information is necessary for directing recovery against financial
instruments belonging to a debtor who is a holder of the
financial instrument account, but information on the balance of
the account of a natural person who is an estate-leaver shall be
provided also in cases when such information is necessary for
drawing up of an inventory list.
(8) The notary who examines an inheritance case shall be
provided with information on the balance on the accounts of a
natural person who is an estate-leaver.
(9) An investment firm shall provide information on the basis
of a written request by a State authority that specifies the
particular person to be examined and the necessity of the
information is justified in conformity with the requirements of
the relevant law.
(10) An investment firm has the right to provide to its parent
commercial company which is an investment firm or financial
holding company information necessary for the supervision of the
investment firm in accordance with this Law, the regulations of
Latvijas Banka, or a mutual agreement between Latvijas Banka and
the foreign supervisory authority of the investment firm.
(11) Information on a client, his or her financial instrument
accounts and money accounts which are related to financial
instrument settlements, and also on transactions made in
financial instruments admitted on a regulated markets shall be
provided to a regulated market operator upon its request if the
operator of a trading venue requires such information to ensure
performance of the supervisory functions assigned for the
prevention of the use of insider information and market
manipulation.
(111) Information on a client, his or her financial
instrument accounts and money accounts which are related to
financial instrument settlement, and also transactions made in
financial instruments recorded in the central securities
depository shall be provided to the central securities depository
upon its request if the central securities depository requires
such information to ensure the performance of the supervisory
functions specified in Article 67(1) of Regulation No
2017/392.
(12) An investment firm and credit institution shall provide
Latvijas Banka with information on the financial instrument
accounts of clients, the client funds accounted by the investment
firm and referred to in Section 129 of this Law, and the
transactions in financial instruments, if Latvijas Banka requires
it for the performance of supervisory functions.
[29 March 2007; 4 October 2007; 14 September 2017; 28 April
2022; 23 September 2021 / Amendment regarding the
replacement of the words "regulatory provisions" with the word
"regulations" and amendment regarding the replacement of the word
"Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 131.1 Access to
Information on Financial Instruments and Funds of a Client
(1) In addition to that specified in Section 131 of this Law,
the information of an investment firm and credit institution
which is related to financial instruments and funds of a client
shall be made freely available to:
1) Latvijas Banka;
2) appointed administrators of insolvency proceedings.
(2) The information referred to in Paragraph one of this
Section shall include:
1) internal records and recording documents that properly
reflect the balances of funds and financial instruments held for
each client;
2) information on persons where client funds are held by
investment firm or credit institution in accordance with Section
129 of this Law, details on the accounts in which client funds
are held and on the relevant agreements with the abovementioned
persons;
3) information on third parties where client financial
instruments are held by investment firm or credit institution in
accordance with Section 129.1 of this Law, detailed
information on the accounts opened with third parties and on the
relevant agreements with the abovementioned persons;
4) detailed information on the third parties performing any
functions related to recording client assets as an outsourced
service and on functions performed as outsourced services;
5) information on the responsible employees of the investment
firm and credit institution involved in related processes,
including employees responsible for oversight of the investment
firms and credit institutions in relation to the safeguarding of
client assets;
6) agreements governing ownership right of the client to
assets.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 132. Liability for Breach of
Confidentiality of a Financial Instrument Account or
Transactions
(1) Anyone who has either directly or indirectly made public
or made known to persons who have no right to receive the
relevant information such information on the financial instrument
accounts of clients of an investment firm, the client funds
accounted by the investment firm and referred to in Section 129
of this Law or on transactions in financial instruments, if such
information has been entrusted to him or her or become known to
him or her as a shareholder (member), chairperson or member of
the supervisory board (where such has been established),
executive board or the audit board, as an employee of the
investment firm, as an official of Latvijas Banka or a State
authority, as a representative of a sworn auditor, as the person
referred to in Section 131, Paragraph six of this Law, as a
member of the supervisory board, executive board or employee of
the central securities depository or the regulated market
operator, shall be held criminally liable in accordance with the
procedures laid down in Law.
(2) Persons who have committed the violations referred to in
this Section shall be punished also if the violations have been
committed after the persons referred to in Paragraph one of this
Section have terminated contractual relations or fulfilment of
their duties, or employment relationship with the investment
firm, Latvijas Banka, State authority or as representatives of
sworn auditors.
[29 March 2007; 4 October 2007; 14 September 2017; 21 June
2018; 23 September 2021 / Amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 132.1 Algorithmic
Trading and Direct Electronic Access to a Trading Venue
(1) An investment firm and credit institution which engages in
algorithmic trading shall introduce effective systems and risk
controls to ensure that its trading systems are resilient and
have sufficient capacity and that trading thresholds and limits
are determined for them, and also to prevent them from sending of
erroneous orders or the systems otherwise functioning in a way
that jeopardise the orderly functioning of the market. Such an
investment firm and credit institution shall also have in place
effective systems and risk controls to ensure that their trading
systems cannot be used for any purpose that is contrary to the
provisions of Regulation No 596/2014 or to the rules of a trading
venue to which it is connected. The investment firm and credit
institution shall introduce effective business continuity
measures to prevent any failure of its trading systems and shall
ensure that its systems are fully inspected and tested and
properly monitored to ensure that they meet the requirements of
this Paragraph.
(2) An investment firm and credit institution the home Member
State of which is the Republic of Latvia shall notify Latvijas
Banka if it is engaged in algorithmic trading. The investment
firm and credit institution which engages in algorithmic trading
shall also notify this to the operator of a trading venue at the
trading venues operated by which the investment firm and credit
institution uses algorithmic trading as a member or participant
of the trading venue.
(3) Latvijas Banka has the right to, at any time, request an
investment firm or credit institution to submit a description of
its algorithmic trading strategies, details of the trading
parameters or system limits, key compliance and risk control
systems and system testing results to ascertain that the
provisions of Paragraph one of this Section are complied with.
Latvijas Banka has the right to, at any time, request further
information from an investment firm or credit institution on its
algorithmic trading and trading systems used thereby. Latvijas
Banka may provide the information received from the investment
firm or credit institution to the competent authority of the home
country of a trading venue, upon request of such authority, at
which the investment firm or credit institution as a member or
participant of the trading venue is engaged in algorithmic
trading.
(4) The investment firm and credit institution shall ensure
that records and notes are kept on all the activities referred to
in this Section in relation to algorithmic trading, and also
shall ensure that those records and notes are drawn up in a
manner which allows Latvijas Banka, when using them, to
adequately supervise the investment firm and credit institution
in relation to the conformity of activity with the requirements
of this Law.
(5) An investment firm and credit institution which uses a
high-frequency algorithmic trading technique shall ensure that
data on all orders placed thereby on a trading venue, including
cancellations of orders, executed orders, and quotations on
trading venues, are registered accurately and in chronological
order using the form specified in Commission Delegated Regulation
(EU) 2017/589 of 19 July 2016 supplementing Directive 2014/65/EU
of the European Parliament and of the Council with regard to
regulatory technical standards specifying the organisational
requirements of investment firms engaged in algorithmic trading
(hereinafter - Regulation No 2017/589). Latvijas Banka has the
right to request the abovementioned recording data and notes at
any time and the investment firm and credit institution shall
submit them without delay.
(6) An investment firm and credit institution which uses
algorithmic trading in its market making strategy shall, taking
into account the liquidity, scale, and nature of the specific
market and the characteristics of the instrument traded:
1) continuously maintain this market within a specified period
of the operation of the trading venue, except in emergencies,
with the result of providing liquidity on a regular and
predictable basis to the trading venue;
2) enter into a written agreement with the operator of a
trading venue which shall accurately determine the obligations of
the investment firm or credit institution referred to in Clause 1
of this Paragraph;
3) introduce effective systems and controls to ensure
continuous fulfilment of the obligations under the agreement
referred to in Clause 2 of this Paragraph.
(7) In accordance with the provisions of this Section and
Section 35.1 of this Law, an investment firm or credit
institution that engages in algorithmic trading shall be
considered to be a market maker if it as a member or participant
of one or more trading venues is dealing on its own account and
implements a strategy, forming simultaneous two-way quotes of
comparable size and at competitive prices relating to one or more
financial instruments on a single trading venue or across
different trading venues, with the result of providing liquidity
on a regular and frequent basis to the overall market.
(8) An investment firm and credit institution that provide
direct electronic access to a trading venue shall introduce
effective systems and controls to ensure proper assessment and
regular review of the suitability of clients using the service,
that such clients are prevented from exceeding appropriate
pre-set trading and credit thresholds, that trading by clients
using direct electronic access to a trading venue is properly
monitored to preclude that it may create risks to the investment
firm or credit institution itself or that could create or
contribute to a disorderly market or could be contrary to
Regulation No 596/2014 or the rules of the trading venue.
(9) If an investment firm or credit institution does not have
the system or controls referred to in Paragraph eight of this
Section, it is prohibited from offering direct electronic access
to a trading venue.
(10) An investment firm and credit institution shall be fully
responsible for ensuring that clients using the service provided
thereby - direct electronic access to a trading venue - comply
with the requirements of this Law and the rules of the trading
venue. The investment firm and credit institution shall ensure
monitoring of all transactions in order to identify violations of
those rules, disorderly trading conditions or conduct that may
involve market abuse and that is to be reported to Latvijas
Banka. The investment firm and credit institution shall enter
into a written agreement with the client which shall include the
essential rights and obligations of both parties arising from the
offering of the service - direct electronic access to a trading
venue - including a condition in the agreement that the
investment firm and credit institution are responsible in
accordance with this Law.
(11) An investment firm and credit institution the home Member
State of which is the Republic of Latvia and which provides
direct electronic access to a trading venue to clients shall
notify thereof Latvijas Banka and the competent authority of its
home Member State of the trading venue at which the investment
firm or credit institution provides direct electronic access.
(12) Latvijas Banka has the right to request at any time that
the investment firm and credit institution submit a description
of the systems and controls referred to in Paragraph eight of
this Section, and also evidence that those have been applied.
Latvijas Banka may provide the information received from the
investment firm or credit institution to the competent authority
of the home country of a trading venue, upon request, in which
the investment firm or credit institution ensures direct
electronic access.
(13) The investment firm and credit institution shall arrange
for records and notes to be kept in relation to all activities
referred to in this Section in relation to direct electronic
access, and also shall ensure that those records and notes are
drawn up in a manner to enable Latvijas Banka to adequately
monitor the investment firm and credit institution in relation to
the conformity of activity with the requirements of this Law.
(14) An investment firm and credit institution that act as a
clearing member for other persons shall have in place effective
systems and controls to ensure clearing services are only applied
to persons who meet clear criteria and that appropriate
requirements are imposed on those persons to reduce risks to the
investment firm and credit institution and to the market. The
investment firm and credit institution shall ensure that there is
a written agreement entered into between the investment firm and
credit institution and the person regarding the essential rights
and obligations of both parties arising from the provision of the
clearing service.
(15) More detailed requirements for the application of the
requirements of this Section are determined by Regulation No
2017/589 and Regulation No 2017/578.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 133. Information to be
Provided on a Regular Basis
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 133.1 Trade in
Financial Instruments on a Multilateral Trading Facility
The MT facility may be organised by:
1) an investment firm which has received the licence for the
operation of the MT facility;
2) a credit institution to which Latvijas Banka has issued the
licence to operate a credit institution and which has acquired
the right to operate the MT facility in accordance with the
procedures laid down in this Law;
3) a regulated market operator who has acquired the licence to
operate a regulated market and which has acquired the right to
operate the MT facility in accordance with the procedures laid
down in this Law.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 133.2 Obligations
of an Operator of a Multilateral Trading Facility
[21 June 2018]
Section 133.3 Members or
Participants of a Multilateral Trading Facility
(1) A member or participant in the MT facility is a person who
is entitled to make transactions in this facility in accordance
with the provisions referred to in Section 133.4,
Paragraph four of this Law.
(2) The following may become a member or participant in the MT
facility:
1) an investment firm to which Latvijas Banka has issued the
licence for the provision of investment services, or a credit
institution to which Latvijas Banka has issued the licence to
operate a credit institution and which has commenced the
provision of investment services in accordance with the
procedures laid down in this Law;
2) an investment firm or a credit institution of other Member
State which in the country of incorporation thereof has obtained
a licence for the provision of investment services.
(3) An operator of the MT facility is entitled to grant the
status of a member or participant also to a person other than
referred to in Paragraph two of this Section but who according to
the criteria approved by the facility operator is appropriate and
conforming, who has sufficient level of skills and competence in
respect of trading on the MT facility and who has sufficient
resources and organisational structure in order to perform the
obligations of the member or participant of the MT facility and
to guarantee due settlements for transactions.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 133.4 Trading
Process and Finalisation of Transactions in a Multilateral
Trading Facility and an Organised Trading Facility
(1) Investment firms, credit institutions, and regulated
market operators operating MT or OT facilities shall establish
transparent rules and procedures for fair and orderly trading and
establish objective criteria for the efficient execution of
orders. The operator of the MT or OT facility shall implement
measures in relation to the sound management of the technical
operations of the facility, including the establishment of
effective contingency arrangements to cope with risks of systems
disruption.
(2) An operator of the MT or OT facility shall develop and
approve the provisions for the criteria for financial instruments
that can be traded on its systems.
(3) An operator of the MT or OT facility shall provide public
availability of the information to enable its users to evaluate
financial instruments and to take investment decisions, taking
into account both the nature of the users and the types of
instruments traded. The operator of the MT or OT facility need
not publish the abovementioned information if it is certain that
such information is available to the public.
(4) An operator of the MT or OT facility shall develop,
publish, keep, and implement transparent and non-discriminatory
rules that are based on objective criteria and govern access to
its facility.
(5) An operator of the MT or OT facility shall develop
measures to clearly identify and manage the potential adverse
consequences in relation to the operation of the MT or OT
facility, or in relation to the members or participants and users
of the operator of the MT or OT facility, or any conflict of
interest between the interest of the MT facility, the OT
facility, their owners, the operator of the MT or OT facility and
the sound functioning of the MT or OT facility.
(6) An operator of the MT or OT facility shall comply with the
requirements of Sections 35.1 and 35.2 of
this Law and introduce all the necessary effective systems,
procedures, and arrangements to do so.
(7) An operator of the MT or OT facility clearly inform its
members or participants of their respective obligations and
responsibility for the settlement of the transactions executed in
the abovementioned facility. The operator of the MT or OT
facility shall determine the measures and procedures necessary to
facilitate the efficient settlement of the transactions concluded
under the relevant MT or OT facility.
(8) An operator of the MT or OT facility shall ensure that it
has at least three materially active members or participants, or
users, each having the possibility and opportunity to interact
with all the other members or participants, or users in respect
to price formation.
(9) If transferable securities that have been admitted to
trading on a regulated market are also traded on the MT facility
or OT facility without the consent of the issuer, the issuer
shall not be subject to any obligation relating to initial,
ongoing, or ad hoc financial disclosure with regard to the
abovementioned MT or OT facility.
(10) An operator of the MT or OT facility shall immediately
fulfil any instructions from Latvijas Banka in conformity with
Section 138 of this Law to suspend or remove a financial
instrument from trading MT or OT facility.
(11) An operator of the MT or OT facility shall provide
Latvijas Banka with a detailed description of the functioning of
the MT or OT facility, including, without prejudice to that laid
down in Section 133.6, Paragraphs one, four, and five
of this Law, a description of any links to other trading venues
(regulated market, MT facility, OT facility) or a systematic
internaliser owned by the same operator of the MT or OT facility,
and a list of their members or participants, or users. Latvijas
Banka shall transfer that information to the European Securities
and Markets Authority upon request.
(12) Latvijas Banka shall send a notification on every
authorisation granted to an operator of the MT or OT facility to
operate as the MT and OT facility to the European Securities and
Markets Authority.
(13) The description referred to in Paragraph eleven and the
content and format of the notification referred to in Paragraph
twelve of this Section are determined by Commission Implementing
Regulation (EU) 2016/824 of 25 May 2016 laying down implementing
technical standards with regard to the content and format of the
description of the functioning of multilateral trading facilities
and organised trading facilities and the notification to the
European Securities and Markets Authority according to Directive
2014/65/EU of the European Parliament and of the Council on
markets in financial instruments.
[21 June 2018; 20 June 2019; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 133.5 Special
Requirements for a Multilateral Trading Facility
(1) Investment firms, credit institutions, and regulated
market operators operating MT facilities, in addition to the
requirements laid down in Section 133.4 of this Law,
shall develop and implement rules for the execution of orders in
the system.
(2) An operator of the MT facility shall ensure that the rules
of the MT facility for access to such facility which have been
developed in accordance with Section 133.4, Paragraph
four of this Law conform to the requirements laid down in Section
36 of this Law.
(3) An operator of the MT facility shall ensure:
1) adequate equipment to manage the risks to which it is
exposed, by implementing the necessary arrangements and systems
to identify all significant risks to its operation, and also
effective measures to mitigate the abovementioned risks;
2) efficient and timely finalisation of transactions performed
in the system;
3) continuously available sufficient financial resources to
ensure orderly functioning of the MT facility, having regard to
the nature and extent of the transactions concluded on the market
and the risks which are related to the operation of the MT
facility.
(4) In relation to transactions concluded according to the
rules of the MT facility between members or participants of the
MT facility or between the MT facility and a member or
participant of the MT facility, the requirements referred to in
Sections 126, 126.1, 126.2, 128,
128.1, 128.2, and 128.3 of this
Law shall not be applied. Members or participants of the MT
facility shall fulfil the obligations provided for in Sections
126, 126.1, 126.2, 128, 128.1,
128.2, and 128.3 of this Law in relation to
their clients, if, acting on behalf of the clients, they execute
their orders in the MT facility.
(5) An operator of the MT facility is prohibited from
executing client orders, dealing on its own account, and engaging
in matched principal trade.
[21 June 2018]
Section 133.6 Special
Requirements for an Organised Trading Facility
(1) Investment firms, credit institutions, and regulated
market operators operating OT facilities may not execute client
orders in their OT facility, dealing on their own account or on
account of another entity or legal person that is part of the
same group as the operator of the OT facility or of a group of
companies. The operator of the OT facility shall develop relevant
rules or procedures determining conformity with the provisions of
this Paragraph.
(2) An operator of the OT facility may engage in matched
principal trading in bonds, structured finance products, emission
allowances and certain derivatives only where the client has
consented to the process.
(3) An operator of the OT facility shall not engage in matched
principal trading to execute client orders in the OT facility
organised thereby, in derivatives pertaining to a class of
derivatives that has been declared subject to the clearing
obligation in accordance with Article 5 of Regulation No
648/2012.
(4) An operator of the OT facility shall implement measures,
ensuring that the matched principal trading performed thereby
conforms to the explanation of the term referred to in Section 1,
Paragraph one, Clause 80 of this Law.
(5) An operator of the OT facility is entitled to engage in
dealing on own account other than matched principal trading only
with regard to sovereign debt instruments for which there is not
a liquid market.
(6) One legal person may not concurrently be an operator of
the OT facility and a systematic internaliser. The OT facility
may not be connected with a systematic internaliser in a way
which enables orders submitted in the OT facility and orders or
quotes submitted in a systematic internaliser to interact and
affect each other. The OT facility may not be connected with
another OT facility in a way which enables the submitted orders
in different OT facilities to interact and affect each other.
(7) An operator of the OT facility may engage another
investment firm or credit institution which is operating as a
market maker on the OT facility operated thereby on an
independent basis. Within the meaning of this Section, such
investment firm or credit institution which has close links with
the operator of the OT facility shall not be deemed an investment
firm or credit institution which is operating as a market maker
on an independent basis.
(8) The execution of orders on the OT facility is carried out
at the discretion of an operator of the OT facility in the
following manner:
1) the operator of the OT facility shall exercise discretion
only in either or both of the following circumstances:
a) when deciding to place an order on the OT facility it
operates or to retract an order on the OT facility it
operates;
b) when deciding not to match a specific client order with
other orders available in the systems at a given time, provided
it is in compliance with specific instructions received from a
client and with the obligations specified in Section
128.2 of this Law;
2) the operator of the OT facility may decide if, when and how
much of two or more orders it wants to match within the system.
In accordance with Paragraphs one, two, three, four, six, and
seven of this Section and without prejudice to Paragraph five,
with regard to a system that arranges transactions in
non-equities, the operator of the OT facility may facilitate
negotiation between clients so as to bring together two or more
potentially compatible trading interest in a transaction.
(9) The obligations specified in Paragraph eight of this
Section shall be without prejudice to Section 128.2
and 133.4 of this Law.
(10) Latvijas Banka has the right to require, either when an
investment firm, credit institution, or regulated market operator
submits a request to be authorised for the operation as an
operator of the OT facility or on ad-hoc basis, that a detailed
explanation is developed why the system is not consistent and
cannot operate as a regulated market, MT facility, or systematic
internaliser, and a detailed description is developed as to how
discretion referred to in Paragraph eight, Clause 1 of this
Section will be exercised, in particular when an order to the OT
facility may be retracted, and also when (and how) two or more
client orders will be matched within the OT facility. The
operator of the OT facility shall provide Latvijas Banka with the
information requested thereby by explaining its use of matched
principal trading. Latvijas Banka shall monitor engagement of the
operator of the OT facility in matched principal trading by
ensuring that it continues to fall within the definition of such
trading and does not give rise to conflict of interest between
the operator of the OT facility and its clients.
(11) For transactions which have been concluded on the OT
facility, the requirements laid down in Sections
126.2, 128, 128.1, 128.2, and
128.3 of this Law shall be applied.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 133.7 Monitoring
of Compliance with the Rules of the Operator of the Multilateral
Trading Facility or the Organised Trading Facility and with Other
Legal Obligations
(1) Investment firms, credit institutions, and regulated
market operators operating MT facilities or OT facilities shall
develop and maintain effective procedures and implement measures
for the regular monitoring of the compliance by their members or
participants or users with the rules of the MT facility or OT
facility. The operator of the MT facility or an OT facility shall
monitor the orders submitted, including cancelled orders, and the
transactions concluded by its members or participants or users in
order to identify violations of the rules of the system,
disorderly trading conditions, potential violations of Regulation
No 596/2014, or system disruptions in relation to a financial
instrument, and shall deploy the resources necessary to ensure
that such monitoring is effective.
(2) An operator of the MT facility or OT facility shall inform
Latvijas Banka immediately of significant violations of its
rules, disorderly trading conditions, potential violations of
Regulation No 596/2014, or system disruptions in relation to a
financial instrument. Latvijas Banka shall send the received
information to the European Securities and Markets Authority and
the relevant supervisory authorities of other Member States.
Latvijas Banka shall inform the European Securities and Markets
Authority and the relevant supervisory authorities of other
Member States of potential violations of Regulation No 596/2014
if it is being certain that the requirements of Regulation No
596/2014 have been actually violated.
(3) An operator of the MT facility or OT facility shall
provide to Latvijas Banka or the relevant law enforcement
institutions the information necessary for the determination of
facts and circumstances which is related to potential violations
of Regulation No 596/2014.
(4) The circumstances characterising the cases referred to in
Paragraph two of this Section shall be determined by Regulation
No 2017/565.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 133.8 Suspension
and Removal of Financial Instruments from Trading on an
Multilateral Trading Facility or an Organised Trading
Facility
(1) Without prejudice to the right of Latvijas Banka under
Section 138 of this Law to demand suspension or removal of a
financial instrument from trading on the MT facility or OT
facility, investment firms, credit institutions, or operators of
the MT facility or OT facility may suspend or remove from trading
on the MT facility or OT facility a financial instrument if the
financial instrument is no longer consistent with the rules of
the MT facility or an OT facility, except when such suspension or
removal would be likely to cause significant damage to the
investors' interests or the orderly functioning of the
market.
(2) An operator of the MT facility or OT facility that
suspends or removes from trading on the MT facility or OT
facility a financial instrument shall also suspend or remove the
derivative referred to in Section 3, Paragraph two, Clauses 4, 5,
6, 7, 8, 9, and 10 of this Law that relates or is referenced to
the relevant financial instrument if it is necessary to support
the objectives of the suspension or removal of the abovementioned
financial instrument. The operator of the MT facility or OT
facility shall make public the decision to suspend or remove the
financial instrument and any related derivatives from trading on
the MT facility or OT facility and inform Latvijas Banka of
taking of such decision. Latvijas Banka shall request suspension
of trade in financial instruments or removal from a trading venue
also in other regulated markets, MT facilities, OT facilities,
and systematic internalisers in the Republic of Latvia where the
same financial instruments and the derivatives referred to in
Section 3, Paragraph two, Clauses 4, 5, 6, 7, 8, 9, and 10 of
this Law which are related to the relevant financial instrument
or are referenced are being traded if the suspension or removal
is due to suspected market abuse, a take-over bid, or the
non-disclosure of inside information on the issuer or financial
instrument violating Articles 7 and 17 of Regulation (EU) No
596/2014, except for the cases where such suspension or removal
could cause significant damage to the investors' interests or the
orderly functioning of the market. Latvijas Banka shall, without
delay, make public such decision and notify the European
Securities and Markets Authority and the relevant supervisory
authorities of other Member States thereof.
(3) If Latvijas Banka has received information from the
relevant competent authority of another Member State on
suspension of trade in financial instruments or removal thereof
from the MT facility or OT facility, the Commission shall request
suspension of trade in financial instruments or removal from a
trading venue also in other regulated markets, MT facilities, OT
facilities, and systematic internalisers in the Republic of
Latvia where the same financial instruments and the derivatives
referred to in Section 3, Paragraph two, Clauses 4, 5, 6, 7, 8,
9, and 10 of this Law which are related to the relevant financial
instrument or are referenced are being traded if the suspension
or removal is due to suspected market abuse, a take-over bid, or
the non-disclosure of inside information on the issuer or
financial instrument infringing Articles 7 and 17 of Regulation
(EU) No 596/2014, except for the cases where such suspension or
removal could cause significant damage to the investors'
interests or the orderly functioning of the market. Latvijas
Banka shall inform the European Securities and Markets Authority
and the relevant competent authorities of other Member States of
its actions. If Latvijas Banka has taken the decision not to
suspend or remove a financial instrument or the derivatives
referred to in Section 3, Paragraph two, Clauses 4, 5, 6, 7, 8,
9, and 10 of this Law which are related to the relevant financial
instrument or are referencing it, it shall append an explanation
of such decision.
(4) The procedures referred to in Paragraphs two and three of
this Section shall also be conformed to if the decision to
suspend trading in or to remove from the MT facility or OT
facility a financial instrument or the derivatives referred to in
Section 3, Paragraph two, Clauses 4, 5, 6, 7, 8, 9, and 10 of
this Law which are related to the relevant financial instrument
or are referencing it is revoked.
(5) The procedures referred to in Paragraphs two and three of
this Section shall also be conformed to if the decision to
suspend trading in or to remove from the MT facility or OT
facility a financial instrument or the derivatives referred to in
Section 3, Paragraph two, Clauses 4, 5, 6, 7, 8, 9, and 10 of
this Law which are related to the relevant financial instrument
or are referencing it, or on revocation of such decision has been
taken by Latvijas Banka in accordance with Section 138 of this
Law.
(6) The situations and cases when the derivatives referred to
in Section 3, Paragraph two, Clauses 4, 5, 6, 7, 8, 9, and 10 of
this Law which are related to the relevant financial instrument
or are referencing it are to be suspended or removed concurrently
with the suspension and removal of a financial instrument from
the MT facility or OT facility are determined by Regulation No
2017/569.
(7) The format and period for the fulfilment of the
requirements laid down in Paragraphs two, three, four, and five
of this Section are determined by Regulation No 2017/1005.
(8) The situations which, within the meaning of this Section,
significantly harm the investors' interests and the orderly
functioning of the market are determined by Regulation No
2017/565.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Chapter
XII.1
Transparency Requirements for Financial
Markets
[21 June 2018]
Section 133.6
Notifications on Transactions in Financial Instruments
[21 June 2018]
Section 133.7 Obligation
to Disclose Pre-trade Information of Investment Firm and Credit
Institution which are Systematic Internalisers
[21 June 2018]
Section 133.8
Requirements for Disclosure of Post-trade Information for
Investment Firms and Credit Institutions
[21 June 2018]
Section 133.9
Requirements for Disclosure of Pre-trade Information in a
Multilateral Trading Facility
[21 June 2018]
Section 133.10
Requirements for Disclosure of Post-trade Information in a
Multilateral Trading Facility
[21 June 2018]
Chapter
XII.2
Growth Markets of Small and Medium-sized
Enterprises
[21 June 2018]
Section 133.11 Growth
Markets of Small and Medium-sized Enterprises
(1) An operator of the MT facility may request Latvijas Banka
to grant the status of a growth market of small and medium-sized
enterprises to the MT facility operated thereby.
(2) Latvijas Banka shall grant the status of a growth market
of small and medium-sized enterprises to the MT facility after
receipt of a relevant submission of the operator of the MT
facility if the MT facility meets that referred to in Paragraph
three of this Section.
(3) Rules, systems, and procedures shall be developed and
introduced for the MT facility, ensuring that:
1) at least 50 % of the issuers the financial instruments
issued by which are admitted to trading on the MT facility are
small and medium-sized enterprises at the time when the MT
facility is granted the status of a growth market of small and
medium-sized enterprises and in each year thereafter;
2) appropriate criteria are set for admission of financial
instruments for trading on the MT facility, the criteria being
constantly conformed to while the financial instrument is
admitted for trading on the MT facility;
3) on the initial admission to trading of financial
instruments on the MT facility there is publicly available
information enabling investors to make an informed decision on
investment in such financial instruments, either an appropriate
information document or a prospectus if the requirements for
expressing an offer of securities to the public are
applicable;
4) issuers or their authorised persons regularly publish
financial statements, including audited annual statements;
5) issuers in accordance with point (21) of Article 3(1) of
Regulation No 596/2014, a person discharging managerial
responsibilities in accordance with point (25) of Article 3(1) of
Regulation No 596/2014, and persons closely associated with them
in accordance with point (26) of Article 3(1) of Regulation No
596/2014 comply with relevant requirements of Regulation No
596/2014;
6) the information regularly provided by issuers is stored and
published;
7) there are effective systems and control to detect and
prevent market abuse in accordance with Regulation No
596/2014.
(4) The criteria referred to in Paragraph three of this
Section shall be without prejudice to the obligation of the MT
facility to comply also with other requirements laid down this
Law in relation to the operation of MT facility. The operator of
the MT facility has the right to impose additional requirements
to the criteria referred to in Paragraph three of this
Section.
(5) Latvijas Banka may revoke the status of a growth market of
small and medium-sized enterprises for the MT facility if:
1) the operator of the MT facility has submitted a relevant
submission for the revocation of the status of a growth market of
small and medium-sized enterprises for the MT facility operated
thereby;
2) the MT facility does not meet the criteria referred to in
Paragraph three of this Section.
(6) Having taken the decision to grant the status of a growth
market of small and medium-sized enterprises to the MT facility
or to revoke the status of a growth market of small and
medium-sized enterprises for the MT facility, Latvijas Banka
shall, without delay, notify the European Securities and Markets
Authority thereof.
(7) A financial instrument which has been admitted for trading
on any growth market of small and medium-sized enterprises may be
admitted for trading also on another growth market of small and
medium-sized enterprises, if the issuer of such financial
instruments has been informed thereof and has not objected
against it. In such case, the issuer shall not be subject to any
obligation against a growth market of small and medium-sized
enterprises to which the financial instruments of the issuer have
been admitted without initiative of the issuer, to conform to the
requirements relating to corporate governance or initial, ongoing
or ad hoc disclosure of information.
(8) The application of the requirements laid down in Paragraph
three of this Section shall be determined by Regulation No
2017/565.
(9) Within the meaning of this Section, small and medium-sized
enterprises are enterprises the average market capitalisation of
which is less than EUR 200 000 000 on the basis of end-year
quotes for the previous three calendar years.
[21 June 2018; 23 September 2021; 26 October 2023 / The
amendment to Clause 3 of Paragraph three regarding the
replacement of the words "offer document" with the words
"information document" shall come into force on 1 January 2024.
See Paragraph 79 of Transitional Provisions]
Chapter
XII.3
Access to Central Counterparties, Clearing
and Settlement Facilities
[21 June 2018]
Section 133.12 Access to
Central Counterparties, Clearing and Settlement Facilities and
Right to Designate Settlement System
(1) Without prejudice to Title III, IV, or V of Regulation No
648/2012, central counterparties, clearing and settlement systems
in the Republic of Latvia shall ensure that investment firms and
credit institutions from other Member States have the possibility
to directly or indirectly access thereto for the purposes of
finalising or arranging the finalisation of transactions in
financial instruments. Direct and indirect access of the
investment firm or credit institution of another Member State to
central counterparties, clearing and settlement systems in the
Republic of Latvia shall be subject to the same
non-discriminatory, transparent, and objective criteria as apply
to the members or participants of central counterparties,
clearing and settlement systems registered in the Republic of
Latvia.
(2) A regulated market operator shall, within its territory,
offer all the members or participants of the regulated market
operated thereby the possibility to designate the system for the
settlement of transactions in securities undertaken on that
regulated market with financial instruments, if the following
conditions are met:
1) such links between the relevant securities settlement
system and the trading infrastructure of the regulated market or
any other system or infrastructure as are necessary to ensure
efficient and economically justified settlement have been
established;
2) the permit of Latvijas Banka to use the relevant securities
settlement system has been obtained.
(3) Latvijas Banka shall issue the permit referred to in
Paragraph two, Clause 2 of this Section for the use of the
securities settlement system if it has evaluated and deemed that
technical conditions of the relevant securities settlement system
do not jeopardise stable functioning of the financial market.
(4) Prior to issuing the permit referred to in Paragraph two,
Clause 2 of this Section, Latvijas Banka shall consult with
institutions carrying out supervision and monitoring of the
securities settlement system selected by members or participants
of the regulated market. The evaluation of Latvijas Banka
referred to in Paragraph three of this Section shall be without
prejudice to the competencies of the national central banks as
overseers of settlement systems or other supervisory authorities
with competence in relation to such systems. Latvijas Banka shall
take into account system control and supervision exercised by
other control or supervisory authorities of clearing and
settlement systems.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 133.13 Provisions
for Central Counterparties, Clearing and Settlement Arrangements
in Multilateral Transaction Facilities
(1) An investment firm, credit institution, and regulated
market operator operating MT facilities has the right to use
central counterparties or clearing house and a settlement system
of another Member State with a view to prove the clearing or
settlement of some or all transactions concluded by the members
or participants of the MT facility under the MT facility operated
thereby.
(2) Latvijas Banka has the right not to allow the operator of
the MT facility to use central counterparties or clearing houses
and settlement systems in another Member State if it is necessary
to maintain the orderly functioning of the MT facility, taking
into account the conditions for settlement systems laid down in
Section 133.12 of this Law. In order to avoid undue
duplication of control, Latvijas Banka shall take into account,
in case of the exercise of the abovementioned rights, the
supervision of the clearing and settlement system already
exercised by the central banks as overseers of clearing and
settlement systems or by other supervisory authorities with
competence in relation to such systems.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Chapter
XII.4
Position Limits and Position Management
Controls in Commodity Derivatives and Reporting on Positions
[21 June 2018]
Section 133.14 Position
Limits and Position Management Controls in Commodity
Derivatives
(1) Latvijas Banka shall issue the regulations by determining
position limits on the size of a net position of commodity
derivatives which a person can hold at all times in relation to
commodity derivatives traded on trading venues and economically
equivalent over-the-counter contracts. When determining the
abovementioned position limits, Latvijas Banka shall use the
calculation methodology laid down in Commission Delegated
Regulation (EU) 2017/591 of 1 December 2016 supplementing
Directive 2014/65/EU of the European Parliament and of the
Council with regard to regulatory technical standards for the
application of position limits to commodity derivatives
(hereinafter - Regulation No 2017/591). Such limits shall be
determined on the basis of all positions held by the person
itself, and also those held on its behalf at an aggregate group
level in order to:
1) prevent market abuse;
2) support orderly pricing and settlement conditions,
including preventing market distorting positions, and ensuring,
in particular, convergence between prices of derivatives in the
delivery month and spot prices for the underlying commodity,
without prejudice to price discovery on the market for the
underlying commodity.
(2) Position limits shall not apply to such positions:
1) which are held by or on behalf of a non-financial entity
and which are objectively measurable as reducing risks directly
relating to the commercial activity of that non-financial
entity;
2) which are held by or on behalf of a financial structure if
the financial structure belongs to a group the main activity of
which is not the provision of investment services or of the
financial services laid down in the Credit Institution Law and
which is not a market maker for commodity derivatives but is
operating on behalf of the non-financial entity of such group,
and if the abovementioned positions are objectively measurable as
reducing risks directly relating to the commercial activity of
that non-financial entity;
3) which are held by the persons referred to in Section 101,
Paragraph seven, Clause 6 of this Law in relation to the
positions which are objectively measurable as arising from
transactions concluded in order to fulfil the duty of ensuring
liquidity on a trading venue;
4) which are formed by the transferable securities referred to
in Section 1, Paragraph one, Clause 30, Sub-clause "c" of this
Law if they apply to the commodity or to the asset forming the
basis of the financial instruments referred to in Section 3,
Paragraph two, Clause 10 of this Law.
(3) Position limits shall specify clear quantitative
thresholds for the maximum size of a position in a commodity
derivative that persons can hold.
(4) Latvijas Banka shall determine limits for each contract in
commodity derivatives and limits for critical or significant
commodity derivatives and agricultural commodity derivatives
traded on trading venues the home Member State of which is the
Republic of Latvia. The abovementioned position limit shall also
apply to economically equivalent over-the-counter contracts.
Commodity derivatives shall be considered to be critical or
significant where the sum of all net positions of end position
holders constitutes the size of their open interest and is at a
minimum of 300 000 lots on average over a one-year period
(hereinafter - the critical or significant commodity
derivatives). Latvijas Banka shall review position limits if
significant changes on the market occur.
(5) Latvijas Banka shall notify the European Securities and
Markets Authority of the exact position limits it intends to set.
Latvijas Banka shall approve the position limits only after an
opinion of the European Securities and Markets Authority on the
compatibility of the specified limits with the calculation
methodology referred to in Paragraph one of this Section has been
received. If it is indicated in the opinion of the European
Securities and Markets Authority that the planned position limits
should be modified and Latvijas Banka agrees to the opinion of
such institution, it shall approve the position limits in
accordance with that indicated in the opinion of the European
Securities and Markets Authority. If Latvijas Banka does not
agree to the opinion of the European Securities and Markets
Authority, it shall provide a justification to this institution
why it considers that the changes are considered to be
unnecessary. If Latvijas Banka approves such position limits in
which that indicated in the opinion of the European Securities
and Markets Authority has not been taken into account, it shall
immediately publish on its website a notice fully explaining its
reasons for doing so.
(6) Where agricultural commodity derivatives based on the same
underlying commodities and sharing the same characteristics or
where critical or significant commodity derivatives based on the
same underlying commodities and sharing the same characteristics
being traded on a trading venue the home Member State of which is
the Republic of Latvia are traded at a large volume on several
trading venues the home Member State of which is not the Republic
of Latvia, the competent authority of the home Member State of
such trading venue where the largest volume of trading takes
place (hereinafter - the central competent authority) shall set
the single position limits in relation to such commodity
derivative. Such single position limits shall be applied to the
whole trade related to contracts of the abovementioned
derivatives.
(7) If Latvijas Banka is the central competent authority, it
shall, when determining or reviewing single position limits,
consult the competent authorities of such other trading venues on
which the agricultural commodity derivatives are traded at the
same volume or on which the critical or significant commodity
derivatives are traded.
(8) If the central competent authority consults with Latvijas
Banka and Latvijas Banka is of the opinion that the single
position limits planned by the central competent authority do not
conform to the calculation methodology referred to in Paragraph
one of this Section, it shall state in writing the full and
detailed reasons to the central competent authority why Latvijas
Banka is of such opinion. Any disputes arising between the
competent authorities shall be settled in accordance with that
specified in Article 19 of Regulation (EU) No 1095/2010 of the
European Parliament and of the Council of 24 November 2010
establishing a European Supervisory Authority (European
Securities and Markets Authority), amending Decision No
716/2009/EC and repealing Commission Decision 2009/77/EC.
(9) Latvijas Banka shall implement cooperation measures,
including exchange the relevant data with each other, with the
competent authorities of the home Member States of such other
trading venues where the same agricultural commodity derivative
based on the same underlying commodities and sharing the same
characteristics or where a critical or significant commodity
derivative based on the same underlying commodities and sharing
the same characteristics being traded on a trading venue the home
Member State of which is the Republic of Latvia is traded and
with the competent authorities of the country of position holders
in the relevant commodity derivative in order to enable the
monitoring of conformity with the single position limit.
(10) An investment firm, credit institution, or regulated
market operator at the trading venue operated by which commodity
derivatives (hereinafter in this Section - the operator of the
trading venue) are traded shall implement position management
controls. In order to implement the abovementioned position
management controls, the operator of the trading venue has the
right to:
1) monitor the open interest positions of persons;
2) obtain information, including all relevant documents, from
persons on the position or the size (volume) of the risk
undertaken, the owners or beneficial owners of positions, any
concert arrangements, and any related assets or liabilities in
the underlying commodity market, and also on positions which are
held, with the intermediation of members and participants, in
commodity derivatives based on the same underlying commodities
and sharing the same characteristics on other trading venues and
economically equivalent over-the-counter contracts;
3) request that a person temporarily suspends, terminates, or
reduces activities if it is necessary, or if the abovementioned
person does not comply with the request - to unilaterally ensure
the suspension, termination, or reduction of the abovementioned
activities;
4) request that a person provides liquidity back into the
market at the agreed price and volume on a temporary basis with
the express intent of mitigating the effects of a large or
dominant position.
(11) The operator of the trading venue shall ensure that the
position limits and position management controls are transparent
and non-discriminatory and shall specify how they apply to
persons, taking into account the nature and composition of market
participants, and how they use the commodity derivative contracts
submitted for trading.
(12) The operator of the trading venue shall provide detailed
information to Latvijas Banka on position management controls.
Latvijas Banka shall notify such information and also information
on the position limits stipulated thereby to the European
Securities and Markets Authority.
(13) A summary on all current position limits and position
managements controls shall be available in the database on the
website of the European Securities and Markets Authority.
(14) Latvijas Banka shall determine the position limits
referred to in Paragraph one of this Section and the conformity
therewith in accordance with Section 138, Paragraph one, Clause
16 of this Law.
(15) More detailed requirements for the application of this
Section are determined by Regulation No 2017/591.
(16) Latvijas Banka may determine limits which are more
restrictive than those adopted in accordance with Paragraph one
of this Section if they are objectively justified and
proportionate by taking into account the liquidity of the
specific market and the orderly functioning of that market.
Latvijas Banka shall publish on its website information on the
more restrictive position limits. When determining more
restrictive position limits, they may be initially determined for
a period not exceeding six months from the date of their
publication on the website of Latvijas Banka. The period for
which more restrictive position limits have been initially
determined may be renewed for a further period not exceeding six
months at a time, if the grounds for the necessity of such more
restrictive position limits continue to be applicable. If the
period for the determined more restrictive position limits is not
renewed, they shall automatically expire after six months.
(17) If Latvijas Banka plans to determine more restrictive
position limits, it shall notify the European Securities and
Markets Authority thereof. The notification shall include a
justification for the more restrictive position limits. Latvijas
Banka shall approve more restrictive position limits only after
the European Securities and Markets Authority has published an
opinion on its website on whether more restrictive position
limits are necessary in the particular case. If Latvijas Banka
has determined more restrictive position limits which do not
conform to the opinion of the European Securities and Markets
Authority, it shall immediately publish on its website a notice
fully explaining its reasons for doing so.
(18) Latvijas Banka is entitled to impose the sanctions and
administrative measures laid down in this Law for the violation
of position limits determined in this Section:
1) in relation to positions held by persons situated or
operating in the territory of the Republic of Latvia or outside
it and which exceed the limits on commodity derivative contracts
determined by Latvijas Banka in relation to commodity derivatives
sold on trading venues situated or operating in the territory of
the Republic of Latvia or economically equivalent contracts;
2) in relation to positions held by persons situated or
operating in the territory of the Republic of Latvia which exceed
the limits on commodity derivative contracts determined by the
competent authorities in other Member States.
[21 June 2018; 20 June 2019; 31 March 2022; 23 September
2021 / Amendment regarding the replacement of the words
"regulatory provisions" with the word "regulations" and amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 133.15 Reporting
on Positions by Categories of Position Holders
(1) An investment firm, credit institution, or regulated
market operator at the trading venues operated by which commodity
derivatives or emission allowances, or their derivatives
(hereinafter in this Section - the operator of the trading venue)
are traded shall perform the following activities:
1) if the number of persons and their open positions exceed
the minimum threshold, the operator of the trading venue shall
weekly make public and send a report to Latvijas Banka and the
European Securities and Markets Authority with the aggregate
positions held by the different categories of persons for the
different commodity derivatives, emission allowances or
derivatives thereof traded on the trading venue operated by the
operator of the trading venue by specifying:
a) the number of long and short positions by such categories
and changes thereto since the previous report;
b) the percentage of the total open interest represented by
each category;
c) the number of persons holding a position in each category
in accordance with Paragraph five of this Section;
2) provide Latvijas Banka with a complete breakdown of the
positions held by all persons, including the members or
participants and the clients thereof, on that trading venue, at
least on a daily basis.
(11) Reporting on positions shall not be applied
for the transferable securities referred to in Section 1,
Paragraph one, Clause 30, Sub-clause "c" of this Law if they
apply to the commodity or to the asset forming the basis of the
financial instruments referred to in Section 3, Paragraph two,
Clause 10 of this Law.
(2) The following shall be distinguished in the notice
referred to in Paragraph one, Clause 1 of this Section and in the
report referred to in Paragraph one, Clause 2 of this
Section:
1) positions which in an objectively measurable way reduce
risks directly relating to the relevant commercial
activities;
2) other positions.
(3) If an investment firm and credit institution trades in
commodity derivatives or emission allowances, or derivatives
thereof outside a trading venue, it shall, at least on a daily
basis, provide the central competent authority or in cases where
there is no central competent authority to the competent
authority on the trading venue where commodity derivatives or
emission allowances, or derivatives thereof are traded with a
complete breakdown of the positions taken in commodity
derivatives or emission allowances, or derivatives thereof traded
on all trading venues and economically equivalent
over-the-counter contracts, and also on positions of their
clients and the clients of those clients until the end client is
reached, in conformity with Article 26 of Regulation (EU) No
600/2014 and Article 8 of Regulation (EU) No 1227/2011.
(4) The operator of the trading venue shall ensure that
members or participants of a regulated market and MT facility and
clients of the OT facility report to the operator of the trading
venue on own positions held through contracts traded on that
trading venue at least on a daily basis, and also on the
positions of their clients and the clients of those clients until
the end client is reached.
(5) The operator of the trading venue shall classify persons
holding the positions of derivatives or emission allowances, or
derivatives thereof according to the nature of their main
business, taking account the following division:
1) investment firms or credit institutions;
2) investment funds within the meaning of the law On
Investment Management Companies or alternative investment funds
within the meaning of the Law on Alternative Investment Funds and
Managers Thereof;
3) other financial institutions, including insurance and
reinsurance companies within the meaning of the Insurance and
Reinsurance Law and pension funds within the meaning of the
Private Pension Fund Law;
4) performers of economic activity;
5) in case of emission quotas or derivatives thereof -
operators to whom the obligations specified in the law On
Pollution are binding.
(6) The content and format of the notice referred to in
Paragraph one, Clause 1 of this Section and the report referred
to in Paragraph one, Clause 2 of this Section shall be determined
by Commission Implementing Regulation (EU) 2017/1093 of 20 June
2017 laying down implementing technical standards with regard to
the format of position reports by investment firms and market
operators.
(7) The minimum thresholds referred to in Paragraph one,
Clause 1 of this Section shall be determined by Regulation No
2017/565.
(8) The day and time when the notice referred to in Paragraph
one, Clause 1 of this Section shall be sent to the European
Securities and Markets Authority are determined by Commission
Implementing Regulation (EU) 2017/953 of 6 June 2017 laying down
implementing technical standards with regard to the format and
the timing of position reports by investment firms and market
operators of trading venues pursuant to Directive 2014/65/EU of
the European Parliament and of the Council on markets in
financial instruments.
[21 June 2018; 20 June 2019; 31 March 2022; 28 April 2022;
23 September 2021 / Amendment regarding the replacement of
the word "Commission" with the words "Latvijas Banka" shall come
into force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Chapter
XII.5
Product Management Requirements
[21 June 2018]
Section 133.16 Product
Management Obligations in Relation to Investment Firms and Credit
Institutions Manufacturing Financial Instruments
(1) In manufacturing financial instruments which encompasses
the creation, improvement, or issuance of financial instruments,
an investment firm and credit institution shall conform to the
requirements of this Section. Upon applying the requirements laid
down in Paragraphs two, three, four, five, six, seven, eight,
nine, ten, eleven, twelve, thirteen, fourteen, fifteen, and
sixteen of this Section, the investment firm and credit
institution shall comply, in a way that is appropriate and
proportionate, with them, taking into account the nature of the
financial instrument, the investment service and the target
market for the product.
(2) An investment firm and credit institution shall establish,
implement, and maintain procedures and measures to ensure that
the manufacturing of financial instruments corresponds to the
requirements for the proper management of conflicts of interest,
including remuneration of employees. In particular, the
investment firm and credit institution manufacturing financial
instruments shall ensure that the design of the financial
instrument, including its features, does not adversely affect end
clients and does not lead to problems with market integrity by
enabling the investment firm or credit institution to mitigate or
dispose of its own risks or exposure to the underlying assets of
the product, if the investment firm or credit institution already
holds the underlying assets on own account.
(3) An investment firm and credit institution have an
obligation to analyse potential conflicts of interest each time a
financial instrument is manufactured. In particular, the
investment firm and credit institution shall assess whether the
financial instrument creates a situation where end clients may be
adversely affected if they incur:
1) an exposure opposite to the one previously incurred by the
investment firm and credit institution itself;
2) an exposure opposite to the one that the investment firm
and credit institution wishes to incur after the sale of the
product.
(4) An investment firm and credit institution shall assess
whether the financial instrument may jeopardise the orderly
functioning and integrity of financial markets before deciding on
the placement of a product on the market.
(5) An investment firm and credit institution shall ensure
that the relevant staff involved in the manufacturing of
financial instruments possess the necessary specific expertise to
understand the characteristics and risks of the financial
instruments they intend to design.
(6) An investment firm and credit institution shall ensure
that its executive board has effective control over the product
management process of the investment firm and credit institution.
The executive board of the investment firm and credit institution
shall systematically include in the activity compliance reports
information on the financial instruments manufactured by the
investment firm and credit institution, including information on
the distribution strategy. The investment firm and credit
institution shall submit activity compliance reports to Latvijas
Banka upon request.
(7) An investment firm and credit institution shall ensure
that, within the scope of performance of its activity compliance
function, the development and periodic review of product
management procedures are monitored to detect any risk of failure
to fulfil the obligations set out in this Section.
(8) If an investment firm and credit institution collaborate
with persons which are not licensed and supervised in the field
of investment services, or with foreign investment firms to
create, develop, or issue a product, they shall enter into a
written agreement outlining their mutual commitments.
(9) An investment firm and credit institution shall identify
at a sufficiently granular level the potential target market for
each financial instrument and specify the type of clients with
whose needs, characteristics, and objectives, including any
objectives related to sustainability, the financial instrument is
consistent. As part of this process, the investment firm and
credit institution shall identify any group of clients with the
needs, characteristics, and objectives of which the financial
instrument is not consistent, except for the cases when
sustainability factors are taken into account in financial
instruments. If investment firms and credit institutions
collaborate to manufacture a financial instrument, only one
target market needs to be identified. The investment firm and
credit institution manufacturing financial instruments that are
distributed through other investment firms and credit
institutions shall determine the needs and characteristics of
clients with whom the product is compatible based on their
theoretical knowledge of and past experience with the financial
instrument or similar financial instruments, the financial
markets and the needs, characteristics, and objectives of
potential end clients.
(10) An investment firm and credit institution shall undertake
a scenario analysis of their financial instruments to be
manufactured, assessing the risks of poor outcomes for end
clients posed by the product and in which circumstances these
outcomes may occur. The investment firm and credit institution
shall assess the financial instruments under negative conditions
covering what would happen if:
1) the market environment deteriorated;
2) the manufacturer or a third party involved in the
manufacturing or functioning of the financial instrument
experiences financial difficulties or other counterparty risk
materialises;
3) the financial instrument fails to become commercially
viable;
4) demand for the financial instrument is much higher than
anticipated, putting a strain on the resources of the investment
firm and credit institution or on the market of the underlying
instrument.
(11) An investment firm and credit institution shall determine
whether a financial instrument meets the identified needs,
characteristics, and objectives of the target market, including
by examining the following elements:
1) the conformity of the financial instrument's risk and
reward profile with the target market;
2) whether financial instrument design is driven by features
that benefit the client and not by a business model that relies
on poor client outcomes to be profitable;
3) whether the sustainability factors of the financial
instrument in the relevant case is consistent with the target
market.
(12) When determining the charging structure proposed for the
financial instrument, an investment firm and credit institution
shall assess and take into account:
1) how financial instrument's costs and charges are compatible
with the needs, objectives, and characteristics of the target
market;
2) whether charges do not undermine the financial instrument's
return expectations;
3) whether the charging structure of the financial instrument
is appropriately transparent for the target market.
(13) An investment firm and credit institution shall ensure
that the provision of information on a financial instrument to
distributors includes information on the appropriate channels for
distribution of the financial instruments, the product approval
process, and the target market assessment and is of an adequate
standard to enable distributors to understand and recommend or
sell the financial instrument properly. The sustainability
factors of a financial instrument shall be laid out in a
transparent way and the relevant information shall be provided to
distributors to take into account adequately any objectives of
the client or potential client related to sustainability.
(14) An investment firm and credit institution shall review
the financial instruments they manufacture on a regular basis,
taking into account all events that could materially affect the
potential risk to the identified target market. The investment
firm and credit institution shall consider whether the financial
instrument remains consistent with the needs, characteristics,
and objectives of the target market, including any objectives
related to sustainability, and if it is being distributed to the
target market, or is reaching clients with the needs,
characteristics, and objectives of which the financial instrument
is not compatible.
(15) An investment firm and credit institution shall review
financial instruments prior to any further issue or re-launch, if
they are aware of any event that could materially affect the
potential risk to investors and assess at regular intervals
whether the financial instruments function as intended. The
investment firm and credit institution shall determine how
regularly their financial instruments are reviewed based on
relevant factors, including factors linked to the complexity or
the innovative nature of the investment strategies pursued. The
investment firm and credit institution shall also identify
crucial events that could affect the potential risk or return
expectations of the financial instrument, such as:
1) the crossing of a threshold that will affect the return
profile of the financial instrument;
2) the solvency of certain issuers whose securities or
guarantees may impact the performance indicators of the financial
instrument.
(16) Upon occurrence of any of the events referred to in
Paragraph fifteen of this Section, an investment firm and credit
institution shall take appropriate measures which may consist of
the following activities:
1) the provision of all the relevant information on the
relevant event and its consequences on the clients or
distributors of the financial instrument if the investment firm
or credit institution does not offer or sell the financial
instrument directly to the clients;
2) changing the product approval process;
3) stopping further issuance of financial instruments;
4) changing the financial instrument to avoid unfair contract
terms;
5) considering whether the sales channels through which the
financial instruments are sold are appropriate if the investment
firm or credit institution becomes aware that the financial
instrument is not being sold as envisaged;
6) contacting the distributor to discuss a modification of the
distribution process;
7) terminating the relationship with the distributor;
8) informing the relevant competent authority.
[21 June 2018; 28 April 2022; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 133.17 Product
Management Obligations for Distributors
(1) An investment firm and credit institution shall, when
deciding on the range of financial instruments issued by
themselves or another investment firm or credit institution and
services they intend to offer or recommend to clients, comply in
an appropriate and proportionate manner with the requirements
laid down in Paragraphs two, three, four, five, six, seven,
eight, nine, and ten of this Section, taking into account the
nature of the financial instrument, the investment service, and
the target market for the product. The investment firm and credit
institution shall also comply with the requirements of this Law
when offering or recommending financial instruments manufactured
by persons that are not subject to this Law.
(2) An investment firm and credit institution shall introduce
suitable product management procedures to ensure that products
and services they intend to offer or recommend correspond to the
needs, characteristics, and objectives of the identified target
market, including any objectives related to sustainability, and
that the intended distribution strategy is consistent with the
identified target market. The investment firm and credit
institution shall appropriately identify and assess the
circumstances and needs of the clients they intend to focus on to
ensure that clients' interests are not compromised as a result of
commercial or funding pressures. As part of this process, the
investment firm and credit institution shall identify any groups
of clients with the needs, characteristics, and objectives of
which the commodity or service is not consistent, except for the
cases when sustainability factors are taken into account in
financial instruments.
(3) An investment firm and credit institution shall, when
deciding on the range of financial instrument and services that
they offer or recommend and the respective target market,
maintain procedures and measures to ensure compliance with all
applicable requirements in accordance with this Law, including
the requirements relating to disclosure, assessment of
suitability or appropriateness, inducements within the meaning of
Section 133.18, and proper management of conflict of
interest.
(4) An investment firm and credit institution shall
periodically review and update their product management
procedures to ensure that they remain robust and fit for their
purpose, and make appropriate changes where necessary.
(5) An investment firm and credit institution shall review the
investment products they offer or recommend and the services they
provide on a regular basis, taking into account any corporate
action that could materially affect the potential risk to the
identified target market. The investment firm and credit
institution shall assess at least whether the product or service
remains consistent with the needs, characteristics, and
objectives of the identified target market, including any
objectives related to sustainability, and whether the intended
distribution strategy remains consistent.
(6) An investment firm and credit institution shall ensure
that, within the scope of performance of its activity compliance
function, the development and periodic review of product
governance arrangements are monitored in order to detect any risk
of failure to comply with the obligations set out in this
Section.
(7) An investment firm and credit institution shall ensure
that the relevant staff possess the necessary specific expertise
to understand the characteristics and risks of the products which
are intended to be offered or recommended and the services
provided, and also the needs, characteristics, and objectives of
the identified target market.
(8) An investment firm and credit institution shall ensure
that its executive board has effective control over the product
management process of the investment firm and credit institution
to determine the range of investment products that they offer or
recommend and the services provided to the respective target
markets. The executive board of the investment firm and credit
institution shall systematically include in activity compliance
reports information on the products offered or recommended
thereby and the services provided. The investment firm and credit
institution shall submit activity compliance reports to Latvijas
Banka upon request.
(9) Distributors shall provide manufacturers with information
on product sales and, where appropriate, information on the
reviews of products referred to in this Section, thus supporting
product reviews carried out by manufacturers.
(10) If several investment firms or credit institutions work
together in the distribution of a product or service, the
investment firm or credit institution with the direct links with
the client shall have ultimate responsibility for the product
management requirements set out in this Section. The investment
firm and credit institution operating as an intermediary in
product distribution shall:
1) ensure that the relevant product information is passed from
the manufacturer to the final distributor in the chain;
2) if the manufacturer requests information on product sales
to fulfil their own product management obligations, enable them
to obtain it;
3) apply the product management obligations laid down for
manufacturers to the service provided thereby as appropriate.
[21 June 2018; 28 April 2022; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Chapter
XII.6
Inducements
[21 June 2018]
Section 133.18 General
Requirements for Inducements
(1) An investment firm and credit institution paying or being
paid any fee or commission or providing or being provided with
any non-financial benefit (hereinafter - the inducement) in
connection with the provision of an investment service or
ancillary investment service to the client shall ensure that all
the conditions and requirements laid down in Section 128,
Paragraphs twelve, 12.1, and 12.2 of this
Law and Paragraphs two, three, four, five, six, seven, and eight
of this Section are met at all times.
(2) A fee, commission, or non-financial benefit shall be
considered to be designed to enhance the quality of the relevant
service to the client if all of the following conditions are
met:
1) it is justified by the provision of an additional or higher
level service to the relevant client, proportional to the level
of inducements received, including:
a) the provision of non-independent investment advice on wide
range of suitable financial instruments and access thereto,
including an appropriate number of instruments from third party
product providers having no close links with the investment firm
or credit institution itself;
b) the provision of non-independent investment advice combined
with either an offer to the client, on an annual basis, to assess
the continuing suitability of the financial instruments in which
the client has invested, or with another on-going service that is
likely to be of value to the client;
c) the provision of access, at a competitive price, to a wide
range of financial instruments that are likely to meet the needs
of the client, including an appropriate number of financial
instruments from third party product providers having no close
links with the investment firm or credit institution;
2) it does not directly benefit the recipient investment firm
or credit institution, its shareholders, participants, or
employees without tangible benefit to the relevant client;
3) it is justified by the provision of an on-going benefit to
the relevant client in relation to an on-going inducement.
(3) A fee, commission, or non-financial benefit shall not be
considered acceptable if the provision of relevant services to
the client is biased or distorted.
(4) The investment firm and credit institution shall fulfil
the requirements laid down in Paragraphs two and three of this
Section on an ongoing basis as long as they continue to pay or
receive the fee, commission, or non-financial benefit.
(5) An investment firm and credit institution shall keep
evidence that any fees, commissions, or non-financial benefits
paid or received by the investment firm and credit institution
are designed to enhance the quality of the relevant service
provided to the client:
1) by keeping a list of all fees, commissions, and
non-financial benefits received by the investment firm and credit
institution from a third party in relation to the provision of
investment services or ancillary investment services;
2) by documenting how the fees, commissions, and non-financial
benefits paid or received by the investment firm or credit
institution, or that it intends to use, enhance the quality of
the services provided to the relevant clients and the steps taken
in order not to impair the obligation of the investment firm and
credit institution to act honestly, fairly, and professionally in
accordance with the best interests of the client.
(6) In relation to any payment or benefit received from or
paid to third parties, an investment firm and credit institution
shall disclose the following information to the client:
1) prior to the provision of the relevant investment service
or ancillary investment service, the investment firm and credit
institution shall disclose to the client information on the
payment or benefit concerned in accordance with Section 128,
Paragraph 12.1 of this Law. Minor non-financial
benefits may be described in a generic way. Other non-financial
benefits received or paid by the investment firm or credit
institution in connection with the investment service provided to
a client shall be priced and information thereon shall be
disclosed separately;
2) if the investment firm or credit institution was unable to
ascertain on an ex-ante basis the amount of any payment or
benefit to be received or paid, and instead disclosed to the
client the method of calculating that amount, it shall also
provide its clients with information of the exact amount of the
payment or benefit received or paid on an ex-post basis;
3) at least once a year, as long as on-going inducements are
received by the investment firm or credit institution in relation
to the investment services provided to the relevant clients, it
shall inform its clients on an individual basis of the actual
amount of payments or benefits received or paid. Minor
non-financial benefits may be described in a generic way.
(7) In implementing the requirements referred to in Paragraph
six of this Section, an investment firm and credit institution
shall take into account the rules on costs and charges referred
to in Section 128, Paragraph six, Clause 3 of this Law and in
Article 50 of Commission Delegated Regulation No 2017/565.
(8) If several investment firms or credit institutions are
involved in a distribution channel, each investment firm and
credit institution providing investment services or ancillary
investment services shall comply with its obligations as regards
the disclosure of information to its clients.
[21 June 2018]
Section 133.19
Inducements in Respect of Investment Advice on an Independent
Basis or Portfolio Management Services
(1) An investment firm and credit institution providing
investment advice on an independent basis or portfolio management
services shall return to clients any fees, commissions or any
financial benefits paid or provided by any third party or a
person acting on behalf of a third party in relation to the
services provided to the abovementioned client as soon as
reasonably possible after receipt. All fees, commissions, or
financial benefits received from third parties in relation to the
provision of independent investment advice and portfolio
management shall be transferred in full to the client.
(2) An investment firm and credit institution shall set up and
implement a policy to ensure that any fees, commissions, or any
monetary benefits paid or provided by any third party or a person
acting on behalf of a third party in relation to the provision of
independent investment advice and portfolio management are
allocated and transferred to each individual client
accordingly.
(3) An investment firm and credit institution shall inform
clients of the fees, commissions, or any monetary benefits
transferred to them.
(4) An investment firm and credit institution providing
investment advice on an independent basis or portfolio management
services shall not accept non-financial benefits that do not
qualify as acceptable minor non-monetary benefits in accordance
with Paragraphs five and six of this Section.
(5) The following benefits shall qualify as acceptable minor
non-financial benefits only if they are:
1) information or documentation relating to a financial
instrument or an investment service, which is generic in nature
or personalised to reflect the circumstances of an individual
client;
2) written information material from a third party that is
commissioned and paid for by an issuer or potential issuer to
promote a new issuance, or if the third party is contractually
engaged with the issuer and paid by the issuer to produce such
information material on an ongoing basis, provided that the
relationship is clearly disclosed in the information material and
that the material is made available at the same time to any
investment firms or credit institutions wishing to receive it or
to the general public;
3) participation in conferences, seminars, and other training
events on the benefits and features of a specific financial
instrument or an investment service;
4) hospitality of a reasonable de minimis value;
5) flowers, souvenirs, books, or representation articles if
the total value of non-financial benefits provided by one entity
within one year in monetary terms does not exceed the amount of
one minimum monthly wage;
6) services and rebates of different types which are offered
by commercial companies or sole proprietorships and which are
available to the public.
(6) Acceptable minor non-financial benefits shall be
reasonable and proportionate and of such a scale that they are
unlikely to influence the behaviour of an investment firm or
credit institution in any way that is detrimental to the
interests of the relevant client.
(7) Minor non-financial benefits shall be disclosed to clients
before the provision of the relevant investment services or
ancillary investment services. In accordance with Section
133.18, Paragraph six, Clause 1 of this Law, minor
non-financial benefits may be described in a generic way.
[21 June 2018]
Section 133.20
Inducements in Relation to Research
(1) The research developed by third parties for investment
firms and credit institutions which provide portfolio management
services or other investment services or ancillary investment
services to clients shall not be regarded as an inducement unless
those are received in return for either of the following
payments:
1) direct payments by the investment firm and credit
institution out of its own resources;
2) payments from a separate research payment account
controlled by the investment firm or credit institution, provided
that the following conditions relating to the operation of the
account are met:
a) the funds of the account consist of a research charge
collected from the client;
b) upon establishing a research payment account and agreeing
on the research charge with their clients, the investment firm
and credit institution introduce measures which determine setting
and regular assessment of a research budget;
c) the investment firm and credit institution are responsible
for the research payment account;
d) the investment firm and credit institution regularly
assesses the quality of the research purchased based on robust
quality criteria and their ability to contribute to better
investment decisions.
(2) If an investment firm or credit institution makes use of
the research payment account referred to in Paragraph one, Clause
2 of this Section, it shall provide the following information to
its clients:
1) before the provision of an investment services to clients -
information on the budgeted amount for research and the amount of
the estimated research charge for each client;
2) annual information on the total costs that each client has
incurred for the provision of third party research.
(3) If an investment firm and credit institution operate a
research payment account, the investment firm and credit
institution have an obligation, upon request by their clients or
by Latvijas Banka, to provide a summary of the providers of the
research paid from this account - the total amount they were paid
over a defined period, the benefits and services received by the
investment firm or credit institution, and how the total amount
spent from the account compares to the budget set by the
investment firm or credit institution for the abovementioned
period by noting any rebate or carry-over if residual funds
remain in the account. The research charge referred to in
Paragraph one, Clause 2, Sub-clause "a" of this Section
shall:
1) only be based on a research budget set by the investment
firm and credit institution for the purpose of establishing the
need for third party research in respect of investment services
rendered to its clients;
2) not be linked to the volume or value of transactions
executed on behalf of the clients.
(4) If the research charge is not collected from the client
separately but alongside a transaction commission, a separately
identifiable research charge shall be indicated to the client,
fully complying with Paragraph one, Clause 2 and Paragraph two of
this Section.
(5) The total amount of research charges received from clients
may not exceed the research budget.
(6) An investment firm and credit institution shall agree with
a client in an agreement on the research charge to be collected
by the investment firm or credit institution from the client
according to the research budget and the frequency with which the
specific research charge will be deducted from the funds of the
client over the year. The research budget shall only be increased
after clear information has been provided to the client on such
intended increase. If there is a surplus in the research payment
account at the end of a period, the investment firm and credit
institution shall apply a procedure to repay those funds to the
client or to offset them against the research budget and charge
calculated for the following period.
(7) The research budget referred to in Paragraph one, Clause
2, Sub-clause "b" of this Section shall be managed by an
investment firm or credit institution itself based on a
reasonable assessment of the need for third party research. The
investment firm and credit institution shall control and
supervise the use of the research budget funds for the purchase
of third party research in order to ensure that the research
budget is managed and used in the best interests of the clients
of the investment firm and credit institution. The abovementioned
control shall also include a clear audit trail of payments made
to research providers and how the amounts paid were determined
considering the quality criteria referred to in Paragraph one,
Clause 2, Sub-clause "d" of this Section. The investment firm and
credit institution shall not use the research budget and research
payment account to fund internal research.
(8) When applying Paragraph one, Clause 2, Sub-clause "c" of
this Section, administration of the research payment account may
be delegated to a third party, provided that the arrangement
facilitates the purchase of third party research and payments to
research providers in the name of an investment firm or credit
institution without any undue delay in accordance with the
instructions of the investment firm or credit institution.
(9) When applying Paragraph one, Clause 2, Sub-clause "c" of
this Section, the investment firm and credit institution shall
include all necessary elements in a written policy and provide it
to their clients.
(10) The investment firm and credit institution which provides
order execution services shall identify separate charges for
these services that only reflect the cost of executing the
transaction. A separately identifiable charge shall be applied to
other benefits or services provided by the same investment firm
or credit institution to investment firms or credit institutions
established in the European Union, and the provision of and
charges for the abovementioned benefits or services shall not be
influenced and conditioned by the amount of payment made for
order execution services.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Chapter XIII
Registration of Providers of Investment Services Registered in
Foreign Countries
[21 June 2018]
Section 134. Rights of Providers of
Investment Services Registered in Foreign Countries
[21 June 2018]
Section 135. Registration with the
Commission
[21 June 2018]
Section 136. Obligations of a
Registered Company
[21 June 2018]
Section 137. Deletion from the
Register
[21 June 2018]
Section 137.1 Supervisory
Authorities
[21 June 2018]
Chapter XIV
Supervision of the Fulfilment of the Requirements of the Law
[21 June 2018]
Section 137.2 Rights of
Latvijas Banka in Supervising the Fulfilment of the Requirements
of the Law
(1) The provision of investment services and ancillary
investment services shall be supervised by Latvijas Banka
according to its competence.
(2) Latvijas Banka shall introduce corresponding supervisory
measures which ensure the fulfilment of the requirements laid
down in this Law for investment firms and credit
institutions.
(3) Latvijas Banka has the right to issue regulations:
1) regarding the provision of information on operation in the
field of provision of investment services and ancillary
investment services;
2) regarding the procedures for the provision of information
on transactions in financial instruments;
3) regarding the procedures by which natural and legal persons
shall notify Latvijas Banka of the short or uncovered positions
in financial instruments and also the procedures for disclosing
information on the short positions in financial instruments in
shares.
[21 June 2018; 23 September 2021; 26 October 2023]
Section 137.3 Reporting
on Potential and Actual Violations
[12 December 2019]
Section 138. Rights of Latvijas
Banka in Implementation of Supervision
(1) In addition to the rights laid down in the Law on Latvijas
Banka, the Law on Investment Firms, this Law, and directly
applicable legal acts of the European Union in relation to the
provision of investment services and ancillary investment
services, the operation of a regulated market operator, and the
requirements laid down in Chapter XII.4 of this Law,
Latvijas Banka is entitled to impose the following supervisory
measures:
1) [31 March 2022];
2) [31 March 2022];
3) [31 March 2022];
4) [31 March 2022];
5) to request freezing of assets or restrictions of another
kind on the use of a property;
6) to temporarily restrict the operation of a financial
instrument market participant, including to restrict the rights
of an investment firm or credit institution to provide investment
services or hold financial instruments;
7) [31 March 2022];
8) [31 March 2022];
9) [31 March 2022];
10) [31 March 2022];
11) to request the financial instrument market participants to
cease any activities which are in contradiction to the
requirements of this Law and Regulation No 600/2014;
12) to take measures of any kind to ensure the conformity of
the operation of such investment firms, credit institutions,
regulated market operators, and other persons, including approved
publication arrangements and approved reporting mechanisms, to
which the requirements of this Law or Regulation No 600/2014
apply;
13) to suspend trade in the financial instruments;
14) to request that financial instruments are removed from the
trading venue;
15) to request any person that it implements appropriate
measures for the reduction of the amount of the position or risk
transaction;
16) to restrict the possibility for any person to access a
commodity derivative, including by determining limits in relation
to the amount of a position which any person may hold for the
whole period in accordance with the requirements laid down in
Section 133.14 of this Law for position limits and
position management controls in commodity derivatives;
17) [31 March 2022];
18) [31 March 2022];
19) to suspend the advertising, distribution, or selling of
financial instruments or structured deposits in accordance with
that specified in Article 40, 41, or 42 of Regulation No
600/2014;
20) to suspend the advertising, distribution, or selling of
financial instruments or structured deposits if the investment
firm or credit institution has not developed or implemented an
efficient process for the approval of products, has not ensured
all the necessary and commensurate administrative and
organisational measures to prevent the negative impact of the
conflicts of interest referred to in Section 127 of this Law on
the interests of clients, or in any other way has not conformed
to the requirements of Section 127, Paragraph eleven of this
Law;
21) to request that a member of the executive or supervisory
board of an investment firm, credit institution, or regulated
market operator is removed from the office;
22) to give binding written instructions to the management
bodies of financial instrument market participants, their heads
and members which are necessary to prevent situation in which the
norms of this Law or directly applicable legal acts of the
European Union are being violated.
(2) Latvijas Banka may impose the supervisory measures laid
down in Paragraph one, Clauses 15 and 16 of this Section also if
they are necessary for the achievement of the supervisory
objective of the supervisory authority of another Member
State.
(3) Latvijas Banka is entitled, in conformity with that laid
down in Article 24 of Regulation No 1286/2014, to impose the
following supervisory measures for the violations of this
Regulation:
1) to prohibit the distribution of packaged private investment
products;
2) to impose the obligation to temporarily suspend the
distribution of packaged private investment products;
3) to prohibit the provision of a key information document
which does not conform to that laid down in Article 6, 7, 8, or
10 of Regulation No 1286/2014 and to take the decision requiring
the publication of a new key information document conforming to
this Regulation;
4) to impose on the person who is the creator of a packaged
private investment product or provides consultations on this
product, or sells it the obligation to inform its retail client
whose rights and interests have been infringed of the sanction or
supervisory measure imposed and also of where the client may
submit a complaint or where he or she can go in order to initiate
extrajudicial settlement of disputes, and also of his or her
rights to bring a claim to a court.
(4) When implementing supervision, Latvijas Banka is
entitled:
1) to request from any person information with regard to its
activities in the financial market, and also to invite any person
to appear before Latvijas Banka and provide information in
person;
2) to become acquainted with the documents or other data in
any form necessary for the performance of the tasks and functions
of Latvijas Banka and to receive their copies;
3) [26 October 2023];
4) to request and receive from the financial market
participants the print-outs of telephone conversations, records
of electronic communication, and other types of data transmission
records;
5) to request that auditors of investment firms, regulated
markets, and data reporting service providers provide
information;
6) to address law enforcement institutions with an application
for the initiation of criminal proceedings;
7) to authorise auditors or specialists to carry out
inspections;
8) to request information, including all the relevant
documents, from any person on the scale of the position or risk
and the objective arising in relation to a commodity derivative,
and on all assets or liabilities on the relevant market;
9) to provide public notifications;
10) insofar as permitted by laws and regulations, to request
existing records of the data flow which are at the disposal of a
telecommunications operator if there are justified suspicions of
a violation and if such records may be useful, when carrying out
inspections in relation to violations of that laid down in this
Law or Regulation No 600/2014.
[21 June 2018; 31 March 2022; 28 April 2022; 23 September
2021; 26 October 2023]
Section 139. Supervision of
Investment Firms
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 139.1 Significant
Branches of Investment Firms
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 140. Supervision of an
Investment Firm Registered in Another Member State
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 140.1 Supervision
of a Branch of a Credit Institution Registered in Another Member
State which Provides Investment Services in the Republic of
Latvia
(1) Latvijas Banka shall supervise conformity of branches of a
credit institution registered in another Member State which
provide investment services in the Republic of Latvia with the
requirements of Section 124, Paragraph two, Clauses 6 and 7,
Sections 126, 126.1, 126.2, 128,
128.1, 128.2, 128.3 of this Law
and Regulation No 600/2014. Latvijas Banka has the right to
inspect the measures taken by such branch for ensuring such
requirements. If Latvijas Banka establishes that the branch of a
credit institution registered in this Member State which operates
in the Republic of Latvia undertakes activities that are in
contradiction with the requirements of Section 124, Paragraph
two, Clauses 6 and 7, Sections 126, 126.1,
126.2, 128, 128.1, 128.2,
128.3 of this Law and Regulation No 600/2014, it
shall, without delay, request the branch to cease such
activities.
(2) If a branch of a credit institution registered in another
Member State which operates in the Republic of Latvia continues
activities that are in contradiction with the requirements of
Section 124, Paragraph two, Clauses 6 and 7, Sections 126,
126.1, 126.2, 128, 128.1,
128.2, 128.3 of this Law and Regulation No
600/2014, Latvijas Banka shall inform the supervisory authority
of the home Member State and implement measures to rectify such
violations. Within the scope of these measures, Latvijas Banka is
entitled to, until rectification of such violations, prohibit the
relevant branch from continuing the provision of investment
services in the Republic of Latvia. Latvijas Banka shall inform
the European Commission and the European Securities and Markets
Authority of the measures taken in accordance with the
requirements of Section 147 of this Law.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 140.2 Supervision
of the Operation of a Multilateral Trading Facility and Organised
Trading Facility Registered in Another Member State
(1) If the MT facility or OT facility registered in another
Member State which operates in the Republic of Latvia undertakes
activities which are in contradiction with the applicable laws
and regulations of the Republic of Latvia governing financial
instrument market, Latvijas Banka shall, without delay, inform
the supervisory authority of the home Member State thereof and
ask to rectify the established violations, and also inform it of
the measures taken.
(2) If the MT facility or OT facility registered in another
Member State which operates in the Republic of Latvia continues
activities which are in contradiction with the applicable laws
and regulations of the Republic of Latvia governing financial
instrument market or if the measures implemented by the
supervisory authority of the Member State turn out ineffective,
Latvijas Banka shall inform the supervisory authority of the home
Member State thereof and take measures to rectify such
violations. Within the scope of such activities, Latvijas Banka
is entitled to, until rectification of such violations, prohibit
the relevant regulated market operator, MT facility, or OT
facility from continuing activities in the Republic of Latvia.
Latvijas Banka shall inform the European Commission and the
European Securities and Markets Authority of the measures taken
in accordance with the requirements of Section 147 of this
Law.
(3) Latvijas Banka shall inform the relevant MT facility or OT
facility of the measures taken in Paragraph two of this Section
or the prohibition imposed.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 141. Supervision of an
Investment Firm Registered in the Republic of Latvia which
Provides Investment Services in a Member State
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 141.1 Collection
of Information Related to Remuneration Policy and Practice
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 142. Supervision on
Consolidated Basis
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Division
F1
Provision of Outsourced Services
[9 June 2005]
Section 142.1 Procedures
for Commencing Provision of Outsourced Services
(1) Within the meaning of this Law, a recipient of outsourced
service may be a regulated market operator, the central
securities depository, and an investment firm. If the outsourced
service recipient and the outsourced service provider are members
of the same group of commercial companies, the outsourced service
recipient may, for the purposes of complying with the
requirements of this Section, take into account the extent to
which it controls the outsourced service provider or the extent
to which the outsourced service provider is subject to
consolidated supervision of the group.
(2) Only such outsourced service provider having experience of
at least three years in the provision of such outsourced services
which a regulated market operator, the central securities
depository, or an investment firm plans to delegate to the
outsourced service provider, is entitled to provide the
outsourced services to a regulated market operator, the central
securities depository, and investment firm.
(3) At least 30 days prior to receipt of the outsourced
service, a regulated market operator, the central securities
depository, and an investment firm shall submit a motivated
written submission to Latvijas Banka for the receipt of the
planned outsourced service. A description of the outsourced
service policy and procedure, and the original copy or certified
copy of the outsourced service contract shall be appended to the
submission.
(4) A regulated market operator, the central securities
depository, and an investment firm shall submit amendments to the
description of the outsourced service policy and procedure to
Latvijas Banka not later than on the following working day after
approval of the relevant amendments.
(5) The following shall be determined in an outsourced service
contract:
1) a description of the outsourced service to be received;
2) precise requirements for the extent and quality of
outsourced service;
3) the rights and obligations of the recipient and the
provider of outsourced services, including:
a) the right of the outsourced service recipient to constantly
supervise the quality of the outsourced service provision, the
right to become acquainted with all documents, the document and
accounting registers, and also to request information from the
outsourced service provider related to the outsourced service
provision;
b) the right of the recipient of outsourced service to give
the provider of outsourced services instructions to be compulsory
enforced in issues which are related to execution of outsourced
service in good faith, good quality, timely manner and
corresponding to laws and regulations;
c) the right of the outsourced service provider to submit a
motivated written request to the outsourced service provider to
terminate the outsourced service contract without delay, if the
outsourced service recipient has established that the outsourced
service provider does not fulfil the requirements laid down in
the outsourced service contract for the amount or quality of the
outsourced service;
d) the obligation of the outsourced service provider to ensure
the outsourced service recipient with a possibility to
continuously supervise the quality of the outsourced service
provision;
e) the obligation of the outsourced service provider to
terminate the outsourced service contract without delay after
receipt of a motivated written request from the outsourced
service recipient;
f) the obligation of the outsourced service provider to ensure
the quality of outsourced service provision and due management of
the risks related to outsourced service provision;
g) the obligation of the outsourced service provider to inform
the outsourced service recipient of any changes which may affect
its ability to provide the outsourced service effectively, in due
amount, quality and in accordance with the requirements laid down
in this Law;
h) the obligation of the outsourced service provider not to
disclose information related to the outsourced service recipient
or client and which in accordance with the requirements of the
law contains business secrets;
4) the right of Latvijas Banka to become acquainted with all
the documents, accounting and document registers and to request
from the outsourced service provider any information which is
related to the provision of outsourced services and performance
of the functions of Latvijas Banka;
5) actions of the outsourced service provider for mitigating
consequences in emergency situations, including introduction and
periodic testing of backup facilities, where necessary, in order
to ensure continuous provision of investment service and
protection of client interests with regard to the function,
service, or activity that has been outsourced to the outsource
service provider.
(6) A regulated market operator, the central securities
depository, or an investment firm which plans to receive an
outsourced service in accordance with the procedures laid down in
this Law shall develop the relevant policy and procedures. The
following shall be determined in the outsourced service
procedure:
1) the internal procedures by which decisions on receipt of
outsourced services are taken;
2) the procedures for entering into an outsourced service
contract, the supervision of execution and termination
thereof;
3) the persons and units responsible for co-operation with the
outsourced service provider and for the supervision of the extent
and quality of the received outsourced service, and also the
rights and obligations of the relevant persons;
4) actions of the outsourced service recipient in cases when
the outsourced service provider does not fulfil or will not be
able to fulfil the provisions of the outsourced service
contract;
5) the risk assessment and management procedures related to
receipt of the outsourced service.
(7) Latvijas Banka has the right to carry out an inspection of
the activities of the outsourced service provider at the location
thereof or at the location of outsourced service provision,
including to become acquainted with all the documents, document
and accounting registers, to make copies of the documents, and
also to request information from the outsourced service provider
which is related to the outsourced service provision or which is
necessary for the performance of the functions of Latvijas
Banka.
(8) The outsourced service provider shall commence the
outsourced service provision if the outsourced service recipient
has not received a prohibition from Latvijas Banka to receive
outsourced service within 30 days from the day of submitting the
submission referred to in Paragraph three of this Section.
(9) An outsourced service provider is entitled to delegate the
outsourced service provision further to another person only upon
receipt of a written consent from the relevant outsourced service
recipient. A regulated market operator, the central securities
depository, and an investment firm shall, prior to further
delegating of the outsourced service, inform Latvijas Banka
thereof in writing and submit the documents referred to in
Paragraph three of this Section. The provisions of this Law shall
apply to further delegation of the outsourced service provision
and the final provider of outsourced services.
(10) The criteria for the importance of a delegated outsourced
service, more detailed procedures for delegation, including for
foreign service providers, are determined in Articles 30, 31, and
32 of Regulation No 2017/565.
[4 October 2007; 14 September 2017; 21 June 2018; 23
September 2021 / Amendment regarding the replacement of
the word "Commission" with the words "Latvijas Banka" shall come
into force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 142.2 Restriction
on the Provision of Outsourced Services
(1) Latvijas Banka shall prohibit a regulated market operator,
the central securities depository, or an investment firm to
receive the planned outsourced service if:
1) the provisions of this Law have not been conformed to;
2) the receipt of the outsourced service may restrict the
possibility of a regulated market operator, the central
securities depository, or an investment firm to provide the
services specified in this Law, and also may infringe the lawful
interests of its clients or deteriorate the conditions on the
basis of which Latvijas Banka has issued the licence to the
outsourced service recipient for the performance of the relevant
professional activity;
3) the receipt of the outsourced services may restrict the
possibility of the administrative bodies of the outsourced
service recipient to fulfil the obligations laid down for them in
laws and regulations, the articles of association of the
outsourced service recipient, or in other internal instruments of
the outsourced service recipient;
4) the receipt of the outsourced services will prohibit or
restrict the possibility of Latvijas Banka to perform the
functions laid down in the law;
5) the outsourced service contract does not conform to the law
and does not provide a clear and true idea of the intended
co-operation between the outsourced service recipient and the
outsourced service provider and the amount and quality of the
outsourced service.
(2) The receipt of the outsourced service shall not exempt a
regulated market operator, the central securities depository, and
an investment firm from the responsibility laid down in the law
or in the contract with their clients. The outsourced service
recipient shall be responsible for the performance of the
outsourced service provider to the same extent as for its own
performance.
(21) Latvijas Banka has the right to request
information from an outsourced service recipient which is related
to the provision of the outsourced service or which is necessary
for the performance of the functions of Latvijas Banka.
(3) Latvijas Banka has the right to request that an outsourced
service recipient eliminates the deficiencies which have been
caused by the receipt of outsourced service, and to determine a
time period for the elimination of such deficiencies. If the
deficiencies are not rectified within the time period specified
by Latvijas Banka, Latvijas Banka shall request the outsourced
service recipient to terminate the outsourcing contract and shall
determine the time period for its discontinuation.
(4) Latvijas Banka is entitled to request an outsourced
service recipient to immediately terminate the outsourced service
contract in effect if it establishes:
1) that the outsourced service recipient does not continuously
supervise the outsourced service or supervises it irregularly and
inadequately;
2) that the outsourced service recipient does not manage the
risk related to the outsourced service provision or manages it
irregularly and inadequately;
3) material deficiencies in the activity of the outsourced
service provider which endanger or may endanger performance of
the obligations of the outsourced service recipient;
4) that any of the circumstances referred to in Paragraph one
of this Section sets in.
(5) An outsourced service recipient shall, without delay,
inform Latvijas Banka if it has established that the outsourced
service provider does not comply with the amount or quality
requirements laid down for the outsourced service in the
outsourced service contract.
(6) The receipt of an outsourced service shall not release the
outsourced service recipient from the obligation to manage the
risks related to the activities thereof laid down in laws and
regulations.
(7) Contesting and appealing the administrative act issued by
Latvijas Banka referred to in Paragraphs one, three, and four of
this Section shall not suspend the operation thereof.
[4 October 2007; 14 September 2017; 21 June 2018; 23
September 2021 / The new wording of Paragraph seven and
amendment regarding the replacement of the word "Commission" with
the words "Latvijas Banka" shall come into force on 1 January
2023. See Paragraph 73 of Transitional Provisions]
Division G
Exchange of Information and Cooperation
[21 June 2018]
Section 143. Exchange of Information
and Cooperation with Supervisory Authorities of Other Member
States to Ensure Supervision over the Provision of Investment
Services
(1) Latvijas Banka shall be responsible for the cooperation
and exchange of information with the supervisory authorities of
other Member States which have been recognised as a contact
person in exchange of information to fulfil the obligations
specified in this Law and Regulation No 600/2014, including
supervisory activities or inspection, and to ensure recovery of a
fine. Latvijas Banka may exercise its authority for cooperation
purposes also if the activities investigated thereby are not a
violation of the legal norms in force in the relevant Member
State.
(2) [28 April 2022]
(3) [28 April 2022]
(4) If Latvijas Banka has the information at its disposal that
the commercial company which is not subject to its supervision
carries out activities in another Member State which are in
contradiction with the legal acts of this Member State in the
field of financial instrument market, Latvijas Banka shall inform
the supervisory authority of the relevant Member State and the
European Securities and Markets Authority.
(5) Latvijas Banka shall, in accordance with the requirements
of Article 15 of European Commission Regulation No 1287/2006,
carry out exchange of information for the purposes referred to in
this Section with the supervisory authority of another Member
State which has been recognised as a contact person in exchange
of information.
(6) Latvijas Banka has the right to indicate that the
information referred to in this Section may be disclosed to third
parties which need it for the performance of its functions laid
down in the law only with a prior written consent of Latvijas
Banka.
(7) Latvijas Banka shall inform the European Securities and
Markets Authority of the supervisory measures applied within the
scope of which the following has been performed:
1) any requests to reduce the amount or risk of a position in
accordance with Section 138, Paragraph one, Clause 15 of this
Law;
2) any restrictions on the ability of persons to conclude
transactions in commodity derivatives in accordance with Section
138, Paragraph one, Clause 16 of this Law.
(8) The description of the request made in accordance with
Section 138, Paragraph four, Clause 8 of this Law shall be
indicated in the information referred to in Paragraph seven of
this Section, including the identity of the persons to whom the
request was addressed, and its grounds, and also the scope of
such restrictions which have been specified in accordance with
Section 138, Paragraph one, Clause 16 of this Law, including
information on the relevant person, the financial instruments
applicable thereto, any restrictions in relation to to the amount
of such positions which may be held by the person for the whole
period, and also any exceptions related thereto and granted in
accordance with Section 133.14 of this Law and the
relevant reasons.
(9) Latvijas Banka shall send the information referred to in
Paragraph seven of this Section not later than 24 hours before
applying the planned supervisory measure. The abovementioned
condition need not be complied with if there are objective
reasons for it.
(10) If the activities referred to in Paragraph seven of this
Section apply to retail energy products, Latvijas Banka shall
also send information to the Agency for the Cooperation of Energy
Regulators which has been founded in accordance with Regulation
(EC) No 713/2009 of the European Parliament and of the Council of
13 July 2009 establishing an Agency for the Cooperation of Energy
Regulators.
(11) In relation to emission allowances, Latvijas Banka shall
cooperate with State institutions which oversee spot and auction
markets and competent authorities, registry administrators and
other State institutions which supervise compliance in the field
of emission allowance trading in the European Union in order to
ensure consolidated information on emission allowances
markets.
(12) In relation to agricultural commodity derivatives,
Latvijas Banka shall cooperate with State institutions which
oversee, administer, and regulate physical markets in
agricultural products and shall provide information to them in
accordance with Regulation No 1308/2013.
(13) If activities of a trading venue registered in another
Member State carried out in the Republic of Latvia in accordance
with the criteria laid down in Article 16 of the European
Commission Regulation No 1287/2006 become substantially important
for the operation of the financial instrument market and
protection of investors, Latvijas Banka shall agree with the
supervisory authority of the relevant Member State on
commensurate cooperation methods.
(14) The criteria by which the activities of a trading venue
in a host Member State might be deemed activities which are of
substantial importance for the operation of the financial
instrument market and protection of investors in the relevant
host Member State are determined by Regulation No 2017/565.
(15) The sample forms, templates, and procedures necessary for
the exchange of the information referred to in Paragraph thirteen
of this Section are determined by Commission Implementing
Regulation (EU) 2017/988 of 6 June 2017 laying down implementing
technical standards with regard to standard forms, templates and
procedures for cooperation arrangements in respect of a trading
venue whose operations are of substantial importance in a host
Member State.
(16) The sample forms, templates, and procedures necessary for
the exchange of the information referred to in this Section are
be determined by Regulation No 2017/980.
[21 June 2018; 20 June 2019; 23 September 2021; 28 April
2022 / Amendment regarding the replacement of the word
"Commission" with the words "Latvijas Banka" shall come into
force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 144. Exchange of Information
with Supervisory Authorities of Member States to Ensure
Supervision of the Prohibition against the Use of Inside
Information and Market Manipulations
(1) Latvijas Banka shall cooperate with supervisory
authorities of Member States in supervision of the prohibition
against the use of inside information and market manipulations in
accordance with the provisions of Regulation No 596/2014.
(2) If Latvijas Banka does not have the information at its
disposal which has been requested by the supervisory authority of
the Member State on the basis of a motivated request and which is
necessary thereto to perform its duties of supervision of the
prohibition against the use of inside information and market
manipulation, Latvijas Banka shall carry out activities within
its competence to obtain the requested information.
(3) If Latvijas Banka cannot obtain the information requested
by the supervisory authority of the Member State, Latvijas Banka
shall inform the relevant supervisory authority of the Member
State thereof by specifying the reasons due to which it cannot
provide the requested information.
[26 May 2016; 23 September 2021 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Section 144.1 Exchange of
Information with Supervisory Authorities of Member States for the
Purpose of Ensuring Admission of an Offer of Securities to the
Public and Financial Instruments to Trading on a Regulated
Market
[12 December 2019]
Section 144.2 Exchange of
Information with Supervisory Authorities of Member States to
Ensure Supervision over the Share Take-over Bids
[31 March 2022]
Section 144.3 Exchange of
Information with Supervisory Authorities of Member States to
Ensure Disclosure of the Regulated Information
(1) Latvijas Banka is responsible for the cooperation with the
competent authorities of Member States in order to ensure the
fulfilment of the duties and exercising the powers laid down for
it in Section 54 of this Law, and also in Division D, Chapters
III, IV, and VI of this Law.
(2) Latvijas Banka shall, on the basis of a relevant motivated
request, provide information to the competent authorities of
Member States which is necessary for the performance of their
functions.
[29 March 2007; 21 September 2017; 23 September 2021 /
Amendment regarding the replacement of the word "Commission" with
the words "Latvijas Banka" shall come into force on 1 January
2023. See Paragraph 73 of Transitional Provisions]
Section 144.4 Exchange of
Information with Supervisory Authorities of other Member States
on Transactions in Financial Instruments
[21 June 2018]
Section 145. Exchange of Information
with Foreign Supervisory Authorities
(1) Latvijas Banka is entitled to enter into agreements on the
exchange of information with foreign supervisory authorities for
the performance of supervisory functions, and also to accede to
the agreement of International Organization of Securities
Commissions for the exchange of information.
(11) Latvijas Banka is entitled to enter into an
agreement on the exchange of information with foreign
authorities, institutions, or other legal persons which:
1) supervises credit institutions, other financial
institutions, insurance companies, and financial markets;
2) are responsible for the liquidation, bankruptcy, and other
similar procedures of investment firms;
3) when performing supervisory functions, auditing investment
firms and other financial institutions, credit institutions and
insurance companies or which manage compensation schemes;
4) are responsible for the supervision of such bodies which
are involved in the liquidation, bankruptcy, and other similar
procedures of investment firms;
5) are responsible for the supervision of such persons who are
carrying out auditing of investment firms, insurance companies,
credit institutions, and other financial institutions;
6) are responsible for the supervision of such persons which
are operating on emission allowances markets;
7) are responsible for the supervision of such persons which
are operating on the markets of agricultural commodity
derivatives.
(2) In order to verify the veracity of such information on a
credit institution, investment firm, another financial
institution, financial holding company, mixed-activity company
registered in a foreign country or on the subsidiary of the
credit institution, investment firm, financial holding company or
mixed-holding company which Latvijas Banka has received during
the performance of supervision on the basis of consolidated
financial statements, Latvijas Banka is entitled to send a
request to the supervisory authority of the relevant foreign
country for carrying out internal control at the relevant
company.
(3) Latvijas Banka is entitled to enter into agreements on the
exchange of information with the authorities and institutions
referred to in Paragraph one and 1.1 of this Section
if the legal acts of the relevant foreign country provide such
liability for unauthorised disclosure of restricted access
information which is equivalent to the liability laid down in the
laws and regulations of the Republic of Latvia and the
requirements applicable in Latvia in the field of personal data
protection have been complied with. Such information shall only
be used to supervise the participants of the financial market or
the functions laid down in the law for the relevant authorities.
The relevant foreign institutions are entitled to disclose the
received information only with a written consent of Latvijas
Banka and only for the purposes for which such consent was
given.
[9 June 2005; 4 October 2007; 21 June 2018; 23 September
2021 / Amendment to Paragraph three regarding the
replacement of the words "financial and capital market" with the
words "financial market" and amendment regarding the replacement
of the word "Commission" with the words "Latvijas Banka" shall
come into force on 1 January 2023. See Paragraph 73 of
Transitional Provisions]
Section 146. Restricted Access
Information
(1) The information on an investment firm and its client, the
operation of an investment firm and the transactions of its
client, and also on other financial instrument market
participants referred to in this Law and their operation, their
clients and their transactions which has not been previously
published in accordance with the procedures laid down in the law
or the disclosure of which is not determined by other laws, or on
disclosure of which a decision has not been taken by Latvijas
Banka, the information received in accordance with the procedures
laid down in this Law from the competent authorities and persons
of the Member States and foreign countries, and also from the
institutional units established by the Member States and foreign
countries, and the information obtained in inspections of
investment firms and other financial instrument market
participants referred to in this Law for the needs of supervision
shall be considered restricted access information and shall be
disclosed to third parties only in the form of a report or a
summary so that it would not be possible to identify any
particular investment firm or its client, another financial
instrument market participant referred to in this Law or its
client. Such information on an investment firm and its client or
other financial instrument market participants referred to in
this Law and their clients, and also on the operation of an
investment firm and the transactions of its client or the
operation of other financial instrument market participants
referred to in this Law and the transactions of their clients
shall have the status of restricted access information also if
insolvency proceedings have been initiated or liquidation has
been commenced for the investment firm or its client, or other
financial instrument market participants referred to in this Law
or their clients, or the investment firm or its client (legal
person) or other financial instrument market participants
referred to in this Law or their clients (legal persons) have
been liquidated.
(2) A prohibition to disclose restricted access information
shall not apply to the information:
1) which is related to court proceedings in a civil case if
the insolvency proceedings of an investment firm or other
financial instrument market participants referred to in this Law
have been initiated or their liquidation has been commenced and
this information is not on the third parties which are involved
in the activities for the improvement of the financial situation
of the investment firm or other financial instrument market
participants referred to in this Law;
2) which has been provided by Latvijas Banka to the person
directing the proceedings in a criminal case on the basis of the
relevant request;
3) on a potential criminal offence detected by Latvijas Banka
in the operation of an investment firm or other financial
instrument market participants referred to in this Law of which
it shall inform the law enforcement institutions;
4) on persons who are responsible for the uncovering of
violations of the laws and regulations and the investigation in
the field of commercial activity if the following conditions are
met:
a) the provision of information is necessary for the
uncovering and investigation of violations of the laws and
regulations governing commercial activity;
b) a certification has been provided that the information will
be available only to such persons who are involved in the
execution of the task and that the requirements for the
protection of information are binding to them;
c) if Latvijas Banka has obtained the necessary information
from the supervisory authority of financial market participants
of another country, it shall only be disclosed if a consent of
the institution which provided the information has been
received.
(3) The provisions of Paragraph one of this Section do not
prohibit Latvijas Banka from providing restricted access
information, by retaining the status of restricted access
information to the information provided, to the European
Securities and Markets Authority, the European Systematic Risk
Board, the European Banking Authority, the European Insurance and
Occupational Pensions Authority, central banks of Member States,
and other authorities responsible for the supervision of payment,
clearing and settlement systems if such information is required
by these authorities for the performance of their functions laid
down in the law, and also from disclosing (publishing on its
website) the results of the stress testing carried out by
Latvijas Banka.
(4) Latvijas Banka is entitled to use the information received
in accordance with the procedures referred to in this Section
only for the performance of its functions:
1) in order to ascertain the conformity of the financial
instrument market participants referred to in this Law with the
laws and regulations governing the founding and operation,
especially in relation to liquidity, insolvency, large exposures,
management, organisation of accounting, and internal control
mechanisms;
2) in order to impose the administrative measures and
sanctions specified in the law;
3) during court proceedings wherein the administrative acts
issued by Latvijas Banka or its actual actions are being
appealed.
(5) Latvijas Banka is entitled to request information from an
investment firm or other financial instrument market participants
referred to in this Law on the basis of a request of the
supervisory authority of investment firms or other financial
instrument market participants referred to in this Law of another
Member State and a request of such supervisory authority of
foreign investment firms or other financial instrument market
participants referred to in this Law with which an agreement on
the exchange of information has been entered into. The
abovementioned authority is entitled to disclose the information
provided thereto by Latvijas Banka only with a written consent of
Latvijas Banka and may use such information only for the purpose
for which it was requested.
(6) Latvijas Banka is entitled to enter into agreements on the
exchange of information with the supervisory authorities of
foreign investment firms or other financial instrument market
participants referred to in this Law, or the authorities of the
relevant foreign country the functions of which are considered
equivalent to the functions of the authorities referred to in
Paragraphs seven and ten of this Section if the legal acts of
such foreign country provide for the protection of restricted
access information equivalent to this Section and the
requirements which are in force in Latvia in the field of
personal data protection have been conformed to. Such information
shall only be used to supervise the financial market participants
or the functions specified in the law for the relevant
authorities.
(7) The provisions of this Section shall not prohibit Latvijas
Banka from exchanging restricted access information with the
following, while retaining the status of restricted access
information:
1) the supervisory authorities of investment firms or other
financial instrument market participants of another Member State
and the ministries of finance of such countries;
2) the authorities which are entrusted with an obligation to
supervise the financial market or the financial market
participants;
3) the authorities of the Member States, including the
collegial authorities established by the Member States and the
institutional units which have been entrusted with an obligation
to maintain the stability of the financial scheme in Member
States and which determine or implement the macro-supervision
policy;
4) the authorities of the Member States which are responsible
for the reorganisation of the financial market participants,
including the collegial authorities established by the Member
States and the institutional units, and also the State
authorities the objective of which is to protect the stability of
the financial system;
5) contractual or institutional systems for customer
protection of Member States;
6) [28 April 2022];
7) persons who are responsible for the mandatory auditors of
financial statements of investment firms or other financial
market participants;
8) the authorities of the Member State which manage
investments and investment compensation schemes, if such
information is necessary for the performance of their
functions;
9) the authorities which are responsible for the supervision
of financial market participants in the field of the prevention
of money laundering and terrorism and proliferation financing,
and the authorities similar to the Financial Intelligence
Service.
(8) The provisions of this Section do not prohibit Latvijas
Banka from handing over restricted access information to a
regulated market operator, the central securities depository, and
authorities ensuring the clearing and settlement of transactions
in financial instruments in Member States if Latvijas Banka
considers that the handing over of such information is necessary
to ensure appropriate action by these authorities where
participants in an account fail to fulfil their obligations or
there are reasonable grounds to believe that they will not fulfil
their obligations.
(9) In respect of the information received from Latvijas Banka
and the supervisory authorities of the financial market
participants of the Member States, the authorities and persons
specified in Paragraphs three, seven, and eight of this Section
shall comply with the following requirements:
1) only use the received information for the fulfilment of the
duties within the competence thereof;
2) it is prohibited for the authorities and persons, including
the employees thereof, during the fulfilment of their duties and
after termination of an employment and other type of contractual
relationship with the abovementioned authorities or persons, to
publicly or otherwise disclose information related to the
activities of investment firms which has not been published
previously in accordance with the procedures laid down in the law
or the disclosure of which is not determined in other laws. In
accordance with the procedures laid down in laws and regulations,
the authorities and persons referred to in this Section shall be
liable for the unlawful disclosure of restricted access
information and for the losses caused to third parties due to the
unlawful actions of the abovementioned authorities or
persons;
3) the authorities or persons are only entitled to disclose
the received information with a prior written consent of the
persons who have provided the relevant information and solely for
the purpose for which this consent has been given.
(10) The provisions of this Section shall not prohibit
Latvijas Banka from exchanging restricted access information with
the central banks of the Member States and other authorities of
the Member States which are responsible for monitoring the
payment systems if the provision of such information is necessary
for the performance of the functions laid down for them in the
law, and also with the European Systemic Risk Board.
(11) The provisions of this Section shall not prohibit
Latvijas Banka from providing restricted access information to
the following international authorities in accordance with the
procedures laid down in Paragraph thirteen of this Section:
1) the International Monetary Fund and the World Bank - for
the performance of assessments intended for the programme for the
evaluation of the financial sector;
2) the Bank for International Settlements - for the
performance of quantitative impact studies;
3) the Financial Stability Board - for the performance of its
functions.
(12) Latvijas Banka shall provide restricted access
information to the authorities referred to in Paragraph eleven of
this Section in conformity with the provisions laid down in
Paragraph thirteen of this Section if a reasoned request has been
received and the following conditions are complied with:
1) the request is sufficiently justified, taking into account
the particular tasks fulfilled by the requesting authority in
accordance with the legal acts governing its operation;
2) the request is sufficiently accurate in relation to the
content and amount of the requested information and the means for
disclosure thereof;
3) a certification has been provided that the requested
information is necessary for the execution of particular tasks of
the requesting authority and does not exceed the amount of
functions specified to such authority in the legal acts governing
its operation;
4) a certification has been provided that information will be
available only to such persons who are involved in the execution
of the relevant task and the requirements for the protection of
information are binding on them.
(13) The authorities referred to in Paragraph eleven of this
Section may become acquainted with restricted access information
only in person in the premises of Latvijas Banka.
[23 September 2021; 28 April 2022 / Amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 147. Obligation of Latvijas
Banka to Provide Information to the European Commission, the
European Securities and Markets Authority, and the European
Banking Authority
(1) Latvijas Banka shall inform the European Commission of the
following:
1) any issue of the licence for the provision of investment
services and ancillary investment services to an investment firm
which is a subsidiary of a company registered in a foreign
country;
2) cases where an investment firm registered in the Republic
of Latvia becomes a subsidiary of a company registered in a
foreign country by acquiring a qualifying holding;
3) [31 March 2022].
(2) In the cases referred to in Paragraph one, Clauses 1 and 2
of this Section, Latvijas Banka shall send to the European
Commission any information also on the structure of such group of
companies which includes the relevant investment firm.
(3) Latvijas Banka shall inform the European Commission and
also other Member States of those interim financial statements
which a capital company the shares of which are admitted to
trading on a regulated market prepares and disseminates in
accordance with the procedures laid down in this Law and of
application of the requirements of Section 62, Paragraph four of
this Law.
(4) Latvijas Banka shall inform the European Commission and
the European Securities and Markets Authority of:
1) the cases referred to in Section 64.3, Paragraph
three of this Law;
2) the activities which have been carried out thereby in
accordance with Section 40.1, Paragraph two of this
Law;
3) the cases when it, in accordance with that laid down in
Section 63, Paragraph one of this Law, recognises as equivalent
such information which an issuer, the registered address of which
is in a foreign country, provides in accordance with the
requirements of the legal acts of his or her country;
4) any general difficulties in providing investment services
or commencing the provision of investment services in foreign
country faced by investment firms which have received the licence
for the provision of investment services or ancillary investment
services from Latvijas Banka.
(5) Latvijas Banka shall inform the European Securities and
Markets Authority of:
1) issuing the licence to an investment firm for the provision
of investment services or ancillary investment services in the
Republic of Latvia, indicating such type of investment service or
ancillary investment service for the provision of which the
investment firm has received the licence, and also regarding
cancellation of the licence or change of the investment services
and ancillary investment services laid down in the licence;
2) agreements on the exchange of information which Latvijas
Banka has entered into with the supervisory authorities of
foreign financial instruments markets, other authorities or legal
persons;
3) sanctions, administrative measures, and supervisory
measures which Latvijas Banka has imposed on market participants
for violations of the norms of this Law. If Latvijas Banka
publishes information on a sanction, administrative measure, or
supervisory measure imposed on a market participant, it shall,
without delay, inform the European Securities and Markets
Authority thereof. Latvijas Banka shall, once a year, send a
summary to this authority on the sanctions, administrative
measures, and supervisory measures imposed on all market
participants within a year;
4) any other facts which are necessary for the European
Securities and Markets Authority for the fulfilment of the
obligations.
(6) Latvijas Banka has the right to inform the European
Securities and Markets Authority of the cases when the
supervisory authority of another Member State fails to provide
information after a motivated request of the Commission or does
not provide information within a relevant (reasonable) time
period, or, regardless of the request of Latvijas Banka, refuses
the possibility for Latvijas Banka to carry out inspection in the
territory of such Member State or for the authorised
representatives of Latvijas Banka to participate in inspection,
or fails to reply to such request within a relevant (reasonable)
time period.
(7) [28 April 2022]
(8) Latvijas Banka shall inform the European Commission, the
European Banking Authority, and the European Securities and
Markets Authority of any laws and regulations governing
establishment and activities of investment firms in the Republic
of Latvia.
[22 March 2012; 24 April 2014; 21 June 2018; 12 December
2019; 31 March 2022; 28 April 2022; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Division
G1
Registration and Supervision of External
Credit Assessment Institutions (Rating Agencies)
[13 January 2011]
Section 147.1 Rights and
Obligations of Latvijas Banka
(1) [8 November 2012]
(2) Latvijas Banka shall supervise the use of credit ratings
by the subjects referred to in Article 4(1) of the Regulation No
1060/2009 which use credit ratings for regulatory purposes in
accordance with this Regulation and also in accordance with the
provisions of the Financial Instrument Market Law.
(3) An External Credit Assessment Institution (rating agency)
shall be regarded as a participant of the financial market within
the meaning of the Law on Latvijas Banka, and the norms of the
Law on Latvijas Banka governing the activities of the
participants to the financial market shall apply to it. The
regulations of Latvijas Banka issued in accordance with this Law
and Regulation No 1060/2009 shall be binding to an External
Credit Assessment Institution (rating agency).
[8 November 2012; 23 September 2021 / Amendment
regarding the replacement of the words "financial and capital
market" with the words "Latvijas Banka", amendment regarding the
replacement of the words "Law on the Financial and Capital Market
Commission" with the words "Law on Latvijas Banka", amendment
regarding the replacement of the words "regulatory provisions"
with the word "regulations", and amendment regarding the
replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 147.2 Issuing and
Appeal of Administrative Acts of Latvijas Banka
(1) Latvijas Banka shall issue administrative acts in
accordance with Section 4, Paragraph one of this Law in the cases
laid down in the law and in Regulation No 1060/2009.
(2) An administrative act issued in accordance with Paragraph
one of this Law may be appealed in accordance with the procedures
laid down in Section 4, Paragraph two of this Law.
[23 September 2021 / Amendment regarding the replacement of
the word "Commission" with the words "Latvijas Banka" shall come
into force on 1 January 2023. See Paragraph 73 of Transitional
Provisions]
Section 147.3 Payments
for Funding the Activities of Latvijas Banka
(1) Latvijas Banka shall receive financing for the
registration and supervision of External Credit Assessment
Institutions (rating agencies) in the amount and in accordance
with the procedures laid down in Regulation No 1060/2009.
(2) [28 April 2022]
(3) In order to finance the operation of Latvijas Banka, a
regulated market operator shall pay thereto an amount of up to 2
per cent of the quarterly average gross income from transactions
thereof but not less than EUR 7114 per year.
(4) In order to finance the operation of Latvijas Banka, the
central securities depository shall pay thereto an amount of up
to two per cent (inclusive) of the quarterly average gross income
from transactions of the central securities depository but not
less than EUR 7114 per year.
(5) Latvijas Banka shall issue regulations for the procedures
for calculating the payments referred to in Paragraphs three and
four of this Section and for submitting reports.
(6) The payments referred to in Paragraphs three and four of
this Section shall be made by the thirtieth day of the month
following the relevant quarter.
(7) If the payments referred to in Paragraphs three and four
of this Section are transferred with delay or not in full amount,
late payment charge in the amount of 0.05 per cent of the unpaid
amount shall be calculated for each delayed day.
(8) [23 September 2021 / See Paragraph 73 of Transitional
Provisions]
[24 April 2014; 14 September 2017; 28 April 2022; 23
September 2021 / Amendment regarding the replacement of
the words "regulatory provisions" with the word "regulations" and
amendment regarding the replacement of the word "Commission" with
the words "Latvijas Banka" shall come into force on 1 January
2023. See Paragraph 73 of Transitional Provisions]
Division
G2
Supervision of the Requirements of Law and
Regulations
[8 November 2012; 21 June
2018]
Section 147.4 Rights of
Latvijas Banka in the Supervision of Transactions with Short
Selling and Credit Default Swaps
While supervising the fulfilment of the requirements of
Regulation No 236/2012, Latvijas Banka has the following rights
in addition to the rights laid down in the Law on Latvijas
Banka:
1) to request the person to cease any activities which are in
contradiction with the requirements of Regulation No
236/2012;
2) to request credit institutions and investment firms to
freeze assets of a person which carries out activities that are
in contradiction with the requirements of Regulation No 236/2012
or limit rights of such person to disposal of the assets.
[21 June 2018; 23 September 2021 / Amendment
regarding the replacement of the words "Law on the Financial and
Capital Market Commission" with the words "Law on Latvijas Banka"
and amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 147.5 Rights of
Latvijas Banka in Supervision of the Requirements of Regulation
No 2016/1011
While supervising the fulfilment of the requirements of
Regulation No 2016/1011, Latvijas Banka has the right, in
addition to the rights laid down in the Law on Latvijas Banka, to
implement one or several supervisory measures and activities
referred to in Article 41(1) of Regulation No 2016/1011 directly
or in cooperation with other institutions.
[21 June 2018; 23 September 2021 / Amendment regarding the
replacement of the words "Law on the Financial and Capital Market
Commission" with the words "Law on Latvijas Banka" and amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Division
G3
Reporting on Potential and Actual
Violations
[12 December 2019]
Section 147.6 Potential
and Actual Violations
(1) The financial instrument market participants referred to
in Section 147.7, Paragraph one of this Law shall
ensure the receipt and examination of reports on the following
potential and actual violations:
1) in operation of an approved publication arrangement, a CT
provider, and an approved reporting mechanism;
2) in provision of investment services and ancillary
investment services;
3) in operation of a regulated market operator;
4) for the violations of the requirements laid down in Chapter
XII.4 of this Law;
5) for the violations of Regulation No 575/2013;
6) for the violations of Regulation No 596/2014;
7) for the violations of Regulation No 600/2014;
8) for the violations of Regulation No 909/2014;
9) for the violations of Regulation No 1286/2014;
10) for the violations of Articles 4 and 15 of Regulation No
2015/2365;
11) for other violations of this Law;
12) for the violations of the Law on Investment Firms and
Regulation (EU) 2019/2033 of the European Parliament and of the
Council of 27 November 2019 on the prudential requirements of
investment firms and amending Regulations (EU) No 1093/2010, (EU)
No 57/2013, (EU) No 600/2014 and (EU) No 806/2014.
(2) Latvijas Banka shall establish and maintain a safe
reporting system on potential and actual violations referred to
in Paragraph one of this Section on which any person may report
to Latvijas Banka.
(3) The procedures by which reports on the violations referred
to in Paragraph one of this Section are submitted to Latvijas
Banka, received and examined thereby shall be determined by the
regulations of Latvijas Banka.
[12 December 2019; 28 April 2022; 23 September 2021 /
Amendment regarding the replacement of the words "regulatory
provisions" with the word "regulations" and amendment regarding
the replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 147.7 Internal
Reporting Line of Financial Instrument Market Participants
(1) A credit institution and a branch of a foreign credit
institution, the central securities depository, a regulated
market operator, an approved publication arrangement a CT
provider, and an approved reporting mechanism shall, according to
the field of their operation, develop a procedure by which an
independent and dedicated internal line for reporting on
violations is established, ensuring that employees of a financial
instrument market participant may report on the violations
referred to in Section 147.6, Paragraph one of this
Law.
(2) The procedure developed by the financial instrument market
participants referred to in Paragraph one of this Section in
relation to the establishment of an internal line for reporting
on violations shall ensure conformity with the requirements laid
down in Section 147.8 of this Law.
[12 December 2019; 28 April 2022]
Section 147.8 Protection
of Persons
(1) In accordance with the laws and regulations regarding
personal data protection, the system established by Latvijas
Banka for reporting on violations shall ensure personal data
protection of such person who is reporting on the violation, and
also personal data protection of such natural person of whom
there are suspicions that he or she has committed the
violation.
(2) Latvijas Banka shall ensure confidentiality of the person
who is reporting on the violation and also of the person of whom
there are suspicions that he or she has committed the violation,
except for the case when the disclosure of such information is
provided for in the laws and regulations of the Republic of
Latvia.
(3) Reporting which, in accordance with Section
147.6, Paragraph one and Section 147.7 of
this Law, is done by employees of a credit institution and a
branch of a foreign credit institution, an investment firm and a
branch of a foreign investment firm, the central securities
depository, a regulated market operator, an approved publication
arrangement, a CT provider, and an approved reporting mechanism
shall not be considered to be a violation of the prohibition of
disclosure of information laid down in an employment contract or
another contract equivalent thereto, or in any law or regulation,
and the person may not be held liable for such reporting.
(4) An employee of a credit institution and a branch of a
foreign credit institution, an investment firm and a branch of a
foreign investment firm, the central securities depository, a
regulated market operator, an approved publication arrangement, a
CT provider, and an approved reporting mechanism who is reporting
on the violations referred to in Section 147.6,
Paragraph one of this Law in the operation of his or her employer
may not be subject to discriminatory or other unjust actions due
to the report provided.
[12 December 2019; 28 April 2022; 23 September 2021 /
Amendment regarding the replacement of the word "Commission"
with the words "Latvijas Banka" shall come into force on 1
January 2023. See Paragraph 73 of Transitional
Provisions]
Section 147.9 Elimination
of a Violation of the Prohibition to Cause Adverse
Consequences
If the prohibition specified in Section 147.8,
Paragraph four of this Law is not complied with and adverse
consequences are caused to a person due to the information
provided thereby on the violations referred to in Section
147.6, Paragraph one of this Law, such adverse
consequences shall be eliminated in accordance with that
specified in the relevant laws and regulations.
[12 December 2019]
Division H
Liability for Violations of the Laws and Regulations Governing
Financial Instrument Market
[9 June 2005]
Section 148. Sanctions and
Supervisory Measures
(1) In accordance with Article 38 of Regulation No 2017/1129,
for the violations laid down in Article 38(1)(a) of the
Regulation, Latvijas Banka is entitled to impose the following
sanctions:
1) to make a public notice which indicates the natural or
legal person who is responsible for the violation and informing
of the nature of the violation;
2) [23 September 2021];
3) as an alternative, to impose a fine on the persons referred
to in Clause 4 or 5 of this Paragraph of up to double amount of
the income gained as a result of the violation or potential
losses avoided if the profit gained as a result of the violation
or potential losses avoided can be determined;
4) to impose a fine on a legal person of up to EUR 5 000 000
or up to three per cent of the total annual turnover according to
the last available audited annual statement of the abovementioned
legal person. If the legal person is a parent undertaking or a
subsidiary of a parent undertaking which prepares consolidated
financial statements in accordance with the Law on the Annual
Financial Statements and Consolidated Financial Statements or
consolidated financial statements in accordance with the
requirements of the relevant legal acts of the home Member State,
the total turnover shall be formed by the total annual turnover
or income of corresponding type in accordance with the relevant
legal acts of the home Member State in the field of accounting,
taking into account the last available consolidated financial
statement which has been approved by the main management body of
the parent undertaking;
5) to impose a fine of up to EUR 700 000 on a natural
person.
(11) Latvijas Banka has the right to impose an
administrative measure - request the person responsible for the
violation to cease the relevant activity without delay and
refrain from repeating such activity henceforth - for the
violations referred to in the introductory part of Paragraph one
of this Section.
(2) Latvijas Banka has the right to issue a warning or impose
a fine of up to EUR 14 200 on an issuer or a person seeking
admission of financial instruments to trading on a regulated
market for the dissemination of false or misleading regulated
information.
(3) [26 May 2016 / See Paragraph 55 of Transitional
Provisions]
(4) [31 March 2022]
(5) Latvijas Banka has the right to issue a warning or impose
a fine of up to EUR 14 200 on the person who violated this Law
and the laws and regulations issued in accordance with it.
(6) [8 November 2012]
(7) [26 May 2016 / See Paragraph 55 of Transitional
Provisions]
(71) Latvijas Banka has the right to issue a
warning or impose a fine of up to EUR 14 200 on an issuer for the
failure to prepare a notification on corporate governance in
accordance with the requirements of Section 56.2 of
this Law or for the failure to publish it in accordance with the
procedures laid down in Section 56.2 of this Law.
(8) For the violations of the provisions of this Law governing
the operation of an investment firm, a credit institution, a
regulated market operator, an approved publication arrangement,
an approved reporting mechanism, a branch of a foreign investment
firm, and also of the provisions of Chapter XII.4 of
this Law, Regulation No 600/2014, and the regulations issued and
decisions taken by Latvijas Banka, Latvijas Banka is entitled to
impose the following sanctions:
1) issue a warning;
2) to make a public notice which indicates the natural or
legal person who is responsible for the violation and the nature
of the violation;
3) [23 September 2021];
4) [23 September 2021];
5) [23 September 2021];
6) to impose a fine of up to EUR 5 000 000 or up to 10 per
cent of the total turnover of the previous financial year on a
legal person according to the approved annual statement of the
previous financial year. If the legal person is a subsidiary of a
parent undertaking or a branch of such subsidiary which prepares
a consolidated financial statement in accordance with the Law on
Annual Statements and Consolidated Annual Statements, the total
turnover shall be formed by the total turnover in the previous
financial year or the income of the corresponding type on the
basis of the data presented by the ultimate parent undertaking in
consolidated financial statements for the previous financial
year;
7) to impose a fine of up to EUR 5 000 000 on the official,
employee, or person who at the time of committing the violation
is responsible for carrying out a certain activity on behalf or
in the interests of the investment firm or credit
institution;
8) as an alternative, to impose a fine on the persons referred
to in Clauses 6 and 7 of this Paragraph of up to double amount of
the income gained as a result of the violation or potential
losses avoided.
(81) Latvijas Banka is entitled to impose the
sanctions provided for in Paragraph eight or the administrative
measures provided for in Paragraph 8.2 of this Section
also if:
1) investment services, activity of the regulated market
operator, and services of an approved publication arrangement and
an approved reporting mechanism are provided or the activity laid
down in Chapter XII.4 of this Law is performed without
the relevant licence or permit;
2) the supervisory measures laid down in Section 138,
Paragraph one of this Law imposed by Latvijas Banka are not being
conformed to.
(82) Latvijas Banka has the right to impose the
following administrative measures for the violations of the
regulations referred to in the introductory part of Paragraph
eight of this Section and the regulations issued or the decisions
taken by Latvijas Banka:
1) to request that the natural or legal person who is
responsible for the violation immediately ceases the relevant
activity;
2) to impose a temporary prohibition on a member of the
executive or supervisory board of an investment firm, a credit
institution, a regulated market operator, a data reporting
service provider or another natural person responsible for the
violation to fulfil the duties specified for him or her;
3) to impose a temporary prohibition of activity on a member
or employee of a regulated market or MT facility or a client of
the OT facility.
(9) [21 June 2018]
(10) For the failure to comply with the requirements of
Division G.1of this Law, Latvijas Banka has the right
to issue a warning to or impose a fine from EUR 1400 to EUR 142
300 on the person who has violated laws and regulations.
(11) If a person has acquired or increased qualifying holding
in a regulated market operator or an investment firm prior to
submitting the notification referred to in Section 9, Paragraph
one or two of this Law to Latvijas Banka or during its
examination, Latvijas Banka is entitled to impose a fine from EUR
1440 to EUR 14 200.
(12) [24 April 2014]
(13) If a financial instrument market participant or another
person referred to in Section 4.1, Paragraphs three
and four of this Law fails to meet the requirements of Section
4.1 of this Law, Latvijas Banka has the right to issue
a warning or impose a fine of up to EUR 14 200 on such
person.
(14) If a financial instrument market participant or another
person bound by the directly applicable legal acts issued by the
European Union authorities in the field of the financial
instrument market (unless it has been laid down otherwise in this
Law) fails to conform to them, Latvijas Banka has the right to
issue a warning or impose a fine on the relevant person. The fine
imposed on legal persons shall not exceed EUR 142 300, but on
natural persons - EUR 57 000.
(15) [28 April 2022]
(151) [28 April 2022]
(152) If an investment firm or a member of the
executive or supervisory board of an investment firm does not
comply with the requirements laid down in the introductory part
of Paragraph fifteen of this Section or does not conform to the
abovementioned requirements, Latvijas Banka has the right to
impose the following administrative measures:
1) to request that an investment firm or the person who is
responsible for the violation immediately ceases the relevant
activity;
2) to impose a temporary prohibition on a member of the
executive or supervisory board of an investment firm or on
another natural person who is responsible for the violation to
fulfil the duties specified for him or her duties in the
investment firm.
(16) If a person has not complied with the requirements of
Sections 54, 56, 56.3, 56.4, 57,
57.2, 57.3 or Chapter IV of this Law or has
not fulfilled the duty imposed thereon and has not notified,
according to specific procedures, of acquiring or losing major
holding in a joint-stock company in accordance with the
requirements of Section 61 of this Law, Latvijas Banka is
entitled to impose the following sanctions:
1) to name in a public notice the natural or legal person who
is responsible for the violation and the nature of the
violation;
2) [23 September 2021];
3) to impose a fine of the highest amount on the legal
person:
a) up to EUR 10 000 000 or up to five per cent of the total
turnover of the previous financial year according to the approved
annual statement of the previous financial year. If the legal
person is a subsidiary of a parent undertaking or a branch of
such subsidiary which prepares a consolidated financial statement
in accordance with the Law on Annual Statements and Consolidated
Annual Statements, the total turnover shall be formed by the
total turnover of the previous financial year or of the income of
corresponding type on the basis of the data presented by the
ultimate parent undertaking in consolidated financial statements
for the previous financial year;
b) up to double amount of the income gained or potential
losses avoided by the person the income obtained as a result of
violation or potential losses prevented can be determined;
4) to impose a fine of the largest amount on the natural
person:
a) up to EUR 2 000 000;
b) up to double amount of the income obtained or potential
losses prevented by the person if the income obtained as a result
of violation or potential losses prevented can be determined.
(161) If a person has not complied with the
requirements laid down in the introductory part of Paragraph
sixteen of this Section or has not fulfilled the duty imposed on
him or her, Latvijas Banka is entitled to impose an
administrative measure - to request that the natural or legal
person responsible for the violation immediately ceases the
relevant activity.
(17) If the person has not complied with the requirements of
Articles 14, 15, Article 16(1) or (2), Article 17(1), (2), (4),
(5), or (8), Article 18(1), (2), (3), (4), (5), or (6), Article
19(1), (2), (3), (5), (6), (7), or (11), or Article 20(1) of
Regulation No 596/2014, Latvijas Banka is entitled to impose the
following sanctions:
1) [23 September 2021];
2) to impose an obligation to reimburse the income obtained as
a result of the violation or potential losses prevented if they
can be determined;
3) to name in a public notice the natural or legal person who
is responsible for the violation and the nature of the
violation;
4) to cancel the licence issued to the investment firm for the
provision of investment services and ancillary investment
services or to prohibit a credit institution to provide
investment services and ancillary investment services;
5) [23 September 2021];
6) to impose an obligation on the meeting of stockholders,
supervisory board, or executive board of an investment firm or
credit institution to remove a member of the executive or
supervisory board of an investment firm or credit institution
from the office or to prohibit another natural person who is
responsible for the violation to fulfil the duties specified for
him or her in the investment firm or credit institution, if the
abovementioned persons have repeatedly violated the requirements
of Article 14 or 15 of Regulation No 596/2014;
7) [23 September 2021];
8) to impose a fine of up to triple amount of the income
gained or potential losses avoided as a result of the violation
if the income gained as a result of the violation or potential
losses avoided can be determined;
9) to impose a fine on a natural person for the following in
relation to Regulation No 596/2014:
a) violations of the requirements of Article 14 or 15, up to
EUR 5 000 000;
b) violations of the requirements of Article 16 or 17, up to
EUR 1 000 000;
c) violations of the requirements of Article 18, 19, or 20, up
to EUR 500 000;
10) to impose a fine on a legal person for the following in
relation to Regulation No 596/2014:
a) violations of the requirements of Article 14 or 15 in the
amount of up to EUR 15 000 000 or up to 15 per cent of the total
turnover of the previous financial year according to the approved
annual statement of the previous financial year. If the legal
person is a subsidiary of a parent undertaking or a branch of
such subsidiary which prepares a consolidated financial statement
in accordance with the Law on Annual Statements and Consolidated
Annual Statements, the total turnover shall be formed by the
total turnover of the previous financial year or of the income of
corresponding type on the basis of the data presented by the
ultimate parent undertaking in consolidated financial statements
for the previous financial year;
b) violations of the requirements of Article 16 or 17, up to
EUR 2 500 000 or up to two per cent of the total turnover of the
previous financial year according to the approved annual
statement of the previous financial year. If the legal person is
a subsidiary of a parent undertaking or a branch of such
subsidiary which prepares a consolidated financial statement in
accordance with the Law on Annual Statements and Consolidated
Annual Statements, the total turnover shall be formed by the
total turnover of the previous financial year or of the income of
corresponding type on the basis of the data presented by the
ultimate parent undertaking in consolidated financial statements
for the previous financial year;
c) violations of the requirements of Article 18, 19, or 20, up
to EUR 1 000 000.
(171) If a person has not complied with the
requirements laid down in the introductory part of Paragraph
seventeen of this Section, Latvijas Banka is entitled to impose
the following administrative measures:
1) to request that the natural or legal person who is
responsible for the violation immediately ceases the relevant
activity;
2) to temporarily suspend the licence issued to the investment
firm for the provision of investment services and ancillary
investment services or to temporarily prohibit a credit
institution to provide investment services and ancillary
investment services;
3) to impose a temporary prohibition on a member of the
executive or supervisory board of an investment firm or credit
institution, or on another natural person who is responsible for
the violation to fulfil the duties specified for him or her in
the investment firm or credit institution;
4) to impose a temporary prohibition on a member of the
executive or supervisory board of an investment firm or credit
institution or on another natural person who is responsible for
the violation to make transactions on its behalf.
(18) If the person has not complied with the requirements of
Section 55.2, 55.3, 55.5,
55.6, 55.7, 55.8, or
55.11 of this Law, Latvijas Banka is entitled to
impose the following sanctions:
1) issue a warning;
2) publish a public notice on the website of Latvijas Banka
indicating the person responsible for the violation and the
nature of such violation;
3) [23 September 2021];
4) [23 September 2021];
5) impose on the capital company a fine of up to 10 per cent
of the net turnover amount of the previous reporting year. If 10
per cent of the net turnover amount of the previous reporting
year is less than EUR 142 300, Latvijas Banka is entitled to
impose a fine of up to EUR 142 300;
6) impose a fine of up to one million euros on the natural
person who is responsible for the violation.
(181) If a person has not complied with the
requirements laid down in the introductory part of Paragraph
eighteen of this Section, Latvijas Banka is entitled to impose
the following administrative measures:
1) request the person who is responsible for the violation to
immediately cease the relevant activity;
2) impose a temporary prohibition on a member of the
supervisory or executive board of the capital company who is
responsible for the relevant violation to fulfil the duties
specified for him or her in the capital company for a period of
up to three years.
(19) Latvijas Banka is entitled, in accordance with Article 24
of Regulation No 1286/2014, to impose the following sanctions for
the violations of this Regulation:
1) to issue a warning in which the responsible person and the
nature of the violation are indicated;
2) [23 September 2021];
3) [23 September 2021];
4) [23 September 2021];
5) impose a fine on a legal person of up to EUR 5 000 000 or
up to three per cent of the total annual turnover according to
the last available audited annual statement of the respective
legal person. If the legal person is a parent undertaking or a
subsidiary of a parent undertaking which prepares consolidated
financial statements in accordance with the Law on the Annual
Financial Statements and Consolidated Financial Statements or
consolidated financial statements in accordance with the
requirements of the relevant legal acts of the home Member State,
the relevant total turnover shall be formed by the total annual
turnover or income of corresponding type in accordance with the
relevant legal acts of the home Member State in the field of
accounting taking into account the last available consolidated
financial statement which has been approved by the main
management body of the parent undertaking;
6) to impose a fine of up to EUR 700 000 on the natural person
who is responsible for the violation;
7) as an alternative to that laid down in Clause 5 or 6 of
this Paragraph, to impose a fine of up to double amount of the
income gained as result of the violation or of the prevented
possible loss;
8) [23 September 2021].
(20) Latvijas Banka is entitled, in accordance with Article 63
of Regulation No 909/2014, to impose the following sanctions for
the violations referred to in Article 63(1) of the
Regulation:
1) to make a public notice which indicates the natural or
legal person who is responsible for the violation and the nature
of the violation;
2) [23 September 2021];
3) to impose an obligation on the meeting of stockholders,
supervisory board, or executive board of the central securities
depository to remove from office a member of the executive or
supervisory board of the central securities depository or another
natural person who is responsible for the violation;
4) to cancel the permits granted in accordance with Article 16
or 54 of Regulation No 909/2014;
5) impose a fine on a legal person of up to EUR 20 000 000 or
up to 10 per cent of the total annual turnover according to the
last available audited annual statement of the respective legal
person. If the legal person is a parent undertaking or a
subsidiary of a parent undertaking which prepares consolidated
financial statements in accordance with the Law on the Annual
Financial Statements and Consolidated Financial Statements or
consolidated financial statements in accordance with the
requirements of the relevant legal acts of the home Member State,
the relevant total turnover shall be formed by the total annual
turnover or income of corresponding type in accordance with the
relevant legal acts of the home Member State in the field of
accounting taking into account the last available consolidated
financial statement which has been approved by the main
management body of the parent undertaking;
6) to impose a fine of up to EUR 5 000 000 on the natural
person responsible for the violation;
7) as an alternative to that laid down in Clause 5 or 6 of
this Paragraph, to impose a fine of up to double amount of the
income gained as result of the violation or of the prevented
possible loss.
(201) Latvijas Banka is entitled to impose the
following administrative measures for the violations referred to
in the introductory part of Paragraph twenty of this Section:
1) to request that the central securities depository or the
person who is responsible for the violation ceases the relevant
activity without delay and refrains from repeating such activity
henceforth;
2) to impose a temporary prohibition on a member of the
executive board or supervisory board of the central securities
depository or on another natural person who is responsible for
the violation to fulfil the duties specified for him or her in
the central securities depository.
(21) Latvijas Banka is entitled, in accordance with Article 22
of Regulation No 2015/2365, to impose the following sanctions for
the violations referred to in Articles 4 and 15 of the
Regulation:
1) [23 September 2021];
2) to make a public notice which indicates the natural or
legal person who is responsible for the violation and the nature
of the violation;
3) to cancel the licence for the person who is responsible for
the violation;
4) [23 September 2021];
5) to impose a fine of up to EUR 5 000 000 on the natural
person responsible for the violation;
6) to impose the following on the legal person who is
responsible for the violation:
a) for the violations of Article 4 of Regulation No 2015/2365
- a fine of up to EUR 5 000 000 or up to 10 per cent of the total
annual turnover according to the last available audited annual
statement of the abovementioned legal person. If the legal person
is a parent undertaking or a subsidiary of a parent undertaking
which prepares consolidated financial statements in accordance
with the Law on the Annual Financial Statements and Consolidated
Financial Statements or consolidated financial statements in
accordance with the requirements of the relevant legal acts of
the home Member State, the relevant total turnover shall be
formed by the total annual turnover or income of corresponding
type in accordance with the relevant legal acts of the home
Member State in the field of accounting taking into account the
last available consolidated financial statement which has been
approved by the main management body of the parent
undertaking;
b) violations of Article 15 of Regulation No 2015/2365 - a
fine of up to EUR 15 000 000 or up to 10 per cent of the total
annual turnover according to the last available audited annual
statement of the abovementioned legal person. If the legal person
is a parent undertaking or a subsidiary of a parent undertaking
which prepares consolidated financial statements in accordance
with the Law on the Annual Financial Statements and Consolidated
Financial Statements or consolidated financial statements in
accordance with the requirements of the relevant legal acts of
the home Member State, the relevant total turnover shall be
formed by the total annual turnover or income of corresponding
type in accordance with the relevant legal acts of the home
Member State in the field of accounting taking into account the
last available consolidated financial statement which has been
approved by the main management body of the parent
undertaking;
7) as an alternative, to impose a fine on the persons referred
to in Clause 5 or 6 of up to triple amount of the income gained
or potential losses avoided as a result of the violation, even if
the amount of the imposed fine exceeds the amounts referred to in
Clause 5 or 6 of this Paragraph.
(211) Latvijas Banka is entitled to impose the
following administrative measures for the violations referred to
in the introductory part of Paragraph twenty-one of this
Section:
1) to request that the person who is responsible for the
violation ceases the relevant activity without delay and refrains
from repeating such activity henceforth;
2) to temporarily suspend the licence for the person who is
responsible for the violation;
3) to impose a temporary prohibition on the member of the
executive board of the person who is responsible for the
violation or on another natural person who is responsible for the
violation to fulfil the duties specified for him or her.
(22) If a person has failed to comply with the requirements of
Article 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 21, 23, 24,
25, 26, 27, 28, 29, or 34 of Regulation No 2016/1011, and also if
a person is not cooperating or refuses to cooperate in the
inspection process carried out by Latvijas Banka in accordance
with Section 147.5 of this Law, Latvijas Banka is
entitled to impose the following sanctions:
1) [23 September 2021];
2) to impose a duty on the person who is responsible for the
violation to reimburse the income gained or potential losses
avoided as a result of the violation, if it is possible to
determine them;
3) to indicate in a public notification the administrator who
is responsible for the violation or the supervised unit and the
nature of the violation;
4) to cancel the permit or registration granted to the
administrator;
5) [23 September 2021];
6) to impose a fine on the person who is responsible for the
violation up to triple amount of the income gained or potential
losses avoided as a result of the violation, if it possible to
determine the income gained or potential losses avoided as a
result of violation;
7) to impose a fine on a natural person for the following in
relation to Regulation No 2016/1011:
a) violations of Articles 4, 5, 6, 7, 8, 9, 10, Article
11(1)(a), (b), (c), and (e), (2), and (3), Article 12, 13, 14,
15, 16, 21, 23, 24, 25, 26, 27, 28, 29, or 34, up to EUR 500
000;
b) violations of Article 11(1)(d) or (4), up to EUR 100
000;
8) to impose a fine on a legal person for the following in
relation to Regulation No 2016/1011:
a) violations of Articles 4, 5, 6, 7, 8, 9, 10, Article
11(1)(a), (b), (c), and (e), (2), and (3), Article 12, 13, 14,
15, 16, 21, 23, 24, 25, 26, 27, 28, 29, or 34, up to EUR 1 000
000 or up to 10 per cent of the total turnover of the previous
financial year according to the approved annual statement of the
previous financial year. If the legal person is a subsidiary of a
parent undertaking or a branch of such subsidiary which prepares
a consolidated financial statement in accordance with the Law on
Annual Statements and Consolidated Annual Statements, the total
turnover shall be formed by the total turnover in the previous
financial year or the income of the corresponding type on the
basis of the data presented by the ultimate parent undertaking in
consolidated financial statements for the previous financial
year;
b) violations of Article 11(1)(d) or (4), up to EUR 250 000 or
up to two per cent of the total turnover of the previous
financial year according to the approved annual statement for the
previous financial year. If the legal person is a subsidiary of a
parent undertaking or a branch of such subsidiary which prepares
a consolidated financial statement in accordance with the Law on
Annual Statements and Consolidated Annual Statements, the total
turnover shall be formed by the total turnover in the previous
financial year or the income of the corresponding type on the
basis of the data presented by the ultimate parent undertaking in
consolidated financial statements for the previous financial
year.
(23) If a person has failed to comply with the requirements
laid down in the introductory part of Paragraph twenty-two of
this Section or if a person is not cooperating or refuses to
cooperate in the inspection process carried out by Latvijas Banka
in accordance with Section 147.5 of this Law, Latvijas
Banka is entitled to impose the following administrative
measures:
1) to request that the administrator who is responsible for
the violation within the meaning of Regulation No 2016/1011
(hereinafter in this Part - the administrator) or the supervised
unit terminates the relevant activity without delay;
2) to temporarily suspend the permit or registration granted
to the administrator;
3) to impose a temporary prohibition on the natural person who
is responsible for the violation to fulfil the duties specified
for him or her in the administrator or the supervised data
provider.
[29 March 2007; 4 October 2007; 22 May 2008; 13 January
2011; 22 March 2012; 8 November 2012; 19 September 2013; 24 April
2014; 26 May 2016; 15 December 2016; 21 September 2017; 14
September 2017; 26 October 2017; 21 June 2018; 12 December 2019;
31 March 2022; 23 September 2021; 28 April 2022 /
Amendment regarding the replacement of the words "regulatory
provisions" with the word "regulations" and amendment regarding
the replacement of the word "Commission" with the words "Latvijas
Banka" shall come into force on 1 January 2023. See Paragraph 73
of Transitional Provisions]
Section 149. Collecting of Fines
The fines collected for the violations laid down in Section
148 of this Law shall be paid into the State budget.
Section 150. Publishing Sanctions,
Administrative Measures, and Supervisory Measures
(1) Latvijas Banka shall publish information on sanctions,
administrative measures, and the supervisory measures referred to
in Section 138 of this Law imposed on persons for the violations
referred to in Section 148 of this Law on its website by
indicating information on the person and the violation committed
thereby, and also on contesting of the administrative act issued
by Latvijas Banka and the ruling given.
(2) If, after prior assessment, Latvijas Banka finds that the
disclosure of data of such person on whom a sanction or
administrative measure, or supervisory measure has been imposed
is not commensurate or the disclosure of such data can endanger
the stability of the financial market, examination of the
relevant administrative case, or the course of the commenced
criminal proceedings, or publication of such information is not
commensurate with the committed offence, Latvijas Banka is
entitled to carry out one of the following activities:
1) to postpone the publishing of the information on the
sanctions or administrative measures, or supervisory measures
imposed on the person until the circumstances for postponing the
publication cease to exist;
2) to publish the information referred to in Paragraph one of
this Section without identifying the person if the publication
ensures efficient protection of personal data;
3) not to publish the information referred to in Paragraph one
of this Section, if the activities specified in Clauses 1 and 2
of this Paragraph are considered to be insufficient to ensure the
stability of the financial market and that publishing is
commensurate to the supervisory measures imposed if they are
considered to be insignificant.
(21) Latvijas Banka has the right not to publish
the information referred to Paragraph one of this Section on the
sanctions, administrative measures, and supervisory measures
specified in Section 138, Paragraph three, Section 148,
Paragraphs seventeen, 17.1, eighteen, 18.1,
nineteen, twenty, 20.1, twenty-one, and
21.1 of this Law if it finds after prior assessment
that publishing would endanger the stability of the financial
market or publishing of such information is not commensurate with
the violation committed.
(22) Latvijas Banka shall, in accordance with the
provisions of Regulation No 596/2014, publish information on
sanctions, administrative measures, and supervisory measures
imposed for the violations of this Regulation.
(3) In the case specified in Paragraph two, Clause 2 of this
Section, the publishing of information may be postponed for a
reasonable period of time, if it is expected that the basis for
publishing will cease to exist within that period without
identifying the person.
(4) The information published on the website of Latvijas Banka
in accordance with the procedures laid down in this Section on
the violations referred to in Section 138, Paragraph three,
Section 148, Paragraphs one, 1.1, eight,
8.2, seventeen, 17.1, eighteen,
18.1, nineteen, twenty, 20.1, twenty-one,
and 21.1 of this Law shall be available for five years
from the day of their publishing.
(5) [28 April 2022]
(6) Latvijas Banka shall, within five working days from the
day of taking the decision, inform the Ministry of Finance of the
sanctions, administrative measures, and supervisory measures
imposed for the violations referred to in Section 148, Paragraphs
eighteen and 18.1 of this Law.
(7) Latvijas Banka shall inform the European Supervisory
Authority of the sanctions, administrative measures, and
supervisory measures imposed for the violations referred to in
Section 138, Paragraph three and Section 148, Paragraph nineteen
of this Law.
(8) Latvijas Banka shall, once a year, inform the European
Securities and Markets Authority of the sanctions, administrative
measures, and supervisory measures imposed for the violations
referred to in Section 148, Paragraphs twenty, 20.1,
twenty-one, and 21.1 of this Law.
(9) Latvijas Banka shall inform the European Securities and
Markets Authority of the sanctions, administrative measures, and
supervisory measures imposed on the persons referred to in
Section 148, Paragraphs eight and 8.2 of this Law, but
not published in accordance with Paragraph two, Clause 3 of this
Section, including of appeal of the relevant administrative act
and the result thereof, and also the sanctions, administrative
measures, and supervisory measures imposed and published.
Latvijas Banka shall, once a year, provide the European
Securities and Markets Authority with aggregated information on
all the sanctions, administrative measures, and supervisory
measures imposed on persons in accordance with Section 148,
Paragraphs eight and 8.2 of this Law.
(10) The procedure by which the information referred to in
Paragraph nine of this Section shall be provided and forms shall
be determined by Commission Implementing Regulation (EU)
2017/1111 of 22 June 2017 laying down implementing technical
standards with regard to procedures and forms for submitting
information on sanctions, administrative measures, and
supervisory measures in accordance with Directive 2014/65/EU of
the European Parliament and of the Council.
[24 April 2014; 11 June 2015; 26 May 2016; 15 December
2016; 21 September 2017; 21 June 2018; 20 June 2019; 12 December
2019; 23 September 2021; 28 April 2022 / Amendment
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023. See
Paragraph 73 of Transitional Provisions]
Division I
Special Provisions for the Renewal of Activities of an Investment
Firm and Resolution, Insolvency, and Liquidation Thereof
[28 April 2022 / See Paragraph 78
of Transitional Provisions]
Section 151. Handling Funds of
Clients
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 152. Handling Financial
Instruments of Clients
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 153. Legal Framework for the
Recovery of Activities and Resolution, Insolvency, and
Liquidation of Investment Firms
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Section 154. Special Procedures for
Covering the Creditors' Claims
[28 April 2022 / See Paragraph 78 of Transitional
Provisions]
Transitional Provisions
1. With the coming into force of this Law, the law On
Securities (Latvijas Republikas Saeimas un Ministru Kabineta
Ziņotājs, 1995, No. 20; 1997, No. 14, 23; 1998, No. 22; 2000,
No. 6, 13; 2001, No. 12, 23) is repealed.
2. A person who has either directly or indirectly acquired a
holding in a joint-stock company the shares of which are admitted
to trading on a regulated market in an amount ensuring at least
10 per cent of the number of shares with voting rights shall
submit a notification to the meeting of shareholders at which
approval of the statement for the year 2003 shall be decided. The
notification shall include all of the information referred to in
Section 61, Paragraph six of this Law.
3. Within one month after the meeting of shareholders at which
approval of the statement for the year 2003 was decided upon, the
joint-stock company the shares of which are admitted to trading
on a regulated market shall publish in the official gazette
Latvijas Vēstnesis list of those persons which have either
directly or indirectly acquired a holding in this joint-stock
company. The publication shall specify how many per cent of the
number of shares with voting rights each person has acquired, and
also the extent of any indirectly acquired holding by each
person.
4. The meeting of shareholders of such joint-stock company the
shares of which are put into public circulation until the day of
coming into force of this Law, but are not admitted to trading on
a regulated market, shall, not later than until 31 December 2005,
decide the issue on the admission of shares to trading on a
regulated market with simple majority of the votes of
participating shareholders. If, in voting on the issue regarding
admission of shares to trading on a regulated market, a
shareholder refrains, then it shall be regarded in such voting
that the shareholder has voted against admission of shares to
trading on a regulated market. If the meeting of shareholders
takes the decision not to admit shares to trading on a regulated
market, by counting together the votes given in favour and the
votes of those shareholders who refrain from voting, the
shareholders who have voted against and refrained from the voting
shall make the mandatory share buy-back offer in accordance with
the procedures laid down in this Law, complying with such
requirements which apply to the share buy-back cases laid down in
Section 66, Paragraph one, Clause 2 of this Law. If the meeting
of shareholders takes the decision to admit shares to trading on
a regulated market, the documents laid down in Section 48,
Paragraphs one and two of this Law shall be submitted to the
Commission not later than within three months counting from the
day of taking the decision. In the issue regarding admission of
shares to trading on a regulated market, the meeting of
shareholders shall be considered competent to take decisions
regardless of the number of votes of participating shareholders.
The executive board of the joint-stock company shall be
responsible for convening the meeting of shareholders.
[9 June 2005]
4.1 The joint-stock companies the shares of which
are put into public circulation until the day of coming into
force of this Law, but are not admitted to trading on a regulated
market, and which have taken the decision to admit the shares to
trading on a regulated market shall, until 31 December 2005,
submit the documents laid down in Section 48, Paragraphs one and
two of this Law to the Commission.
[9 June 2005]
4.2 For those joint-stock companies the shares of
which are put into public circulation until the day of coming
into force of this Law, but are not admitted to trading on a
regulated market, and which are declared to be insolvent:
1) and are under restoration process, the meeting of
shareholders shall, not later than within three months after
completion of the restoration, decide on the admission of shares
to trading on a regulated market in accordance with the
procedures laid down in Paragraph 4 of these Transitional
Provisions;
2) and in respect of which bankruptcy procedure has been
initiated, the Commission shall take the decision to withdraw
shares from public circulation and cancel the issue
certificate.
[9 June 2005]
4.3 If the shares of a joint-stock company are put
into public circulation until the day of coming into force of
this Law, but are not admitted to trading on a regulated market,
the shareholders of such company:
1) shall submit the notification laid down in Section 61 of
this Law to the Commission and joint-stock company in accordance
with the procedures and time period laid down in Section 61;
2) shall make the mandatory share buy-back offer in accordance
with the procedures laid down in this Law in the case laid down
in Paragraph one, Clause 1 of Section 66.
[9 June 2005; 4 October 2007]
4.4 The joint-stock companies the shares of which
are put into public circulation until the day of coming into
force of this Law, but are not admitted to trading on a regulated
market, and the shareholders of such companies shall be liable
for violations of this Law in accordance with Section 148 of this
Law.
[9 June 2005; 4 October 2007]
5. The shareholders who, on the day of coming into force of
this Law, possess a qualifying holding in an investment firm
shall, within 10 days, inform the Commission thereof in
accordance with the procedures laid down in this Law.
6. The provisions of Section 69, Paragraph four of this Law
also apply to those restrictions on disposal of shares specified
in Section 34 of the law On Joint-Stock Companies if the
joint-stock company has not re-registered with the Commercial
Register before the day of coming into force of this Law.
7. Within one month from the day of coming into force of this
Law, the Central Depository shall post on its website and also
publish in the official gazette Latvijas Vēstnesis the
regulations in force which are binding to the participants of the
Central Depository and ensure the performance of functions of the
Central Depository laid down in this Law.
8. Investment firms which have received licence for the
performance of intermediary activity from the Commission shall,
within six months from the day of coming into force of this Law,
re-register such licence with the Commission, specifying in the
submission for re-registration what investment services and
ancillary investment services they wish to provide.
9. [9 June 2005]
10. Section 22, Section 25, Paragraphs four and five, Section
28, Paragraph four, Section 36, Paragraphs three and four,
Section 37, Paragraph seven, second sentence, Section 48,
Paragraph three, Section 49, Section 50, Paragraphs three and
seven, Section 84, Paragraph three, Section 95, Paragraphs three
and four, Section 102, Paragraph four, Section 103, Paragraph
four, Sections 112, 113, 140, and 141, Section 142, Paragraphs
five, twelve, thirteen, and fourteen, and Section 147 of this Law
shall come into force with a special law.
11. Chapter X of this Law comes into force on 1 January 2005.
An investment firm shall prepare annual statements for the years
2003 and 2004 in accordance with the requirements of the law On
Annual Accounts of Undertakings and the law On Consolidated
Annual Accounts.
12. Amendment to Section 93, Paragraph three and Section 93,
Paragraph seven of this Law shall come into force on 1 January
2006.
[9 June 2005]
13. Such issuers which are registered in a foreign country and
transferable securities of which are already admitted to trading
on a regulated market shall select their competent authority of
the home Member State in accordance with the requirements of this
Law and notify their decision to the selected competent authority
of the home Member State until 31 December 2005.
[9 June 2005]
14. If the Commission has taken the decision to allow to make
an offer to the public until 1 July 2005, the issue prospectus
shall be valid for 12 months from the day of taking the
decision.
[9 June 2005]
15. If the Commission has registered a prospectus until 1 July
2005, the requirements of Section 50, Paragraph one of this Law
shall be applied.
[9 June 2005]
16. If the Commission has approved the issue prospectus or
prospectus until 1 July 2005, but the issuer, the person making
an offer, or the person seeking admission of transferable
securities to trading on a regulated market wants to make an
offer to the public or seek admission of transferable securities
to trading on a regulated market also in other Member State after
coming into force of this Law, he or she must prepare a new issue
prospectus or prospectus in accordance with the requirements of
Division C and Division D, Chapter II of this Law.
[9 June 2005]
17. If the shares of the target company are in several Member
States at the same time, one of which is Latvia, and the
registered office of the target company is in none of them, the
Commission together with the supervisory authorities of other
Member States shall, within four weeks after coming into force of
Section 56.1 of this Law, agree which of the
supervisory authorities will supervise buy-back offers which will
be made in respect of the shares of the target company. If the
Commission together with the supervisory authorities of other
Member States have not agreed within the time period laid down,
the target company shall, on the first day following the end of
the time period of four weeks, determine which of the
abovementioned authorities will supervise take-over bids that
will be made in respect of the shares of the target company.
[15 June 2006]
18. Sections 56.1 and 57.2 of this Law
shall come into force on 1 January 2007.
[15 June 2006]
19. The shareholders of joint-stock companies (shares of which
are put into public circulation) who have acquired at least 95
per cent of the total number of shares with voting rights are
entitled to make a final share buy-back offer within three months
from the day of coming into force of Section 69.1 of
this Law.
[15 June 2006]
20. The shareholders of joint-stock companies (shares of which
are withdrawn from public circulation within 12 months before
coming into force of Section 69.1 of this Law) who
have acquired at least 95 per cent of the total number of shares
with voting rights are entitled to make a final share buy-back
offer without admitting the shares of the joint-stock company to
trading on a regulated market within three months from the day of
coming into force of Section 69.1 of this Law.
[15 June 2006]
21. A person who has either directly or indirectly acquired
holding in a joint-stock company (shares of which are admitted to
trading on a regulated market) in such amount which ensures at
least one twentieth, but does not exceed one tenth of the total
number of shares with voting rights, shall, within three months
after the day of coming into force of Section 69.1 of
this Law, inform the regulated market operator on the regulated
markets of which the shares of such company are admitted to
trading, and the joint-stock company itself thereof.
[15 June 2006; 21 June 2018]
22. A shareholder to whom the requirements of Division D,
Chapter IV of this Law apply shall, not later than until 30 June
2007, inform the issuer of the proportion of those voting rights
and capital which are owned by him or her on the day when the
information is provided, unless such shareholder has submitted
equivalent information prior to the coming into force of this
Law.
[29 March 2007]
23. An issuer shall, not later than until 30 July 2007,
publish the information which it has received in accordance with
the requirements of Paragraph 22 of these Transitional Provisions
in accordance with the requirements of Section 64.2 of
this Law.
[29 March 2007]
24. Investment firms shall apply the advanced internal ratings
based approach for the calculation of credit risk capital
requirement and the advanced measurement approach for the
calculation of such risk capital requirement from 1 January
2008.
[29 March 2007]
25. Investment firms which apply the internal ratings based
approach for the calculation of risk-weighted exposure amount
shall, until 31 December 2009, ensure own funds which are always
greater than the amounts indicated in Paragraphs 27, 28, and 29
of these Transitional Provisions or equivalent to them.
[29 March 2007]
26. Investment firms which apply the advanced measurement
approach for the calculation of the operational risk capital
requirement shall, between 1 January 2008 and 31 December 2009,
ensure own funds which are always greater than the amounts
indicated in Paragraphs 28 and 29 of these Transitional
Provisions or equivalent to them.
[29 March 2007]
27. Until 31 December 2007, the own funds of the investment
firm shall be at least 95 per cent of minimal own funds which are
calculated in accordance with the procedures stipulated by the
Commission for the calculation of capital adequacy.
[29 March 2007]
28. Between 1 January and 31 December 2008, the own funds of
the investment firm shall be at least 90 per cent of the minimal
own funds which are calculated in accordance with the procedures
stipulated by the Commission for the calculation of capital
adequacy.
[29 March 2007]
29. Between 1 January and 31 December 2009, the own funds of
the investment firm shall be at least 80 per cent of the minimal
own funds which are calculated in accordance with the procedures
stipulated by the Commission for the calculation of capital
adequacy.
[29 March 2007]
30. For the fulfilment of the requirements of Paragraphs 25,
26, 27, 28, and 29 of these Transitional Provisions, the
indicators characterising the investment firm shall be calculated
individually or at the consolidation group level in accordance
with Sections 123.3 and 123.4 of this
Law.
[29 March 2007]
31. Until 31 December 2007, an investment firm has the right
to prepare the credit risk and counterparty risk capital
requirement calculation in accordance with the standardised
approach laid down in Section 121 of this Law, by applying the
capital adequacy calculation procedures stipulated by the
Commission.
[29 March 2007]
32. If an investment firm uses the possibility referred to in
Paragraph 31 of these Transitional Provisions, it has the right
by 31 December 2007 to prepare the debt securities and capital
securities position risk capital requirements calculation laid
down in Section 121 of this Law according to the capital adequacy
calculation procedures stipulated by the Commission.
[29 March 2007]
33. If an investment firm uses the possibility referred to in
Paragraph 31 of these Transitional Provisions, the requirements
of Section 123.1 and 123.2 of this Law
shall not be applied until 31 December 2007.
[29 March 2007]
34. When using the possibility referred to in Paragraph 31 of
these Transitional Provisions, an investment firm shall reduce
the operational risk capital requirement laid down in Section
121, Paragraph one, Clause 4 of this Law by such an amount which
is determined as such total exposure value which is calculated in
the credit risk capital requirement in accordance with Paragraph
31 of these Transitional Provisions, in relation to the total
exposure value subject to all credit risks.
[29 March 2007]
35. If the risk-weighted exposure for all exposures is
calculated in accordance with Paragraph 31 of these Transitional
Provisions, the investment firm shall ensure the implementation
of restrictions on large exposures and restrictions on exposures
of persons related to the investment firm in accordance with the
procedures stipulated by the Commission prior to the coming into
force of these amendments.
[29 March 2007]
36. Section 124, Paragraph one, Clause 10 of this Law shall
come into force on 1 November 2007.
[29 March 2007]
37. An issuer the financial instruments of which are admitted
to trading on a regulated market shall, until 1 February 2008,
submit to the Commission:
1) internal rules of procedure developed by the issuer
regarding establishment and maintenance of the list of holders of
inside information, and also the procedures for making
transactions by persons included in the list of holders of inside
information in financial instruments or commodity derivatives of
such issuer;
2) the list of holders of inside information in accordance
with the requirements laid down in Section 86, Paragraph two and
three of this Law. Historical information on former holders of
inside information, starting from the day of establishment of the
list, and updated information on existing holders of inside
information shall be included in the list. The year and date when
a person was included on the list shall be provided to the
existing holders of inside information, the year and date when a
person was included on the list of holders of inside information
and the year and date when inside information of the issuer was
no longer available to the person shall be provided for the
former holders of inside information.
[4 October 2007]
38. Investment firms which have obtained the licence of the
Commission for the provision of investment services, and credit
institutions which have acquired the right to provide investment
services in accordance with the procedures laid down in this Law,
shall, until 1 February 2008, develop the policy referred to in
Section 124.1 of this Law in respect of the ensuring
the client status, the policy for prevention of a conflict of
interest referred to in Section 127, and the order execution
policy referred to in Section 128.3 of this Law.
[4 October 2007]
39. Investment firms which have obtained the licence of the
Commission for the provision of investment services, and credit
institutions which have acquired the right to provide investment
services in accordance with the procedures laid down in this Law,
shall, until 1 February 2008, inform the existing clients of
their status in accordance with the procedures laid Section
124.1 of this Law.
[4 October 2007]
40. Section 56.2 of this Law shall come into force
on 1 September 2008 and shall be applied to the accounting
periods which end on this date or later.
[22 May 2008]
41. A capital company the transferable securities of which are
admitted to trading on a regulated market shall apply the
provisions of Section 54.1 of this Law after
establishment of the audit committee. The capital company the
transferable securities of which are admitted to trading on a
regulated market shall elect members of the audit committee in
the nearest meeting of shareholders or members.
[22 May 2008]
42. Amendments to Section 119 of this Law shall apply to
statements which have been submitted to the State Revenue Service
on 1 July 2008 or later.
[29 May 2008]
43. If an application for an administrative act of the
Financial and Capital Market Commission has been submitted to the
District Administrative Court until 1 January 2009, a decision on
the application submitted shall be taken, and also the
administrative case initiated shall be examined and a court
adjudication in this case shall be rendered and appealed in
accordance with the provisions of the Administrative Procedure
Law.
[23 October 2008]
44. An issuer the registered office of which is in a foreign
country may prepare consolidated annual financial statements and
consolidated financial statements for interim periods of
six-months in accordance with the generally accepted accounting
principles of the Republic of India for the financial years which
began until 1 January 2015.
[8 November 2012]
45. If a notification on convening a meeting of shareholders
is announced until 31 December 2009, the provisions of this Law
which were in force until 31 December 2009 shall be applicable to
convening the meeting of shareholders, submitting of issues and
inclusion in the agenda and occurrence of the meeting or
shareholders.
[15 October 2009]
46. Until 31 December 2011, the own funds of the investment
firm which has obtained an authorisation of the Commission to
apply the internal ratings-based approach to calculation of the
risk weighted average or to apply the advanced measurement
approach to calculation of the operational risk capital
requirements, is at least 80 per cent of the minimum own capital
which is calculated by applying appropriate simpler approaches to
determination of the credit risk and the operational risk capital
requirements in accordance with the procedures for the
calculation of the minimum capital requirements stipulated by the
Commission.
[13 January 2011]
47. The requirements of Division F of this Law shall be
applicable to those contracts regarding transactions with the
financial instruments referred to in Section 3, Paragraph two,
Clause 6 of this Law which have been entered into after 1 July
2012.
[22 March 2012]
48. Until 31 December 2012, the own funds of the investment
firm which has obtained an authorisation to apply the internal
ratings-based approach to calculation of the risk weighted
average or to apply the advanced measurement approach to
calculation of the operational risk capital requirements, is at
least 80 per cent of the minimum own capital which is calculated
by applying appropriate simpler approaches to determination of
the credit risk and the operational risk capital requirements in
accordance with the procedures for the calculation of the minimum
capital requirements stipulated by the Commission.
[22 March 2012]
49. The accumulated other income referred to in Section 1,
Clause 28, Sub-clause "c" of this Law which has been reflected in
the comprehensive income statement shall be included in the
initial capital from 1 January 2015 in accordance with the
provisions for transitional period stipulated by the
Commission.
[24 April 2014]
50. The requirement referred to in Section 124, Paragraph
1.2, Clause 2 of this Law shall be applied to the
variable remuneration component which is determined not later
than with regard to results of activities in the second half of
2014 and to the fixed remuneration component in the relevant
period, irrespective of the date of conclusion of an employment
contract or an authorisation agreement.
[24 April 2014]
51. Amendments to Section 17.1, Paragraph three (in
relation to the new wording of the first and second sentence) and
Section 44.1, Paragraph four of this Law shall come
into force on 1 January 2016.
[11 June 2015]
52. An issuer whose transferable securities are admitted to
trading on a regulated market and whose home Member State is
determined in accordance with Section 3.1, Paragraph
four, Clause 2 of this Law or Paragraph six of this Section, but
who until 27 November 2015 has not informed the competent
authorities of the choice of the home Member State, shall inform
the competent authority within three months from the day of
coming into force of amendments to Section 3.1 of this
Law.
[26 May 2016]
53. The requirements of Section 56, Paragraph three of this
Law which are applicable to a capital company the debt securities
of which have been admitted to trading on a regulated market
shall be applied to annual statements of the capital company
which are prepared for the reporting period starting on 1 July
2016 or later, unless the capital company already prepares its
financial statements in accordance with Regulation No
1606/2002.
[26 May 2016]
54. Application of Section 57 of this Law which has been
reworded, and Section 57.2 shall be commenced with the
interim reports and financial information of issuers prepared for
the reporting year starting on 1 July 2016 or later.
[26 May 2016]
55. Amendments to this Law in relation to deletion of Sections
59, 85, 86, 86.1, 87, 88, 88.1, 89, and 91,
Sections 84 and 90 which have been reworded, and also amendments
to Section 148 in relation to deletion of Paragraphs three and
seven, Paragraph four which has been reworded, and Paragraphs
sixteen and seventeen of Section 148 shall come into force on 3
July 2016.
[26 May 2016]
56. [31 March 2022]
57. [31 March 2022]
58. Section 56, Paragraph one, Clause 5, introductory part and
Clauses 3 and 4 of Section 56.2, Paragraph two which
have been reworded, Section 56.2, Paragraph two,
Clause 8, Paragraph 2.1 and amendment to Paragraph
seven, Sections 56.3, 56.4 and
56.5 and amendment to Section 148, Paragraph sixteen
(liability for the failure to comply with the requirements for
non-financial statement or consolidated non-financial statement)
shall be applicable to annual statements and consolidated annual
statements starting from the reporting year of 2017 (the
reporting year which starts on 1 January 2017 or during the
calendar year of 2017).
[15 December 2016]
59. [31 March 2022]
60. Until 1 July 2019, the central securities depository and
its participant shall ensure the fulfilment of the requirements
laid down in Section 93, Paragraph two of this Law in relation to
contracts concluded between the central securities depository and
its participant.
[14 September 2017]
61. Until 31 December 2017, a participant of the central
securities depository shall be deemed as the holder of a
securities account within the meaning of the law On Personal
Income Tax whose obligation is to withhold personal income tax
from the dividends disbursed to a shareholder or an intermediary
for shares in public circulation and to transfer them into the
State budget.
[14 September 2017]
62. Members of the executive board or supervisory board of a
regulated market operator who, until 1 August 2018, have been
recognised as corresponding to the requirements of the law need
not undergo re-assessment of their conformity with the
requirements of the law.
[21 June 2018]
63. Until 3 January 2021, the clearing obligation specified in
Article 4 and the risk management procedures indicated in Article
11(3) of Regulation No 648/2012 shall not apply to such energy
derivative contracts which have been concluded by non-financial
counterparties conforming to the conditions of Article 10(1) of
Regulation No 648/2012 or non-financial counterparties which,
starting from 3 January 2018, receive a licence of an investment
firm for the first time. Such energy derivative contracts are not
deemed to be over-the-counter derivative contracts for
determining the clearing threshold referred to in Article 10 of
Regulation No 648/2012. All other requirements laid down in
Regulation No 648/2012 shall apply to energy derivative contracts
which are subject to this Transitional Provision. The exception
referred to in this Paragraph shall be granted by the Commission
and the European Securities and Markets Authority shall be
informed thereof.
[21 June 2018]
64. The board of a capital company shall develop the
remuneration policy referred to in Section 59.3 of
this Law and submit it for approval at the next meeting of
shareholders which is convened after 1 September 2019, provided
that the remuneration policy is approved and made public not
later than by 31 December 2020.
[20 June 2019]
65. A capital company shall draw up the remuneration report
referred to in Section 59.4 of this Law starting from
the financial year of 2020 (the financial year starting on 1
January 2020 or during the calendar year of 2020).
[20 June 2019]
66. A capital company shall disclose the comparison of the
changes referred to in Section 59.4, Paragraph one,
Clause 3 of this Law starting from the financial year of 2020
(the financial year starting on 1 January 2020 or during the
calendar year of 2020) and shall provide at least for such period
of the last five financial years which starts not later than on 1
January 2020.
[20 June 2019]
67. Sections 59.6, 59.7,
59.8, 59.9, and 59.10 of this
Law shall come into force on 1 September 2020.
[20 June 2019]
68. If an investment firm and credit institution are entitled,
on the day of coming into force of Section 126.3 of
this Law, to provide portfolio management services, including
shares of such joint-stock company in the portfolio the
registered office of which is in a Member State and the shares of
which are admitted to trading on a regulated market, it shall
develop and publish the engagement policy in accordance with
Section 126.3 of this Law by 1 November 2019.
[20 June 2019]
69. An investment firm and credit institution shall publish
the report referred to in Section 126.3, Paragraph
four of this Law on the implementation of the engagement policy
and the information referred to in Paragraph five starting from
2020.
[20 June 2019]
70. The central securities depository, regulated market
operator, and a data reporting service provider which is subject
to the requirement referred to in Section 147.7 of
this Law for the creation of an internal reporting line shall
create it not later than by 1 April 2020.
[12 December 2019]
71. A third-country group which includes more than one credit
institution or investment firm of a Member State and the total
asset value of which in the European Union on 27 June 2019 was at
least EUR 40 billion, and which continues its activities on the
day of coming into force of Section 111.2 of this Law
shall, in accordance with the requirements of the abovementioned
Section, establish a parent company in the European Union by 30
December 2023.
[29 April 2021]
72. The holding company referred to in Section
111.1 of this Law which carried out activities on 27
June 2019 and continues activities on the day of coming into
force of this Section shall receive a permit in accordance with
the procedures laid down in the abovementioned Section within six
months from the day of coming into force of Section
111.1.
[29 April 2021]
73. Amendment to this Law regarding the replacement of the
words "Law on the Financial and Capital Market Commission"
throughout the Law with the words "Law on Latvijas Banka", the
replacement of the words "Financial and Capital Market
Commission" throughout the Law, except for Transitional
Provisions, with the words "Latvijas Banka", amendments to the
Law regarding the replacement of the words "regulatory
provisions" throughout the Law with the word "regulations",
regarding the replacement of the word "Commission" with the words
"Latvijas Banka" throughout the Law, except for the title
"European Commission" in Section 1, Paragraph one, Clause 5,
Section 28, Paragraph four, Section 40.1, Paragraph
two, Section 63.1, Paragraphs six and seven, Section
64.3, Paragraph three, Section 126.2,
Paragraph 12.2, Section 140.1, Paragraph
two, Section 140.2, Paragraph two and Section 147, the
titles of Regulations of the European Commission, titles of
Regulations of the European Parliament and of the Council, and
also Transitional Provisions, amendments regarding the
replacement of the words "financial and capital market" with the
words "financial market" in Section 4, Paragraph five, Section
31, Paragraph two, Clause 5, Section 138, Paragraph four, Clauses
1 and 4, Section 145, Paragraph three, Section 147.1,
Paragraph three, Section 4, Paragraph one and the new wording of
the introductory part of Paragraph four, the new wording of
Section 10, Paragraph ten, amendments to Section
103.2, Paragraphs eleven and thirteen, the new wording
of Section 142.2, Paragraph seven, amendment regarding
the deletion of Section 147.3, Paragraph eight shall
come into force concurrently with the Law on Latvijas Banka.
[23 September 2021; 31 March 2022; 28 April 2022]
74. The regulatory provisions of the Financial and Capital
Market Commission issued on the basis of this Law until the day
of coming into force of the Law on Latvijas Banka shall be
applicable until the day when the relevant regulations of
Latvijas Banka come into force, but not longer than until 31
December 2024.
[23 September 2021]
75. The application of that specified in Section 56, Paragraph
seven of this Law shall commence in relation to annual statements
containing financial statements on the financial year which
starts from 1 January 2021 or during the calendar year of
2021.
[31 March 2022]
76. That specified in Section 128.2, Paragraph
7.2 of this Law shall not be applied to a trading
venue and a systematic internaliser until 28 February 2023.
[31 March 2022]
77. Section 1, Paragraph six of this Law, amendments to
Section 133.16, Paragraph nine, Section
133.16, Paragraph eleven, Clause 3, amendments to
Section 133.16 regarding the supplementation of
Paragraph thirteen with a sentence and to Paragraph fourteen, and
also the new wording of Paragraph 133.17, Paragraph
two, and amendment to Section 133.17, Paragraph five
shall come into force on 22 November 2022.
[28 April 2022]
78. The new wording of Section 1, Paragraph one, Clause 2 of
this Law, amendments to Section 1, Paragraph one, Clause 18,
amendments regarding the deletion of Section 1, Paragraph one,
Clauses 22, 23, 26, and 101 and Paragraph three, Clause 4, the
new wording of Section 1, Paragraph three, Clause 5, amendment to
Section 3, Paragraph one, amendment regarding the deletion of
Section 3, Paragraph 5.2, amendments to Section 3,
Paragraph twelve, amendment regarding the deletion of Section
3.1, Paragraph nine, amendments to Section 4,
Paragraph four, Section 4.2, amendments to Section 7,
Paragraphs one, four, and five, Section 9, Paragraphs one and
two, the introductory part of Section 10, Paragraph one, Clauses
1, 2, 3, and 4, amendment regarding the deletion of Section 10,
Paragraph one, Clause 2.1, amendments to Section 10,
Paragraphs two, three, four, five, and seven, the new wording of
Paragraph eight, amendment regarding the deletion of Section 10,
Paragraph eleven, the new wording of Section 10, Paragraph
twelve, amendments to Section 11, Paragraphs one and two,
amendments to Section 12, Paragraphs one and two, amendment
regarding the deletion of Division E.1, amendments to
Section 101, Paragraphs one and 1.1, the new wording
of Section 101, Paragraph seven, Clause 5, the new wording of
Section 102, the title of Section 103, the introductory part of
Paragraph one, Clause 5 of Paragraph one, the new wording of
Paragraph two, the new wording of Section 104, Paragraph one,
amendments regarding the deletion of Chapters VIII and
VIII.1, amendments to the title of Section 112 and
Paragraph one, the new wording of Paragraph two, amendments
regarding the deletion of Section 112, Paragraphs three, four,
five, and six, amendments to the title of Section 113 and
Paragraph one, the new wording of Paragraph two, amendments
regarding the deletion of Section 113, Paragraphs three, four,
4.1, 4.2, five, 5.1, six, seven,
eight, nine, and ten, amendments regarding the deletion of
Sections 113.4, 113.5, 113.6,
114, 115, 117, 118, 119, 119.1, 120, 121.1,
122, 122.1, 122.2, 122.3,
123.1, 123.2, 123.3,
123.4, and 123.5, the new wording of
Section 124, Paragraph one, amendments regarding the deletion of
Section 124, Paragraphs 1.1, 1.2,
1.3, 1.4, 1.5, 1.6,
and 1.7, the new wording of Section 129, Paragraph
one, amendment to Section 129.1, Paragraph nine,
Clause 2, Section 131, Paragraph 7.1, amendment
regarding the deletion of Section 133, amendments to Section
133.15, Paragraph five, Clause 3, amendments to the
introductory part of Section 138, Paragraph one, Clause 12 of
Paragraph one, the new wording of Paragraph one, Clause 20,
amendments regarding the deletion of Sections 139,
139.1, 140, 141, 141.1, and 142, amendments
regarding the deletion of Section 143, Paragraphs two and three,
amendments to Section 143, Paragraph five, amendment to Section
146, Paragraph four, amendment regarding the deletion of Section
146, Paragraph seven, Clause 6, amendments to Section 147,
Paragraph four, Clause 2, amendment regarding the deletion of
Section 147, Paragraph seven, amendment regarding the deletion of
Section 147.3, Paragraph two, amendments to Section
147.3, Paragraphs five, six, and seven, the new
wording of Section 147.6, Paragraph one, Clause 1 and
Clause 12, Section 147.7, Paragraph one, amendments to
Section 147.8, Paragraphs three and four, amendments
to Section 148, Paragraph eight and Paragraph 8.1,
Clause 1, amendments regarding the deletion of Section 148,
Paragraphs fifteen and 15.2, amendments to Section
150, Paragraph four, amendment regarding the deletion of Section
150, Paragraph five, and amendment regarding the deletion of
Division I shall come into force concurrently with the Law on
Investment Firms.
[28 April 2022 / The abovementioned amendments shall be
included in the wording of the Law as of 31 May 2022.]
79. Amendments to Section 16.1 and Section
133.11, Paragraph three, Clause 3 of this Law shall
come into force on 1 January 2024.
[26 October 2023]
Informative Reference to European
Union Directives
[9 June 2005; 15 June 2006; 29
March 2007; 4 October 2007; 22 May 2008; 29 May 2008; 26 February
2009; 15 October 2009; 13 January 2011; 22 March 2012; 24 April
2014; 11 June 2015; 26 May 2016; 15 December 2016; 21 June 2018;
28 February 2019; 20 June 2019; 17 June 2020; 29 April 2021; 30
September 2021; 31 March 2022; 28 April 2022; 16 June
2022]
This Law contains norms arising from:
1) Directive 2003/71/EC of the European Parliament and of the
Council of 4 November 2003 on the prospectus to be published when
securities are offered to the public or admitted to trading and
amending Directive 2001/34/EC;
2) [4 October 2007];
3) [4 October 2007];
4) European Parliament and Council Directive 95/26/EC of 29
June 1995 amending Directives 77/780/EEC and 89/646/EEC in the
field of credit institutions, Directives 73/239/EEC and 92/49/EEC
in the field of non- life insurance, Directives 79/267/EEC and
92/96/EEC in the field of life assurance, Directive 93/22/EEC in
the field of investment firms and Directive 85/611/EEC in the
field of undertakings for collective investment in transferable
securities (Ucits), with a view to reinforcing prudential
supervision;
5) [21 June 2018];
6) Directive 2001/34/EC of the European Parliament and of the
Council of 28 May 2001 on the admission of securities to official
stock exchange listing and on information to be published on
those securities;
7) Directive 2002/47/EC of the European Parliament and of the
Council of 6 June 2002 on financial collateral arrangements;
8) Directive 2002/87/EC of the European Parliament and of the
Council of 16 December 2002 on the supplementary supervision of
credit institutions, insurance undertakings and investment firms
in a financial conglomerate and amending Council Directives
73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and
93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European
Parliament and of the Council;
9) [21 June 2018];
10) [21 June 2018];
11) [21 June 2018];
12) Directive 2004/25/EC of the European Parliament and of the
Council of 21 April 2004 on takeover bids;
13) Directive 2004/109/EC of the European Parliament and of
the Council of 15 December 2004 on the harmonisation of
transparency requirements in relation to information about
issuers whose securities are admitted to trading on a regulated
market and amending Directive 2001/34/EC;
14) [21 June 2018];
15) Directive 2004/39/EC of the European Parliament and of the
Council of 21 April 2004 on markets in financial instruments
amending Council Directives 85/611/EEC and 93/6/EEC and Directive
2000/12/EC of the European Parliament and of the Council and
repealing Council Directive 93/22/EEC;
16) Directive 2006/31/EC of the European Parliament and of the
Council of 5 April 2006 amending directive 2004/39/EC on markets
in financial instruments, as regards certain deadlines;
17) Commission Directive 2006/73/EC of 10 August 2006
implementing Directive 2004/39/EC of the European Parliament and
of the Council as regards organisational requirements and
operating conditions for investment firms and defined terms for
the purposes of that Directive;
18) Commission Directive 2007/14/EC of 8 March 2007 laying
down detailed rules for the implementation of certain provisions
of Directive 2004/109/EC on the harmonisation of transparency
requirements in relation to information about issuers whose
securities are admitted to trading on a regulated market;
19) Directive 2006/46/EC of the European Parliament and of the
Council of 14 June 2006 amending Council Directives 78/660/EEC on
the annual accounts of certain types of companies, 83/349/EEC on
consolidated accounts, 86/635/EEC on the annual accounts and
consolidated accounts of banks and other financial institutions
and 91/674/EEC on the annual accounts and consolidated accounts
of insurance undertakings;
20) Directive 2006/43/EC of the European Parliament and of the
Council of 17 May 2006 on statutory audits of annual accounts and
consolidated accounts, amending Council Directives 78/660/EEC and
83/349/EEC and repealing Council Directive 84/253/EEC;
21) [21 June 2018];
22) Council Directive 86/635/EEC of 8 December 1986 on the
annual accounts and consolidated accounts of banks and other
financial institutions;
23) [21 June 2018];
24) Directive 2007/44/EC of the European Parliament and of the
Council of 5 September 2007 amending Council Directive 92/49/EEC
and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC
as regards procedural rules and evaluation criteria for the
prudent assessment of acquisitions and increase of holdings in
the financial sector;
25) [16 June 2022];
26) Directive 2009/111/EC of the European Parliament and of
the Council of 16 September 2009 amending Directives 2006/48/EC,
2006/49/EC and 2007/64/EC as regards banks affiliated to central
institutions, certain own funds items, large exposures,
supervisory arrangements, and crisis management;
27) [21 June 2018];
28) Directive 2010/73/EU of the European Parliament and of the
Council of 24 November 2010 amending Directives 2003/71/EC on the
prospectus to be published when securities are offered to the
public or admitted to trading and 2004/109/EC on the
harmonisation of transparency requirements in relation to
information about issuers whose securities are admitted to
trading on a regulated market;
29) Directive 2010/78/EU of the European Parliament and of the
Council of 24 November 2010, amending Directives 98/26/EC,
2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC,
2004/109/EC, 2005/60/EC, 2006/48/EC, 2006/49/EC and 2009/65/EC in
respect of the powers of the European Supervisory Authority
(European Banking Authority), the European Supervisory Authority
(European Insurance and Occupational Pensions Authority) and the
European Supervisory Authority (European Securities and Markets
Authority);
30) Directive 2013/36/EU of the European Parliament and of the
Council of 26 June 2013 on access to the activity of credit
institutions and the prudential supervision of credit
institutions and investment firms, amending Directive 2002/87/EC
and repealing Directives 2006/48/EC and 2006/49/EC;
31) Directive 2014/59/EU of the European Parliament and of the
Council of 15 May 2014 establishing a framework for the recovery
and resolution of credit institutions and investment firms and
amending Council Directive 82/891/EEC, and Directives 2001/24/EC,
2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU,
2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and
(EU) No 648/2012, of the European Parliament and of the
Council;
32) Directive 2014/51/EU of the European Parliament and of the
Council of 16 April 2014 amending Directives 2003/71/EC and
2009/138/EC and Regulations (EC) No 1060/2009, (EU) No 1094/2010
and (EU) No 1095/2010 in respect of the powers of the European
Supervisory Authority (European Insurance and Occupational
Pensions Authority) and the European Supervisory Authority
(European Securities and Markets Authority);
33) Directive 2013/34/EU of the European Parliament and of the
Council of 26 June 2013 on the annual financial statements,
consolidated financial statements and related reports of certain
types of undertakings, amending Directive 2006/43/EC of the
European Parliament and of the Council and repealing Council
Directives 78/660/EEC and 83/349/EEC (Text with EEA
relevance);
34) Directive 2013/50/EU of the European Parliament and of the
Council of 22 October 2013 amending Directive 2004/109/EC of the
European Parliament and of the Council on the harmonisation of
transparency requirements in relation to information about
issuers whose securities are admitted to trading on a regulated
market, Directive 2003/71/EC of the European Parliament and of
the Council on the prospectus to be published when securities are
offered to the public or admitted to trading and Commission
Directive 2007/14/EC laying down detailed rules for the
implementation of certain provisions of Directive
2004/109/EC;
35) Directive 2014/57/EU of the European Parliament and of the
Council of 16 April 2014 on criminal sanctions for market abuse
(market abuse directive);
36) Directive 2014/56/EU of the European Parliament and of the
Council of 16 April 2014, amending Directive 2006/43/EC on
statutory audits of annual accounts and consolidated
accounts;
37) Directive 2014/95/EU of the European Parliament and of the
Council of 22 October 2014 amending Directive 2013/34/EU as
regards disclosure of non-financial and diversity information by
certain large undertakings and groups;
38) Directive 2014/65/EU of the European Parliament and of the
Council of 15 May 2014 on markets in financial instruments and
amending Directive 2002/92/EC and Directive 2011/61/EU;
39) Commission Delegated Directive (EU) 2017/593 of 7 April
2016 supplementing Directive 2014/65/EU of the European
Parliament and of the Council with regard to safeguarding of
financial instruments and funds belonging to clients, product
governance obligations and the rules applicable to the provision
or reception of fees, commissions or any monetary or non-monetary
benefits;
40) Directive (EU) 2016/1034 of the European Parliament and of
the Council of 23 June 2016 amending Directive 2014/65/EU on
markets in financial instruments;
41) Directive (EU) 2017/2399 of the European Parliament and of
the Council of 12 December 2017 amending Directive 2014/59/EU as
regards the ranking of unsecured debt instruments in insolvency
hierarchy;
42) Directive (EU) 2017/828 of the European Parliament and of
the Council of 17 May 2017 amending Directive 2007/36/EC as
regards the encouragement of long-term shareholder
engagement;
43) Directive (EU) 2019/2034 of the European Parliament and of
the Council of 27 November 2019 on the prudential supervision of
investment firms and amending Directives 2002/87/EC, 2009/65/EC,
2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU;
44) Directive (EU) 2019/878 of the European Parliament and of
the Council of 20 May 2019 amending Directive 2013/36/EU as
regards exempted entities, financial holding companies, mixed
financial holding companies, remuneration, supervisory measures
and powers and capital conservation measures;
45) Directive (EU) 2019/879 of the European Parliament and of
the Council of 20 May 2019 amending Directive 2014/59/EU as
regards the loss-absorbing and recapitalisation capacity of
credit institutions and investment firms and Directive
98/26/EC;
46) Directive (EU) 2020/1504 of the European Parliament and of
the Council of 7 October 2020 amending Directive 2014/65/EU on
markets in financial instruments;
47) Directive (EU) 2021/338 of the European Parliament and of
the Council of 16 February 2021 amending Directive 2014/65/EU as
regards information requirements, product governance and position
limits, and Directives 2013/36/EU and (EU) 2019/878 as regards
their application to investment firms, to help the recovery from
the COVID-19 crisis;
48) Directive (EU) 2019/2177 of the European Parliament and of
the Council of 18 December 2019 amending Directive 2009/138/EC on
the taking-up and pursuit of the business of Insurance and
Reinsurance (Solvency II), Directive 2014/65/EU on markets in
financial instruments and Directive (EU) 2015/849 on the
prevention of the use of the financial system for the purposes of
money-laundering or terrorist financing;
49) Commission Delegated Directive (EU) 2021/1269 of 21 April
2021 amending Delegated Directive (EU) 2017/593 as regards the
integration of sustainability factors into the product governance
obligations.
The Law shall come into force on 1 January 2004.
The Law has been adopted by the Saeima on 20 November
2003.
Acting for the President,
the Chairperson of the Saeima, I. Ūdre
Rīga, 11 December 2003
1 The Parliament of the Republic of
Latvia
Translation © 2024 Valsts valodas centrs (State
Language Centre)