Text consolidated by Valsts valodas centrs (State Language Centre) with amending laws of

Section 335. Merging of Companies

(1) Merging of companies may take the form of acquisition or consolidation.

(2) Acquisition is a process in which a company (the acquired company) transfers all of its property to another company (the acquiring company).

(3) Consolidation is a process in which two or more companies (acquired companies) transfer all of their property to a newly founded company (the acquiring company).

(4) In the case of merging, the acquired company ceases to exist without liquidation procedures.

(5) In the case of merging, all the rights and obligations of the acquired companies are transferred to the acquiring company.

(6) In the case of merging, the stockholders, shareholders or members (hereinafter in this Part – shareholders) of the acquired companies shall become shareholders of the acquiring company.

[24 April 2008]
Section 335.¹ Cross-border Merger
(1) Cross-border merger shall be such merger of two or more capital companies, of which at least one is registered in Latvia, but the others have been established in accordance with regulatory enactments of the European Union Member States.

(2) The Member State within the meaning of this Section and Division XIX shall be a European Union Member State, the Republic of Iceland, the Kingdom of Norway and the Principality of Liechtenstein.

(3) The merger shall not be considered as a cross-border merger in such case, when there is a capital company involved, which has intended to perform collective contributions of the capital of inhabitants in accordance with the principle of risk division and the capital chares (stocks) are bought back or redeemed upon the request of shareholders (stockholders) directly or indirectly from the assets of this capital company. The activities by which the capital company wants to ensure that the market value of its shares does not differ significantly from the net value of assets thereof shall be equalled to such buy-back procedure or pre-emption.

(4) The provisions of this Law regarding the merger of capital companies shall be applied to cross-border merger insofar as it is not otherwise provided for in Division XIX of this Law. If the acquiring capital company is registered in another Member State, the capital company registered in Latvia, upon involving in the cross-border merger, shall observe the provisions of this Law regarding merging of capital companies in respect of the procedures for taking of decisions in relation to merging and protection of creditors, shareholders (stockholders), debenture holders, as well as employees of the capital company.

Section 336. Division of Companies

(1) Division is a process in which a company (the dividing company) transfers all of its property to one company or more other companies (the acquiring companies) through splitting up or divestiture.

(2) In the case of splitting up, the dividing company transfers all of its property to two or more acquiring companies and ceases to exist without liquidation procedures.

(3) In the case of splitting up, shareholders of the dividing company shall become shareholders of the acquiring company in accordance with a decision on splitting up of the company.

(4) In the case of divestiture, the dividing company transfers part of its property to one or more acquiring companies. In the case of divestiture, the dividing company shall continue to exist.

(5) In the case of divestiture, all the shareholders of the dividing company or part of them become shareholders of the acquiring company, or the dividing company may become the sole shareholder of the acquiring company in accordance with a decision on divestiture of the company.

(6) The acquiring company may be an already existing company or a company to be newly founded.

Section 337. Restructuring of Companies

(1) Restructuring is a process in which one type of company (the restructured company) is restructured into a different type of company (the acquiring company).

(2) In the case of restructuring, all the rights and obligations of the restructured company are transferred to the acquiring company.

(3) In the case of restructuring, the shareholders of the restructured company become shareholders of the acquiring company.

(4) In the case of restructuring, the restructured company ceases to exist without liquidation procedures.
Division XVI

Reorganisation Procedures

Section 338. Reorganisation Agreement

(1) If two or more already existing companies are involved in the reorganisation process, they shall enter into a reorganisation agreement (hereinafter – agreement).

(2) The agreement shall indicate:

1) the firm names, legal addresses and registration numbers of all the companies involved in the reorganisation;

2) the companies’ capital shares (stocks) exchange coefficient and the amount of premium (if such is provided for);

3) the division of the capital shares (stocks) among the shareholders of the acquiring company;

4) the provisions for the transfer of the capital shares (stocks) of the acquiring company to the shareholders of the companies to be acquired, divided or restructured;

5) the time from which the capital shares (stocks) transferred give a right to receive dividends or a profit share from the acquiring company and any provisions affecting this time (if such is provided for);

6) the rights granted by the acquiring company to stockholders of each category of shares of the acquired, dividing or restructured company, and debenture holders, who own convertible debentures;

6¹) the rights granted by the acquiring company to members of supervisory authorities and executive bodies of the acquired, dividing or restructured company, as well as to the controller of the company;

7) the day from which the transactions of the acquired, dividing or restructured company shall be included in the accounting of the acquiring company and shall be regarded as transactions of the acquiring company;

8) the consequences of reorganisation for the employees of the acquired, dividing or restructured company;

9) the activities to be conducted in the reorganisation process and the time periods for conducting them.

(3) If all the capital shares (stocks) of the acquired or dividing company are owned by the acquiring company, the information referred to in Paragraph two, Clauses 2, 3, 4 and 5 of this Section shall not be included in the agreement.

(4) If the agreement provides for conditions precedent and if these conditions do not come into effect within three years from the day when the agreement is entered into, each of the companies involved in the reorganisation process may unilaterally withdraw from the agreement notifying the other contracting parties not later than six months in advance, if a shorter period for notice is not specified in the agreement.

(5) Each of the companies involved in the reorganisation process shall submit a notice of reorganisation, with the draft agreement appended, to the Commercial Register Office. The date of registration of a draft agreement and its amendments and the number of the Commercial Register file in which the draft agreement is located shall be promulgated in the official gazette Latvijas Vēstnesis.