11 - Latvia

Summary

Introduction

Takeovers are regulated in Latvia by the Financial Instruments Market Law (Finanšu instrumentu tirgus likums), effective as from 1 January 2004. The Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids (the ‘Takeover Directive’) was implemented in Latvia through amendments to the Financial Instruments Market Law, which took effect on 13 July 2006.

The Financial Instruments Market Law provides a detailed legal framework for takeovers. In line with the Takeover Directive, the Financial Instruments Market Law aims primarily at protection of the minority shareholders of the offeree companies. Nevertheless, the Financial Instruments Market Law also provides some instruments that are favourable to the majority shareholders, such as the right of squeeze-out.

Takeovers are supervised by the Financial and Capital Market Commission (Finanšu un kapitāla tirgus komisija – the ‘Commission’), a governmental body that is charged with the task to regulate and supervise the financial instruments market in Latvia. The Commission is given a wide range of rule-making, investigatory and enforcement powers in order to meet its statutory objectives.

The Riga Stock Exchange (Rīgas Fondu birža) is currently the only regulated financial instruments market in Latvia.

Scope

The Financial Instruments Market Law regulates the conditions for and the procedure for extension of the mandatory, voluntary and final takeover bids, as well as the consequences of a failure to extend the mandatory takeover bid by a person or entity that is obliged to do so.