Henceforth, the UR shall not verify the rights arising from categories of shares or stocks

When receiving a company’s documents for registration, the Register of Enterprises (UR) primarily verifies whether they formally comply with the requirements of regulatory enactments. Private agreements between shareholders (e.g., specific provisions on the sale of shares) are generally not evaluated by the UR; however, an assessment of the compliance of the provisions included in the articles of association does take place. As of January 1, 2026, amendments to the Law “On the Register of Enterprises of the Republic of Latvia” (the Law on the Register of Enterprises) are in effect, establishing that categories of shares or stocks—and specifically the rights arising from them—are excluded from the UR’s verification and competence. Thus, the legislator has clearly reinforced the right of company shareholders to independently determine the content of the rights of various categories of shares or stocks.

The UR reviews all documents submitted for registration in accordance with Section 14 of the Law on the Register of Enterprises. A state notary of the UR verifies the compliance of the submitted documents with the requirements of regulatory enactments and the documents already in the registration file. At the same time, the second paragraph of this Section specifies areas that the UR does not verify. Until now, the UR did not evaluate private law agreements of company shareholders or stockholders included in the articles of association pursuant to Section 144, Paragraph one, Clauses 8 and 9 of the Commercial Law, such as special conditions for the alienation of shares or other mutual agreements between founders.

Henceforth, company shareholders have the right to independently decide on the introduction of specific categories of shares or stocks and the content of the rights arising from them, thereby strengthening the principle of private autonomy existing in private law. Given that the scope of rights assigned to categories of shares or stocks is not information to be entered into the commercial register, the UR has no grounds to perform a verification of the provisions of the articles of association regarding the scope of rights assigned to each category of shares or stocks.

These changes have significant practical importance, considering the previous practice of the UR. Previously, several cases were identified where the UR performed a substantive evaluation of the rights assigned to each category of shares, including rejecting company applications in situations where different categories of shares were deemed too similar in terms of the scope of assigned rights. In practice, such an approach restricted the freedom of private law agreements and the expression of will of company shareholders.

At the same time, it should be noted that the wording of Section 14, Paragraph two of the Law on the Register of Enterprises included in the amendments does not include a full reference to Section 144, Paragraph one, Clause 4.1 of the Commercial Law. The text of the amended provision includes a reference only to the rights arising from each category of shares or stocks, whereas aspects such as the number of shares and the nominal value of each category of shares still fall within the competence of the UR and are evaluated when reviewing documents submitted for registration. This is explained by the fact that information regarding the amount of the company’s share capital, the number of shares, and their nominal value is entered into the commercial register; therefore, the state notary of the UR is obliged to verify this information even in cases where it relates to specific categories of shares.

Additionally, it should be noted that, despite the amendments, several restrictions applied by the UR still remain. One of the most significant recent issues, the resolution of which still awaits a uniform interpretation by the UR or the courts, is the regulation of disproportionate dividend distribution in a company’s articles of association. Although it follows from case law that the articles of association must provide for a precise procedure for the payment of disproportionate dividends, there are currently no uniform criteria regarding the requirements expected by the UR. It should be emphasized that the amendments have not affected this issue—perhaps the full implementation of the principle of private autonomy in this aspect is still awaiting its practical realization.