Attorneys-at-law in Central and Eastern Europe
Substantial amendments to Latvian Commercial Code
18.06.2009
On 4 February 2009 Latvia's Constitutional Court handed down a judgment about protection of minority shareholders.
Kategorie: en_Allgemein
Erstellt von: bnt Nuernberg
Due to reform of the Commercial Law which started in Latvia in 2002, every limited company had to change their registration by 2005 and conform to new rules. In the present proceedings the plaintiff held 16% of the stock of a Latvian gas provider. The stock package was a blocking minority, because due to the statutes of the company drafted under the former legal basis a majority of 85% was necessary for certain essential issues. However, the new Commercial Law had set that 75% of all votes are required for issues such as changes in statutes or share capital and new stock issues. As a result of these changes the plaintiff's package lost its blocking quality and its value decreased significantly. Therefore the plaintiff claimed her right of ownership, which is guaranteed in the Latvian constitution. Although the Parliament, which was the defendant, rejected all reproaches, during the proceedings it changed the Commercial Law again. After these further amendments shareholders may set a higher rate of votes regarding essential issues in their statutes. The Constitutional Court considered the matter and analysed the constitutionality of the limitation in the past. In conclusion the Court found that the former rule was a disproportional limitation of the right of ownership. So the regulation which stated that a ¾ majority is necessary, but also sufficient, for decisions of essential questions, is void from the outset. The decision shows a development towards empowering the constitutional right of ownership (LV 21, 06.02.2009).
