Private and public limited liability companies in Latvia are required to have directors, respectively a board of directors and a supervisory board. The directors of Latvian companies play a crucial role in achieving the enterprise’s goals. Directors have certain duties and they are held liable for the decisions they make.
For detailed information about the provisions of the Commercial Code on company management, you can ask our Latvian lawyers.
The duties and responsibilities of the directors are usually stated in the memorandum or articles of association of a company. The management board of companies in Latvia is in charge with the daily operations. According to the Latvian Commercial Law, the directors must manage and ensure the operational flow in a company.
The management board must also keep the financial balance and decide in financial matters such as tax payments. According to Article 171 in the Company Law, the management board of Latvian enterprises must be loyal to the company and abide by the regulations set out by the shareholders in the general meetings.
Latvian directors are not allowed to conclude partnerships with third parties in other businesses that compete with the company the directors manage, cannot conclude any other business transactions in the same field as the company they work for or exercise the same duties in other companies in the same time.
The members of the management board usually have specific non-compete regulations they must abide by. The directors also have the obligation of not disclosing any secret of the company. According to Article 169 in the Commercial Code, members of the management board must exercise their duty with caution and diligence.
The Commercial Code in Latvia states that the directors will be held liable for any prejudices caused to the company unless they prove they have acted cautiously and diligently. Latvian directors will also be held accountable for administrative matters such failure to file documents with the Companies Register or for filing false information.
Directors of Latvian companies can also be held liable towards third parties such as creditors and further on they can be held liable for criminal matters according to the Criminal Law.
You can contact our law firm in Latvia for information about the corporate governance code and its principles.
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