Access to Justice for Business and Inclusive Growth in Latvia

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Like many OECD countries, Latvia is taking an innovative, user-centred approach to improving legal and justice services by strengthening the judicial sector and law enforcement authorities This report reviews the commercial, legal and regulatory framework in Latvia, highlighting its impact on businesses and its suitability for different forms of commercial activity. It analyses business’ legal and justice needs, and evaluates the accessibility and responsiveness of public services for business, including dispute resolution mechanisms. Finally, the report provides recommendations to help Latvia better tailor justice services to the needs of business and thus support more inclusive growth.



Reducing founding and operation costs and facilitating modern forms of business and finance in Latvia

Mandatory share capital requirements for private and public companies have an influence on the level of entrepreneurial activity. The higher the capital figure required for founders to raise when commencing business in the form of a limited liability company, the less entrepreneurial activity is to be expected. While a mandatory share capital was quite common in the 20th century in many European company laws, recent times saw many countries giving up a mandatory capital figure for private companies and lower it for public companies. Mandatory minimum capital requirements lost ground, because such a figure is arbitrary and would be either too high or too low in the large majority of cases. Where the figure is too high, it stifles business and increases the costs of founding one. Where the figure is too low, it does not have a relevant regulatory effect for creditors. In addition, research showed that offering limited liability with lower capital requirements increases the number of enterprises founded. In line with these developments in regulatory practice and science, most stakeholders interviewed in the OECD missions felt that a mandatory minimum share capital for private companies in Latvia is not necessary. In addition, the suggestion was made to reduce the capital figure for public companies.


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