Financial Services, Latvia, Legislation, Markets and Companies

The new bill lays down the procedures of the establishment, operations, liquidation, and management of state and municipal companies, as well as the rules on how such companies decide what goals to achieve and how their results are evaluated, Saeima Press Service told LETA. The law will come into force next January.

The new law revamps the current system where every ministry runs companies in a given area as it sees fit, whereas the new law establishes uniform procedures for more efficient management of state companies.

The law also provides that government-run companies, whose net turnover in the previous year exceeded EUR 21 million and balance sheet total was over EUR 4 million, will be permitted to set up councils of governors.

The number of council members will be set according to the Cabinet of Ministers' regulations, which will also stipulate the minimum requirements on candidates who apply for the position of a council member.

Under the new law, state and municipal companies will have to publish all latest information on their websites, as well as information about their medium-term strategies and results achieved, which is hoped to improve transparency of state companies' operations.

Work on the legislation began already in 2010 with the aim to achieve higher return on capital and higher dividends, whereas the public will be better informed about state-owned companies' management. The reform will also improve the overall business climate in Latvia.

The Economy Ministry previously explained that efficient management of state-owned companies is one of the preconditions for Latvia's accession to the Organization for Economic Cooperation and Development.

There are 70 companies that fully belong to the state and 72 that partly belong to the state, as well as 323 companies that fully belong to a local government and 282 companies that partly belong to municipalities. There are just four local governments that do not own, or are not shareholders in, any company.