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Tuesday, 22.07.2025, 14:08
How to limit representation rights of member of the board in Latvia?
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Answer: Board member’s representation rights in relation to third persons may not be restricted (Section 223, Paragraph 3 of the Commercial law), however such restriction will have legal force in relation to the company itself.
Pursuant to Section 223, Paragraph 4 of the Commercial law, in relation to the company, the board of directors shall observe the restrictions of representation rights, which are specified in the articles of association, and by decisions of the meeting of shareholders and of the council.
If Articles of Association restrict conclusion of a certain transaction, yet board member concludes such transaction, then said transaction shall be binding on the company. However the company may raise a claim against the member of the board regarding breach of the Articles of association and recover the losses incurred.
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