As of 3 May 2022 a new Share Repurchase Law is in force with many changes introduced.
The law was developed at the initiative of the Ministry of Finance and the Financial and Capital Market Commission (FCMC) to improve minority shareholder rights protection. At the same time, the draft law aimed to revise and make the current regulation of the Financial Instruments Market Law on share repurchase offers more comprehensible and to eliminate inconsistencies with Directive 2004/25/EC on takeover bids. To achieve this, the opinion of the FCMC and Latvian Chamber of Commerce and Industry on the draft law was requested.
As a result, the law as adopted aims to protect the interests of shareholders in connection with a share repurchase offer or a request to repurchase shares in a joint stock company whose shares are listed on a regulated market, as well as to ensure supervision of share repurchases.
Among other changes, the law eliminates shortcomings associated with application of the current regulatory framework; sets the number of voting rights for a mandatory offer and the procedure for receiving a permit from the FCMC; changes and clarifies exemptions from making a mandatory bid; changes and clarifies restrictions in the case of non-submission of a mandatory offer (including the issue of an offer); provides for a procedure to determine a responsible person for submitting the offer; clarifies shares to be disposed of within the offer; defines the widest possible circle for shareholders entitled to refer to the offer; sets deadline and procedure for submission of the offer; sets an obligation to submit the offer before reorganizing a company, as a result of which all shares are excluded from the regulated market; simplifies and clarifies procedures for exclusion of shares from the regulated market.
Additionally, the law touches upon many different issues related to remuneration for shares, voluntary share repurchase offer, competing offer, prohibition on disrupting the offer, exemption of the offer from sale of shares and restrictions on voting rights, the procedure for making an offer, final share repurchase, shareholder’s request to the controlling person to repurchase shares, shareholder’s request to the company to repurchase shares if the shareholders‘ meeting decides to exclude the shares from the regulated market and include them in the multilateral trading facility, and a shareholder’s request to the company to repurchase shares if the shares are forcibly excluded from the regulated market.
Source: Share Repurchase Law, adopted on 31 March 2022.