Latvia

• 15/10/2020
• Jurisdictions

Latvia notified Chapter VI of the National Security Law (the Latvian Act) last amended in 2018 to the European Commission. Screening is however not limited to transactions involving foreign investors The Cabinet of Ministers (the Latvian Cabinet) is the responsible authority. The Latvian Act restricts certain transactions and events involving companies of significance to national security to a prior approval requirement (licence).

Scope

The mechanism applies to commercial companies registered in Latvia which (i) are of significance to national security (electronic communications operators with a significant market power, audible broadcasting mass media whose coverage extends at least 60% of Latvian territory or audio-visual electronic mass media whose coverage extends to at least 95% of Latvian territory, transmission, distribution, storage of natural gas, electricity or thermal energy producers with an actual capacity exceeding 50 MW or transmission and distribution operators, (ii) operate a national critical infrastructure; or (iii) operate a European critical infrastructure. The Ministry of Economic Affairs maintains the list of commercial companies that qualify as “significant to national security”. Prior approval (licence) is required for transfer of (i) ownership or control in a company of significance to national security or its holding company or beneficial owner and (ii) ownership of national or European critical infrastructure.

Review criteria

The Latvian Cabinet may decide to restrict a transaction if it results in influence endangering or potentially endangering national security in a commercial company of significance to national security.

Application procedure

The foreign investor must apply to the Ministry of Economics before carrying out the transaction.

Filing fees

The Latvian Act does not provide for specific filing fees.

Implementation and government practice

Phase 1: The Latvian Ministry drafts a decision, taking into account the opinion of the State security services, and delivers the draft decision to the Latvian Cabinet for consideration.

Phase 2: The Latvian Cabinet issues a final decision, which is notified to the addressee by the Latvian Ministry. A notification is sent to the company which is the object of the transaction at issue.

Due process

The Latvian Act provides the possibility of appeal against a final decision before the Administrative District Court. A judgment of the Administrative District Court may be, in turn, appealed by submitting a cassation complaint.

Time limits

The Latvian Cabinet must take a decision within one month of receiving an application. This may be extended to four months.

Confidentiality

The Latvian Act does not provide an explicit affirmation of the Latvian Cabinet’s duty of confidentiality in handling information submitted by the investor during a screening procedure.

Sanctions

A transaction in violation of a decision prohibiting it is invalid. The Latvian Act does not provide for any further sanctions for violations of the obligations or non-compliance with the procedure.

Legislative developments

Currently, there are no legislative developments in Latvia in relation to FDI screening.

 

The above information is a summary that does not constitute legal advice. For exhaustive information, advice, and assistance please get in touch with our lawyers.