Latvian approach of recognising the interest of the group. Is there a need for ammendments?

Abstract

The relevance of this study is that Latvian Group of Companies Law focuses on creditor and minority shareholder protection, less concerned with pursuing the interest of the group. That raises the question of whether centralised management can be incorporated. Additionally, creditor and minority shareholder protection are exposed to specific issues. The limited scope of the duty to compensate the losses of an accounting year, absence of direct liability of the parent company and difficulties to determine disadvantageous transactions and other detrimental measures are concerns in creditor protection. Minority shareholder protection has been criticised regards future profits, an amount payable for indemnity and a mechanism applicable for calculation for the redemption of stocks (capital shares). The main problemsidentified in the research paper: are the effectiveness of the establishment of centralised management; direct liability of a parent company; exit and buy-out rights of minority shareholders. The research paper undertakes the following tasks: 1) to examine a parent company’s right to give instructions in Group of Companies Law; 2) to analyse a parent company’s and its lawful representative liability in Group of Companies Law; 3) to examine minority shareholder protection, which is not members of the group, in Group of Companies Law; 4) to compare results of previous tasks with German and Portuguese group law and French Rozenblum doctrine. The research paper concludes that there is no need to amend the Group of Companies Law because exposed inefficiencies can be fixed by advancing case law. Moreover, the research paper proves the effectiveness of the German model of group law. The novelty of the analyzed topic is manifested in the fact that there is a shortage of case law and the present literature on Group of Companies Law does not cover the issue of the recognition of the interest of the group. The methodology will be that of legal doctrinal research, legal theory method, the reform agenda research and comparative analysis