Latvia Plans to Ease Capital Contributions: A Win for Start-Ups and SMEs

The Parliament of Latvia has proposed the latest amendments to the Commercial Law of Latvia (hereinafter – Amendments) that aim to substantially simplify the procedure for the valuation of the property contributions (contributions in-kind) in the share capital of limited liability companies (SIA). These Amendments aim to reduce procedural burdens, cut costs for entrepreneurs, and open the door to faster, more flexible capital formation — especially for small and medium-sized enterprises (SMEs) and high-growth start-ups.  

Prior to the proposed Amendments, entrepreneurs in Latvia faced disproportionate compliance obligations when making property contributions to a company’s share capital. Even modest contributions — such as a shareholder loan or the assignment of a receivable converted into shares — were often subject to expert valuation, a process both costly and time-consuming. The new framework introduces a tiered approach that aligns legal requirements with the real-world value and risk profile of the contribution.

Key changes:

1. Contributions up to EUR 25,000: Founder-Certified Valuation

Where property contributions do not exceed EUR 25,000 and represent less than 50% of a company’s share capital at incorporation, the valuation may be performed by the founders of the company themselves with no external expert required.

2. EUR 25,000–50,000: Valuation by the Management Board

In case of a share capital increase, if property contributions fall between EUR 25,000 and EUR 50,000 and remain under half of the total capital, the Management Board may provide the valuation opinion. This authority was previously reserved for external experts only.

3. Loan Claims: No More Valuation Obligations

The most impactful change for start-ups — property contributions in the form of claims arising from non-cash loan agreements, such as bank transfers — will be exempt from valuation altogether, whether during incorporation or capital increase. This will remove the current significant procedural burden of requiring a valuation opinion.

Key benefits:

Together, these changes are expected to deliver several practical advantages for entrepreneurs and company founders:

• Faster formation and capital increases.
• Lower legal and administrative costs.
• Greater financing flexibility – more easily convert shareholder loans and receivables into equity.
• Enhanced competitiveness – strengthening Latvia’s appeal to foreign investors through modern, business-friendly legal practices.

As competition for capital, talent, and innovation intensifies across the Baltics and Europe, these proposed Amendments represent a meaningful step toward modernising Latvia’s business environment. By streamlining capital contribution procedures, the reform positions Latvia as a more agile and investor-friendly jurisdiction — precisely the kind of environment today’s entrepreneurs, SMEs, and start-ups are looking for. However, these changes are not yet in force and remain pending legislative approval.

For more information on the current requirements and available options for making share capital contributions — including the legal framework for contributing crypto-assets — we invite you to read our earlier article, Crypto Assets for Share Capital Payments: A New Option for Companies in Latvia.

The information in this article is general and not intended as legal advice. It is for information purposes only and does not reflect any particular situation or circumstances and should not be relied upon as a source of professional advice.

Authors: Jēkabs Senkāns, Lawyer in SIA “Venture Faculty” and Daiga Kroņkalne, Legal Assistant in SIA “Venture Faculty”