“Compliance and overall tightening of regulations is definitely a hot topic in Latvia,” reports Maris Vainovskis of Eversheds Sutherland Bitans.
According to Vainovskis, companies in the finance sector and export-orientated businesses are the primary focus of increased anti-money laundering and know-your-client regulatory requirements and sanctions.
Vainovskis points to the recent efforts of the Latvian Government to “promote the attraction of SME financing.” In order to achieve this goal, the Latvian Government has “designed a local support instrument” to be included in regulations related to the EU Structural Funds. According to him, the “key objectives of the state support instrument program," include “increasing the number of local enterprises that use capital market instruments in attracting finance, ensuring access to alternative finance attraction tools, and expanding investment opportunities and encouraging institutional and private investor activity in the Latvian capital market.”
Additionally, Vainovskis says that, following the encouragement of the Foreign Investors Council in Latvia (which Eversheds Sutherland Bitans and other leading Latvian law firms participate in), the country’s Cabinet of Ministers has supported the creation of a specialized Court of Economic Affairs to “improve the business and investment environments in Latvia.” The process of creating this specialized court is expected to finish by 2021.
Finally, although Vainovskis reports that Latvia’s “overall political climate is good and stable,” he says that “there is some rumbling going on in the energy sector” connected to the “lack of clarity concerning the mandatory procurement payments system in green energy projects.” According to him, “a working group was set up last year to abolish the system of mandatory procurement payments.” Investors in the green energy production sector have already seen changes in the law that affect their business plans, and Vainovskis reports that “this prevailing uncertainty has had some negative impact on the green energy sector in Latvia.”