SKA Monthly Newsletter 2015/10

September 25, 2015

Changes in Legislation
The Cabinet of Ministers Has Approved Amendments in Energy Law
On 15 September 2015 the Cabinet of Ministers approved amendments to the Energy Law. Amendments have been made to reform of the natural gas market. They intend to set out requirements and obligations to the participants in the natural gas market in an open market environment and to eliminate risks related with the use of strategically important natural gas delivery systems for political purposes.
According to the draft law, the natural gas market will be completely liberalized by 3 April 2017 which means that henceforth prices will be determined by mutual agreement between the seller and the end user. Despite the changes the transmission and distribution tariffs of natural gas for legal entities as well as for natural persons will continue to require the approval of the Public Utilities Commission (Sabiedrisko pakalpojumu regulēšanas komisija). However, households will have the opportunity to choose whether  receive natural gas at tariffs determined by the Regulator (the Public Utilities Commission), or to receive gas at the market price as provided by the rules of an open market for natural gas.
Considerable importance in the draft law has been given to the creation of an independent transmission and storage system operator. Two dates have been set for the ownership un-bundling.  

By 3 April 2017 a legally independent company owning the distribution system’s assets and having at its disposal underground gas storage located in Incukalns (city where underground gas storage facilities are located) must be created.

By 31 December 2017 the operator of transmission and storage system must be independent from the JSC “Latvijas Gaze”, meaning that the owners of the company must not be associated with the JSC “Latvijas Gaze” or its shareholders. The monitoring of said process will be performed by the Regulator designated by the state, in this case, the Public Utilities Commission. (In Latvian)
Amendments to the Law on the Vehicle Operation Tax and Company Car Tax
On 15 September 2015 the Cabinet of Ministers supported amendments to the Law on the Vehicle Operation Tax and Company Car Tax. Amendments concern the increase in the tax rate for light vehicles by 7.4%, equating it with the consumer price index instead of setting the tax rate in monetary terms, as previously was the case. Likewise it has been planned to move forward with changes to payment arrangements for the vehicle operation tax beginning 1 January 2016 to 1 January 2017. Changes include the payment of a tax for a period of actual vehicle operation, contrary to the established practice in the past where the tax was calculated for each current calendar year. (In Latvian)
Judgment of the Court of Justice of the European Union (CJEU) on the Nationality Requirement for Notaries
The Court of Justice of the European Union (CJEU) on 10 September 2015 has taken a decision against the Republic of Latvia concluding that the nationality requirement for access to the profession of notary in Latvia is inconsistent with European Union Law.
Likewise the CJEU has reached a decision in cases on the nationality requirement for notaries in other European Union (EU) Member States. In all cases judgments have been the same. Until now judgments have been made with regard to 8 EU Member States: Belgium, France, Luxembourg, Austria, Netherlands, Germany, Portugal and Greece.
CJEU based its decision on the fact that none of the actions performed by notaries can be classified as direct and specific exercises of official authority. Latvia has maintained its position that a notary in the exercise of their duties takes part in the exercise of state authority. The case was reviewed on the merits and a fine for the non-conformity of former Latvian legal norms with EU Law has not been imposed.
For the judgment, please see:
Judgment of the Administrative Regional Court on the Decision of the Competition Council to Impose a Penalty on the National Gas Supplier
On 1 October 2013 the Latvian Competition Council issued a decision regarding the violation of the Competition Law by the JSC “Latvijas Gaze”. The case concerned the application of unfair practices to consumers of natural gas who wished to conclude new natural gas supply agreements, but who were denied the opportunity until they had paid the former user’s debts, if any. JSC “Latvijas Gaze” was ordered to stop the use of such unfair practices, and was also fined for said practices EUR 1.6 million. 
JSC “Latvijas Gaze” appealed the decision of the Competition Council. On 2 September 2015 the Administrative District Court concluded that the objections raised by JSC “Latvijas Gaze” in its appeal against the Competition Council are not valid. The Court also decided that the fact that “Latvijas Gaze” is a participant in a regulated market does not justify the abuse of a dominant position by applying unfair trade practices to the consumers of natural gas.
Credit Institutions Will Have to Inform the State Revenue Service Regarding Suspicious Transactions Related to Taxes
On 15 September 152015 the Cabinet of Ministers approved amendments to draft laws which create an obligation for credit institutions and payment service providers to inform the Latvian State Revenue Service (VID) of suspicious transactions related to taxes. 

Amendments have been introduced with the aim to reduce the number of offences directly attributable to tax evasion. With the entry into force of said amendments information regarding offences available to The Office for Prevention of Laundering of Proceeds Derived from Criminal Activity (Noziedzīgi iegūtu līdzekļu legalizācijas novēršanas dienests) henceforth will also be available to the State Revenue Service (VID). The changes made imply a preventive action which should help to achieve better results in the fight against crimes attributable to suspicious transactions regarding taxes.  The amendments are scheduled to enter into force on 1 January 2016. (In Latvian)
SKA News
New Employees Join Spigulis & Kukainis Team
We are pleased to announce that in July of 2015 Attorney at Law Ms. Anna Pauconoka and Junior Associate Ms. Anete Kleinberga joined the “Spigulis & Kukainis” team!
Rigas Farmaceitiska Fabrika Shares Removed from the Baltic Secondary List
We inform you that on 3 September 2015 stock exchange NASDAQ OMX Riga delisted 507 000 JSC “Rigas farmaceitiska fabrika” bearer shares setting the date of 4 September 2015 as the last trading day for said shares. 

Company shareholders decided to delist shares based on the issuer’s, JSC“Rigas farmaceitiska fabrika”, request after the office had successfully ensured the execution of a mandatory takeover bid of JSC “Rigas farmaceitiska fabrika” shares by providing the legal services to execute said takeover process. 

As a result of the mandatory and final takeover bid SIA “CAPITAL HOLDING” now owns 2 093 000, or 100%, of the company’s shares which entitles JSC  “Rigas farmaceitiska fabrika” to leave  the regulated market.

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