Commission Report (2002): Latvia

• Progress since the last Regular Report
• Overall assessment
• Conclusions

Chapter 5: Company law

Progress since the last Regular Report

Since last year`s Regular Report, Latvia has made further progress in the areas of company law and the protection of intellectual and industrial property rights.

Regarding company law, the new Commercial Law entered into force in January 2002, providing for a transition period for companies to re-register with the state enterprise register by the end of 2004. In February 2002, the Parliament adopted amendments to the Commercial Law, providing for the protection of minority shareholders. The administrative capacity of the state enterprise register has been further strengthened; additional funds have been allocated, to upgrade the technical infrastructure and to hire 30 new employees. In 2001, 7 402 enterprises were registered in the state enterprise register, compared with 8 048 in 2000.

As regards accounting, with the entry into force of the Law on Sworn Auditors in January 2002, transposing the 8th Directive, the accounting and auditing legislation appears to be in line with the acquis. The law creates the legal basis for the professional operation of sworn auditors and the Ministry of Finance supervises the operation of the Latvian Sworn Auditor Association, the responsible authority. In order to ensure state supervision, the Ministry of Finance appointed three authorised representatives in January 2002.

In the field of industrial property rights, the administrative capacity of the Latvian patent office has been strengthened: in 2001, 26 employees were trained on the legislation and registration of trademarks, as well as on the implementation of the system of Community trademarks issues. During the reporting period, there has been a significant increase in the number of patents and trademarks granted as well as appeals against the decisions of the patent office.

In the field of intellectual property rights, two Regulations, one on the distribution of films and one on private copy, came into force in January 2002. The co-ordinating bodies in the areas of intellectual and industrial property rights continued with the implementation of approved action plans in the framework of the strategic development programme on the development and protection of intellectual property (2001--2005).

Administrative capacity in this field has been strengthened. Specialised seminars and training were organised for police, prosecutors, customs officials, and judges. These activities aim to establish a situation where each customs point has a customs official with special skills in the area of the protection of intellectual property rights. In order to streamline the enforcement of the legislation on the protection of intellectual property rights, a manual for customs officials has been prepared. Through a reorganisation, the division to combat audio, video and computer piracy was established (22 employees) in the economic police bureau in March 2002. Two additional staff positions have been allocated to the intellectual property protection division of the national customs board.

During 2001, a significant increase was observed in seizures of CDs, videotapes and software, as well as in the number of administrative protocols drawn up. However, only a small increase was reported in registered and disclosed infringement cases regarding copyrights and neighbouring rights.

No new developments are to be reported in the area of the Regulation replacing the Brussels Convention on jurisdiction and enforcement of judgements in civil and commercial matters and of the Rome Convention on the law applicable to contractual obligations.

Overall assessment

Regarding company law, Latvia's legislation is already largely in line with the acquis on accounting law, but some discrepancies still remain. Although in general progress has been made with regard to administrative capacity, almost a quarter of companies obliged to submitt their annual accounts to the state enterprise register failed to do so. Regarding accounting law, Latvia`s legislation was already broadly in line with the acquis, but remains to be amended in order to allow fair value accounting.

Also in the field of industrial property rights, Latvia`s legislation is well advanced although full alignment with the acquis remains to be achieved on patents, trademark and designs legislation. However, Latvia should be able to introduce the remaining outstanding industrial property measures in due course. In January 2002, 1 947 patents, 27 965 trademark and 488 industrial design patents were in force.

As far as intellectual property rights are concerned, Latvian legislation is largely in line with the Community acquis. However, further alignment is needed in view of the acquis on copyright in the information society as well as on resale rights.

As regards the enforcement of copyright legislation, and despite some positive trends, the high levels estimated by private industry of counterfeit and pirated music (64%), software (59%) and videos (85%) remain a matter of serious concern. The fight against counterfeiting and piracy must therefore continue to be high on the agenda. Better co-operation and co-ordination among enforcement bodies remains a matter of priority.

While administrative capacity has slightly improved, border controls still require substantial strengthening. Regarding the judiciary, even though considerable efforts have been made to train judges in various aspects of national and international intellectual and industrial property rights law, the track record of convictions in criminal cases remains rather poor. To a large extent, this is due to the outdated provisions of the current criminal procedural law and the still pending adoption of the new Law on Criminal Procedure.

With respect to the Regulation replacing the Brussels convention on jurisdiction and enforcement of judgements in civil and commercial matters, and the Rome Convention on the law applicable to contractual obligations, Latvia needs to continue preparations and draw up the necessary legislation.

Conclusions

In its 1997 Opinion, the Commission concluded that in certain areas significant progress had been made regarding the adoption of framework directives necessary for regulating a market economy. Still, further legislative efforts had to be made, especially regarding intellectual and industrial property rights, before full compliance could be achieved. The Commission added that, if the pace of harmonisation with EC legislation achieved was maintained, Latvia should have a good chance of fulfilling the legislative requirements in this field in the medium term, although some problems of implementation and enforcement might persist.

Since the Opinion, Latvia has made progress in aligning company law, and has also aligned its laws on trademarks and patents with the acquis. Latvia`s legislation in the field of industrial and intellectual property rights is also largely aligned. Furthermore, gradual progress has been made with strengthening administrative capacity.

Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia has agreed to the EU proposal regarding intellectual property rights for pharmaceutical products and Community Trademark. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.

In order to complete preparations for membership, Latvia's efforts now need to focus on ensuring full alignment with the acquis along the lines set out above, intensifying measures to combat piracy and counterfeiting and, more broadly, further improving co-ordination between enforcement bodies (customs, police, judiciary).

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