Latvia

Summary of private placement provisions for fund interests (if applicable)

The Latvian law implementing the AIFMD, i.e. the Law on Alternative Investment Funds and Fund Managers (“AIFFM”), was passed on 9 July 2013 and came into force on 8 August 2013, although certain sections of the law will only come into effect at a later date. These include sections relating to initial capital and core capital requirements (Implementing Regulation no. 575 / 2013) which came into effect on 1 January 2014.

Neither the AIFFM nor the Law on Market for Financial Instruments (“LMFI”) which regulate financial markets and the public trading of securities in Latvia include any definition of “private placement”. The notion of a private placement is generally addressed by way of specific exemptions relating to the obligation to prepare and register a prospectus, with such exemptions corresponding to the exemptions in the Prospectus Directive.

According to the terms of the AIFFM and LMFI, funds distributed in Latvia must be registered with the Financial and Capital Markets Commission. Furthermore, fund shares can no longer be distributed in Latvia on a “private placement” basis, whether the fund is targeted at qualified or other investors.

Other forms of possible placement options for fund interests outside fund regulations

As an exemption from the general authorisation rule, unsolicited business with Latvian clients does not trigger any licensing requirements. In other words, there is no restriction on the right of persons and entities domiciled in Latvia to request the services of any entity (such as a fund manager) on their own initiative (i.e. reverse solicitation).

Consequences of non-compliance with placement regimes for fund interests

Where there has been a distribution of fund interests in a manner not compliant with Latvian law, administrative penalties of up to EUR 142,300 may be imposed.

Additional regulatory sanctions can also include the prohibition on further distribution activities of the fund.

Private placement rules for non-fund investments available

The private placement of securities is regulated by the LMFI. This law provides for a number of private placement exemptions, the most important applying to offers (i) where the minimum subscription amount is EUR 100,000 per investor; (ii) where the offer is addressed to less than 150 investors per EEA Member State; or (iii) being restricted to professional investors (professional investors being in essence MiFID professional clients as per Annex II of the MiFID).