This newsflash covers novelties and trends in the field of board member liability. Initially it was stated that on 1 January 2015, new amendments to the Latvian Insolvency Law come into force setting liability of management board members for non-submission of accounting documents to the insolvency administrator. However currently there is a draft law submitted to the Parliament in order to postpone the effective date to 01.03.2015.

The current year has brought new amendments to the Commercial Law. These mainly refer to the company liquidation procedure. Additionally, the Commercial Law now contains a new procedure for suspending operations of a commercial entity. The amendments also set limits on a natural person doing business or occupying certain positions following decisions during criminal proceedings or proceedings involving administrative violations.

Generally speaking, wrongful trading is the special form of liability where a director of a company is liable for damages towards the creditors for the mismanagement of an insolvent company.

A special feature of the institution of wrongful trading is, that it may give rise not only to the liability of the director of the company but also to the liability of the director, management, employee of the parent company or even of the grandparent company (so called shadow director).