20.02.2020 Possibility to obtain financial support for listing of shares or bonds in capital markets

On 21 January 2020, the Latvian Cabinet of Ministers approved a new EU funds support program for attracting financing in capital markets by small and medium enterprises registered in Latvia for the growth and development of businesses. Within the framework of the program potential applicants will be able to apply for coverage of preparation costs for listing of a company in the capital markets. The support program shall be implemented by 30 June 2023.

What is the maximum financial support available to one company? The maximum financing available to one company is:

  • EUR 100,000 in case of share issue,
  • EUR 20,000 in case of bond issue,
  • Financial support shall cover up to 50% of the costs for attraction of capital to the capital market.

What is the total financial support available via the program? EUR 1 million, EUR 0.8 million whereof for supporting of share issue and EUR 0.2 million for supporting of bond issue.
 
For placement on which markets? AS “Nasdaq Riga” Baltic regulated market or Baltic alternative market “First North” (First North Baltic equities list).
 
When and where to apply for the financial support? Once a quarter the Central Finance and Contracting Agency (Agency) will select applications. The selection procedure will take place until free funds are available, but not later than by 31 March 2021.
 
Will there be more info available? On 18 March 2020, the Agency will hold an informative event.
 
What to submit? An applicant will have to submit to the CFCA a project application and a business plan, as determined in the regulations of the selection procedure.
 
What kind of issues of shares or bonds will be supported? The program provides support for the issue of both shares and debt securities (bonds). An issue of shares will be considered successful, if at least EUR 500,000 are raised as the result of admission of shares to any regulated market of AS “Nasdaq Riga” within a period of 2 years. While an issue of debt securities shall be considered successful, if debt securities are admitted to any regulated market of AS “Nasdaq Riga” within a period of 2 years.

What costs may be covered? The financial support may be used to cover the preparation costs for listing of a company on a capital market, as for example:

  • costs for attraction of capital (services of an organiser of an issue);
  • costs of preparation of a prospectus of issue (or preparation of the registration document, securities description and summary);
  • costs of preparation of an offer document or business description of a company;
  • costs related to a due diligence;
  • costs for legal, financial, tax, audit and other certified consultants. Other costs shall be covered from the applicant’s own resources.

Which applicants do not qualify? There are certain restrictions for an applicant to be eligible for the funding. The restrictions will apply, if an applicant:

  • does not comply with the criteria provided in Article 23 of the Law on Management of the European Union Structural Funds and the Cohesion Fund for the 2014-2020 Programming Period;
  • operates in industries provided in Article 3(3) of Regulation (EU) No 1301/2013 on specific provisions concerning the Investment for growth and jobs goal;
  • engages in the production or trade of weapons and ammunition or its business activities are related to gambling activities;
  • operates in the primary agricultural sector;
  • within the period of last 24 months has executed attraction of capital, issuing debt securities for the total amount exceeding EUR 1,000,000;
  • has not issued all the outstanding shares or bonds specified in a prospectus in the capital market by the time of submission of the project application to the CFCA.