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Dealing with capital shares, i.e. disposal, payment, registration, etc. shall be regarded as commercial activities and shall be governed by the norms of the Commercial Law

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Dealing with capital shares, i.e. disposal, payment, registration, etc. shall be regarded as commercial activities and shall be governed by the norms of the Commercial Law
The Senate, with the decision of assignments hearing, dated 30 September 2021, in Case No. SKC-647/2021 has refused to initiate cassation proceedings, thus the judgment of the Court Panel of Civil Affairs of the Riga Regional Court, dated 20 January 2021, entered into force, to reject the claim for the annulment of the capital shares’ purchase agreement and for the deletion of entries in the Enterprise Register.

There was a dispute in the case regarding the prescription period for the transaction of acquisition of capital shares with a natural person and commercial transactions (Sections 389 and 406 of the Commercial Law) regarding application of the prescription institute for a natural person’s claims against merchants. When considering the claims of merchants, the case-law recognises that only one counterpart of the transaction must be a merchant in order to apply the rules of the Commercial Law (e.g. the Senate judgments in cases No. SKC-104/2019 and No. SKC-109/2019), however, in the current case the claim was brought by a natural person regarding liabilities of the capital shares’ purchase agreement.

The Court Panel of Civil Affairs has joined the argument of the defendant’s party advocate that the founder and sole shareholder of the capital company has disposed of capital shares in the interests of commercial activity, namely by selling capital shares to another capital company for the purpose of carrying out further economic activities, thus dealing with capital shares, i.e. disposal, payment, registration, etc., is considered to be commercial activity and governed by the Commercial Law provisions.

Specifications in the present case had fundamental grounds for rejecting the claim, since the case-law has recognised that, in the event of adjudication of a case on its merits, the court finds that the prescription period laid down in civil law provisions had expired, it should only examine the matter of suspending or termination of the prescription period, while avoiding to examine the factual circumstances and to assess the evidence, since a prescription period constitutes an independent basis for rejecting the claim. (see, e.g., the Senate judgment in Case No. SKC-100/2010)

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