Latvia's Ministry of Finance proposes letting supervisory boards appoint audit committees at public interest entities

Latvia's Ministry of Finance has drafted amendments to the Financial Instruments Market Law that would let shareholders in public interest entities delegate the appointment of audit committees to the entity's supervisory board where one exists, instead of requiring election only by the shareholder meeting. The change is intended to reduce duplicated procedures, simplify the formation of audit committees and lower administrative burden, while leaving shareholders free to appoint the committee themselves if they prefer. The ministry said the institutional and functional independence of audit committees, and their role in overseeing financial reporting, internal controls and external audit, would remain unchanged. The draft also shortens the eligibility restriction for audit committee candidates by cutting from three years to two years the period during which a candidate must not have had an employment relationship with the relevant public interest entity, with the stated aim of widening the pool of qualified finance specialists. In Latvia, public interest entities mainly include locally listed companies, credit institutions, insurers, investment service providers and other entities covered by the Audit Services Law. The ministry estimates that larger entities could save about EUR 35,000 to EUR 75,000 a year in administrative costs, and the Cabinet is due to consider the amendments on 19 May.