Upon the request of the Regional Administrative Court, at the meeting of chairs of Senate’s departments it was decided on the appropriate procedure for examining an application regarding the decision of the board of the regulated market operator “Nasdaq Riga” AS (hereinafter – the stock-exchange) on the recognition of the decision of the board of the issuer "Ditton pievadķēžu rūpnīca" AS (hereinafter – the applicant) to delist the shares from the regulated market as unlawful and revocation thereof.

In the specific case, the board of the stock-exchange delisted the applicant's shares from the regulated market, because, in its opinion, the applicant failed to comply with the terms of the listing agreement concluded between the stock-exchange and the applicant by failing to pay the debt for the services provided after repeated requests by the stock-exchange. In accordance with the rules of the stock-exchange, which the applicant has undertaken to comply with, this is a ground for delisting the shares from the regulated market.

After the conclusion of the agreement and the admission of the transferable securities to the regulated market in accordance with the Financial Instrument Market Law (FITL), the Bank of Latvia has the right to carry out checks to verify compliance with the requirements of the FITL and, if necessary, to refer the matter to a court or to cooperate with other authorities. However, this does not mean that the Bank of Latvia would have the right to issue an administrative act on the decision of the regulated market operator to exclude securities from the regulated market, as the Bank of Latvia issues administrative acts in cases provided for by law. In the specific case where the stock-exchange has excluded the applicant's shares from the Second List of the stock-exchange due to failure to pay the listing fees, the Bank of Latvia does not have the right to issue an administrative act, as such a right is not provided for by law.

In Latvia, a system has been established for the trading of financial instruments whereby the regulated market operator (the stock-exchange) organizes the relevant regulated markets on the basis of private law and is available to issuers for the establishment of such private law relationships. At the same time, it is not excluded that a regulated market operator – a commercial entity – may in certain cases be assigned a public law task. However, in this case, there was no basis for concluding that the regulated market operator had acted outside the scope of the organisation of the regulated market for which the stock-exchange, as a commercial entity, had been established.

By delisting the shares from the stock-exchange list due to applicant’s failure to fulfil the terms of the listing agreement concluded between the stock-exchange and the applicant, the stock exchange's board acted within the framework of the organization of the regulated market, i.e., within the framework of private law relationship. Consequently, the dispute is not subject to review in accordance with the procedure laid down in the Administrative Procedure Law, but in accordance with the procedure laid down in the Civil Procedure Law. The administrative case is to be discontinued, but in the present case this does not prevent the applicant from seeking protection of their rights before a court of general jurisdiction.

 

Information prepared by

Rasma Zvejniece, Head of the Division of Communication of the Supreme Court

E-mail: rasma.zvejniece@at.gov.lv, telephone: +371 67020396, +371 28652211