Glossary

Equity (pašu kapitāls)

In Latvian: Pašu kapitāls

Accounting Updated

Equity (pašu kapitāls) is the part of an undertaking assets left after deducting all liabilities and provisions. On the balance sheet it consists of share capital, reserves, retained earnings or accumulated losses of previous years, and the profit or loss for the year.

The "Equity" section lists share capital, share premium, the revaluation reserve for long-term investments, other reserves, retained earnings or uncovered losses of previous years, and the profit or loss for the year.

Equity is not the same as share capital. Share capital is the amount fixed in the articles and registered; equity moves every year with profits and losses. The Commercial Law forbids declaring or paying dividends if equity is below share capital.

If the losses of an SIA reach at least half of its share capital, the board must report this and call a meeting of members.

Example

SIA "Ozols" has share capital of EUR 5,000, retained earnings of EUR 9,000 and a 2025 profit of EUR 4,000. Equity is EUR 18,000, more than the share capital, so the members may decide to pay a dividend out of profit.

Legal basis

This explanation is for information and does not replace tax or legal advice. The law in its current consolidated text prevails.