Convertible loan agreements and simple agreements on future equity: legal perspectives on alternative investment instruments in Latvia

Abstract

This research thesis examines the legal status and enforceability of Convertible Loan Agreements (CLAs) and Simple Agreements for Future Equity (SAFEs) within the Latvian legal system. By applying doctrinal and comparative legal research, the study explores the challenges posed by the absence of specific regulation for these alternative investment instruments in Latvia. The analysis identifies key obstacles under the Civil Law and Commercial Law frameworks, particularly regarding the enforceability of conversion rights and the procedural complexity of share capital increases. Comparative insights from the United States, United Kingdom, Austria, and Sweden reveal how other jurisdictions have adapted to the practical needs of venture capital financing. Based on these findings, the thesis proposes pragmatic measures for Latvia, including interpretative guidance, standardised templates, procedural improvements, and tax clarity. The results demonstrate that targeted reforms, rather than broad legislative changes, are necessary to foster legal certainty and promote Latvia’s competitiveness in the international venture capital landscape.