Highlights of the proposed changes to the Bulgarian Commerce Act

Nov 08, 2016 | Insight

In line with European Union recommendations, Bulgaria has prepared a draft law amending the Bulgarian Commerce Act. The amendments are still in draft and have not been approved by Parliament. Below are the important points on this draft law.

An important rule relates to providing restructuring proceedings to companies facing financial difficulties. The proposed new legislation envisages measures to prevent the opening of insolvency proceedings of a company by reaching a stand-still agreement with the creditors. Such agreement can be reached if there is an imminent insolvency treat for the debtor company.

Such stabilisation proceedings are inapplicable to banks, insurance companies and some public undertakings.

A petition for opening of stabilisation proceedings may be filed only by the debtor company. The petition (including the restructuring plan) is reviewed and approved by the district court at the seat of the company.

Other amendments relates to providing addition conditions on transactional contracts that have the purpose to sale the business as a going concern; purchase contracts for the transfer of the shares of a limited liability company; and the resolutions of the shareholders meeting in limited liability company relating to change of shareholders, disposal of assets, appointment of managers.

The proposal requires that such documents must have the signature and content certified by a public notary in order to limit the potential fraud attached to all such operations. Under the Bulgarian law, certified documents by a public notary will require the notary to maintain one copy of the certified documents that can be checked by the officials if required. However, note that the certification of shareholders meetings may impair the free circulation of persons and the shareholders resolutions must be taken always in person so that no longer the participation over conference calls will be permitted.