BULGARIA Law and Practice Contributed by: Marin Sarafov, Petya Norova, Iva Georgieva and Eduard Milchev, G&P Law
Act (BIPA), which enforces that, in some cases, inves - tors’ endeavours need to undergo prior approval. An investment must undergo FDI screening when the following conditions under BIPA are met. • The investor must qualify as a “foreign investor” by being: (a) a non-EU individual and legal entity established outside the EU; or (b) an EU-based entity that is directly or indirectly controlled by a non-EU person or that acts on behalf of a non-EU person in relation to the investment; and • the transaction must qualify as a “foreign direct investment”, ie: (a) be an investment that establishes or maintains lasting and direct links between the inves - tor and a Bulgarian enterprise, not just a “one time” deal with no actual after-effect on the economy; or (b) be an expansion of an existing investment, eg, by increasing production capacity, diversifying production, or establishing a new place of busi - ness; and • it must fall within sectors or activities that may affect security or public order, eg: (a) critical infrastructure, whether physical or vir - tual, including energy, transport, water, etc; or (b) critical technologies and dual-use items includ - ing, artificial intelligence, etc; or (c) supply of critical inputs, including energy or raw materials, as well as food security; or (d) access to sensitive information, including personal data, or the ability to control such information; or (e) the freedom and pluralism of the media; and • at least one of the following quantitative or struc - tural thresholds must be met: (a) the investment results in the acquisition of at least 10% of the capital of a company operat - ing in Bulgaria, or the value of the investment exceeds EUR2 million; and/or (b) the investment results in the acquisition of at least 10% of the capital of a Bulgarian under - taking that performs hi-tech activities, regard - less of the investment amount; and/or
(c) the investment qualifies as a “new invest - ment” (eg, establishment of a new enterprise, greenfield-related expansion of an existing enterprise, diversification of production, or a major change in production processes, and the amount of the investment exceeds EUR2 million). FDI screening may still be triggered in certain special circumstances even where the thresholds are not met, such as for investments: • from Russia or Belarus; or • relating to critical oil-related infrastructure; or • cases where national security authorities request or propose screening due to potential security con - cerns. Some investors, such as those from countries that are part of the EU or the European Economic Area, enjoy a more favourable regime and are treated as low risk. 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance If the above criteria are met, the investor should file an application and supporting documents at the Bulgar - ian Investment Agency, being the point of contact for the matter. The application is reviewed by the Interagency Screen - ing Council (ISC) at the Bulgarian Council of Minis - ters in a statutory 45 calendar-day period (extendable once by up to 30 days). The ISC may either: • approve the investment; • initiate a comprehensive review; or • reject the approval altogether. What happens if the investment is rejected? In the case of a rejection, the investment is prohibited because it is considered to pose a risk to national security or public order. Depending on the timing of the rejection, if it is issued:
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