BULGARIA Law and Practice Contributed by: Marin Sarafov, Petya Norova, Iva Georgieva and Eduard Milchev, G&P Law
• before the transaction is finalised – then the trans - action cannot be legally finished and is not binding; or • after the transaction is finalised – then the authori - ties may order measures to unwind or neutralise the investment. In the case of non-compliance in the procedure (eg, by providing inaccurate and/or misleading informa - tion), the investor can be subject to a fine of 5% of the investment value (but no less than approximate - ly EUR25,500), and additional restrictions may be imposed to ensure public order and national security. 2.3 Commitments Required From Foreign Investors The Bulgarian FDI screening regime expressly allows the competent authority to approve a transaction sub - ject to some conditions (commitments) where risks are identified but can be adequately managed. Although BIPA does not provide an exhaustive list of the types of commitments, these can include: • governance and control commitments – (a) restrictions on the percentage of shares that may be acquired; and/or (b) certain strategic decisions remain subject to approval by Bulgarian-resident directors; and • information and data security commitments – (a) data localisation to be done within Bulgaria or the EU; and/or (b) restrictions will be imposed on cross-border data transfers, etc. 2.4 Right to Appeal The authority’s decision can be challenged by the investor before the Bulgarian administrative court in cases of: • a refusal; • challenging the conditions imposed by the author - ity; and • certain procedural irregularities affecting the review process, as a fair procedure is guaranteed for all. The scope of the legal challenge here lies in prov - ing and providing evidence that there are no risks to
national security or public order, or that they can be adequately mitigated. Even though the courts are usually deferential on national security assessments, placing them above all else, they can annul unlawful or insufficiently rea - soned decisions. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity While Bulgarian legislation provides for several forms of legal entities, the most common types of corporate vehicles are: • the limited liability company (LLC); • the joint stock company (JSC); and • the newly implemented variable capital company (VCC). Limited Liability Company (LLC) Best use scenario: • small-to-medium enterprises; • family-owned businesses; and • project companies involving a single holding parent company. When to avoid: • for investment capital endeavours; • for heavily regulated business activity and licens - ing; and • for project companies when more participants are involved. The LLC was the conservative “go-to” option for most small and medium-sized enterprises. This was mainly for lack of a better option in the past, and is now a tradition, regardless of its faults. An LLC is a capital corporate form consisting of the traditional: (i) decision-making body (a general meet - ing (GM) of shareholders/a sole owner); and (ii) an executive management body (be it singular or col - lective).
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