BULGARIA Law and Practice Contributed by: Konstantin Vassilev and Kiril Kirkov, Vassilev & Partners Law Firm
1. Corporate Governance Requirements 1.1 Corporate Forms and Governance Requirements Bulgarian law recognises several commercial busi - ness forms, but corporate practice is concentrated mainly around limited liability companies and joint- stock companies. The limited liability company may be incorporated as a multi-member company (OOD) or as a single-member company (EOOD). It is the most common vehicle for private businesses, subsidiaries, family-owned com - panies and small or medium-sized enterprises. It has a simple governance structure: the general meeting of quota-holders, or the sole owner in an EOOD, takes ownership-level decisions, while one or more manag - ers conduct the company’s business and represent it externally. The statutory minimum capital is EUR1. The joint-stock company may be incorporated as a multi-shareholder company (AD) or as a single-share - holder company (EAD). It is generally used for larger businesses, regulated activities, capital-intensive projects and companies intending to raise funding from a broader investor base. Its minimum capital is EUR25,000. An AD may have either a one-tier system, with a board of directors, or a two-tier system, with a management board and a supervisory board. This is the required form for Bulgarian companies whose shares are admitted to trading on a regulated market. Other forms are available but less common. A sole proprietor is a natural person registered as a merchant and has unlimited personal liability. General partner - ships, limited partnerships and partnerships limited by shares are recognised but used selectively. The variable capital company is a newer flexible form designed mainly for small and growth companies, including start-ups. The European Company is also available under the applicable EU framework and Bul - garian company law. For non-public companies, the main source of cor - porate governance rules is the Commerce Act, sup - plemented by the company’s articles of association or statute. These documents regulate the allocation
of powers, management and representation, quorum and majority rules, transfer restrictions and internal approvals. For public companies and issuers, the Public Offering of Securities Act is the central governance statute. It is supplemented by capital markets legislation, Financial Supervision Commission ordinances, market abuse rules, stock exchange rules and directly applicable EU legislation. Companies with publicly traded shares must be organised as joint-stock companies. They are subject to additional mandatory rules on board composition, independent directors, investor relations, shareholder meetings, disclosure, remuneration, significant and related-party transactions, major shareholding noti - fications and takeover protections. 1.2 Corporate Governance Legislation and Regulation Corporate governance in Bulgaria is based on statu - tory law, constitutional documents, capital markets regulation, sector-specific rules and soft-law stand - ards. For private companies, the Commerce Act governs incorporation, capital, corporate bodies, representa - tion, shareholder and quota-holder rights, transfor - mations, liquidation and insolvency-related corporate matters. A company’s articles of association or statute are equally important in practice because they set the company’s internal governance rules within the limits of mandatory law. For public companies and issuers, the framework is more detailed. The Public Offering of Securities Act is supplemented by the Markets in Financial Instru - ments Act, the Financial Supervision Commission Act, market abuse legislation, Financial Supervision Commission ordinances and directly applicable EU rules, including the Market Abuse Regulation and the Prospectus Regulation. The Accountancy Act and the Independent Financial Audit and Sustainability Assurance Act are important for larger companies, public-interest entities and issu - ers. They regulate financial reporting, management
67 CHAMBERS.COM
Powered by FlippingBook