BULGARIA Law and Practice Contributed by: Konstantin Vassilev and Kiril Kirkov, Vassilev & Partners Law Firm
reports, statutory audit, audit committees, sustain - ability reporting and sustainability assurance. The National Corporate Governance Code is the main Bulgarian soft-law instrument. It applies primarily to public companies, companies planning to go pub - lic and certain public undertakings on a “comply or explain” basis. Internal policies, board rules, commit - tee rules, conflict-of-interest policies, disclosure pro - cedures and remuneration policies are also important governance tools. 1.3 Companies With Publicly Traded Shares Companies with publicly traded shares are subject to a mandatory governance regime under the Public Offering of Securities Act, in addition to the general company law rules. A Bulgarian public company must be organised as an AD and its shares must be dema - terialised. A public company may use a one-tier or two-tier board structure. At least one third of the members of the board of directors, or of the supervisory board in a two-tier structure, must be independent. Public com - panies must also appoint an investor relations director under an employment contract to support commu - nication with shareholders, investors, the Financial Supervision Commission and the regulated market. Public companies are subject to enhanced general meeting rules. The notice and materials must be avail - able at least 30 days before the meeting through the required statutory channels, including the Commercial Register, the Financial Supervision Commission, the regulated market and the company’s website. Share - holders may ask questions, vote by proxy and, if they meet statutory thresholds, propose agenda items. They must disclose annual and half-yearly finan - cial reports, corporate governance information and, where applicable, sustainability information and related assurance. The annual activity report must include a corporate governance declaration covering the governance code applied, deviations from that code, internal control and risk management systems, takeover-related information, board functioning and diversity policy information.
Public companies must adopt and apply a remunera - tion policy for members of their management and supervisory bodies. They are also subject to special approval rules for significant transactions and related- party transactions. Certain transactions above statu - tory thresholds require prior general meeting approval, a reasoned report to shareholders and restrictions on voting by interested shareholders. Shareholders must notify the Financial Supervision Commission and the company when their voting rights reach, exceed or fall below 5% or a multiple of 5%. Mandatory tender offer obligations may arise when a person acquires more than one third, 50% or two thirds of the votes, subject to statutory conditions. The statutory requirements under company, capital markets, accounting, audit and market abuse legisla - tion are mandatory. The National Corporate Govern - ance Code is voluntary in form but important in prac - tice because public companies must disclose whether they apply a governance code and explain deviations. 1.4 Stock Exchange Requirements Developments The main recent listing-related development is the EuroBridge Market segment of the Bulgarian Stock Exchange. It was developed with Deutsche Börse and allows Bulgarian companies to have their shares traded simultaneously on the regulated markets in Bulgaria and Germany. EuroBridge does not create a new Bulgarian statu - tory board model. Public companies may continue to use either a one-tier or a two-tier structure. The main implications are practical: issuers must manage cross-market compliance, bilingual disclosure, euro- denominated trading and payments, reporting time - tables, corporate event announcements and investor communications for a broader international investor base. The Premium Equities Segment of the Bulgarian Stock Exchange also remains relevant for issuers seeking a higher market profile. Its requirements relate to free float, market capitalisation, trading activity and disclosure, including disclosure in English. These requirements do not directly alter board composition,
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