BULGARIA Law and Practice Contributed by: Konstantin Vassilev and Kiril Kirkov, Vassilev & Partners Law Firm
3.5 Independence of Directors Bulgarian law does not impose a general independ - ence requirement on all private companies. Independ - ence is mandatory for public companies, where at least one third of the board of directors or supervisory board must be independent. A person will not qualify as independent in a public company if, among other things, the person works for the company, holds at least 25% of the votes directly or through connected persons, has a sustained busi - ness relationship with the company, serves in the management or supervisory body of certain connect - ed entities, or is connected with another member of the company’s management or supervisory body. For private joint-stock companies, board members must disclose certain external interests before elec - tion and notify the company if such circumstances arise later. Board members of an AD are also subject to a non-compete restriction. They may not conduct competing commercial activity or serve in manage - ment roles in competing companies unless permitted by the statute or expressly approved by the body that elected them. For public companies, conflict rules are stricter. Mem - bers of management and supervisory bodies must avoid direct and indirect conflicts of interest, disclose any conflict promptly and fully in writing, and refrain from participating in decision-making in such cases. 3.6 Legal Duties of Directors/Officers In an OOD, the manager organises and directs the company’s business in accordance with the law and general meeting resolutions. The manager represents the company externally and must act in the compa - ny’s interest. The manager may be liable to the company for dam - age caused through culpable conduct, including breach of the articles of association, general meeting resolutions, internal approval requirements or appro - priate commercial care. Board members of an AD must perform their functions with the care of a diligent merchant and in the interest of the company and all shareholders. Bulgarian case
and unlimitedly liable with the other board members for obligations arising from that representative’s acts. Public companies must have at least one third inde - pendent members on the board of directors or super - visory board. Persons convicted of intentional publicly prosecutable crimes, unless rehabilitated, are not eli - gible to serve on management or supervisory bodies of public companies. The National Corporate Gov - ernance Code also recommends transparent nomi - nation, professional competence, independence of judgement and attention to diversity. 3.4 Appointment and Removal of Directors/ Officers In an OOD, the manager is appointed and removed by the general meeting of quota-holders. In an EOOD, this power is exercised by the sole owner. Appoint - ment and removal have effect against third parties after registration in the Commercial Register. A manager may request removal from the Commer - cial Register by written notice to the company. If the company does not apply for registration within one month after receiving the notice, the manager may apply personally. In a one-tier AD, the general meeting elects and removes the members of the board of directors. In a two-tier AD, the general meeting elects and removes supervisory board members, while the supervisory board appoints and removes management board members. A board member may also request dereg - istration by written notice, if the company does not register the release within six months, the board mem - ber may apply personally. Certain persons may not act as managers or board members, including persons who have participated in management or control of companies terminated due to insolvency with unsatisfied creditors, and persons subject to special statutory disqualifications. Public company candidates must also satisfy eligibility and independence rules under the Public Offering of Secu - rities Act.
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