BULGARIA Law and Practice Contributed by: Konstantin Vassilev and Kiril Kirkov, Vassilev & Partners Law Firm
law treats this as a professional standard requiring commercial judgement, diligence, relevant information and experience. This duty applies regardless of internal allocation of functions. Non-executive members are not relieved from responsibility simply because day-to-day man - agement is assigned to executive members. They are expected to remain informed, participate in board work and oversee executive management. Managers and board members are subject to con - flict-of-interest and non-competition constraints. They should not use their position, company property, infor - mation or business opportunities for personal ben - efit at the company’s expense. Board members must also preserve confidential information obtained in their capacity as board members. In financial distress, the management body, manager or representative of the debtor must file for insolven - cy proceedings within the statutory period where the company is insolvent or over-indebted. This is a per - sonal duty and does not require prior general meeting approval. Public company directors also have capital markets duties to act in the interest of all shareholders and on the basis of reliable information. 3.7 Responsibility/Accountability of Directors Directors and managers primarily owe their duties to the company. In joint-stock companies, board mem - bers must act in the interest of the company and all shareholders. Public company board members are also required to act in the interest of all shareholders. Directors should not treat their role as a mandate from a particular shareholder, even if that shareholder nomi - nated or supported their election. Their obligation is to the corporate interest and to shareholders as a whole. Bulgarian company law does not contain a gen - eral stakeholder duty equivalent to broader models in some jurisdictions. However, other interests may become relevant under specific rules. In financial distress, creditor interests become important. Pub - lic companies also operate within disclosure, mar - ket integrity and sustainability reporting frameworks
affecting investors, creditors, employees and other stakeholders. 3.8 Breach of Directors’ Duties The company may bring claims against directors, managers or board members for damage caused by breach of duties. In an OOD, the general meet - ing may resolve to bring a claim against the manager or comptroller and appoint a representative for the proceedings. In an AD, shareholders holding at least 10% of the capital may bring an action pursuing liability of board members for damage caused to the company. In pub - lic companies, shareholders holding at least 5% of the capital have broader statutory rights to bring cer - tain company actions and claim damages caused by management or supervisory body members or by a managerial agent. The main civil consequence is liability for damages. Board members of an AD are jointly and severally liable for damage caused through their fault, subject to exoneration if they were not at fault. Other conse - quences may include removal from office, refusal of release from liability, loss of remuneration in specific cases and regulatory sanctions for public companies. A transaction entered into without required internal approval may still be valid against a good-faith third party, but the person who concluded it may be liable to the company for damage. 3.9 Other Claims/Enforcement Against Directors/Officers Claims or enforcement may also arise from manage - ment contracts, civil liability, insolvency law, tax and social security rules, capital markets legislation, mar - ket abuse rules and criminal law. For public companies, the Public Offering of Secu - rities Act adds specific governance and disclosure obligations. It also provides that a person controlling a public company, or another person using influence over a public company to procure a board member or managerial agent to act against the company’s inter - est, may be jointly and severally liable for damage caused to the company.
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