BULGARIA Law and Practice Contributed by: Konstantin Vassilev and Kiril Kirkov, Vassilev & Partners Law Firm
4. Shareholders 4.1 Companies and Shareholders
Bulgarian law does not generally allow directors or managers to contract out of mandatory statutory lia - bility for their own fault. A general meeting may release board members from liability for a relevant period, but such release does not necessarily prevent minority shareholders from bringing a statutory claim on behalf of the company. Directors’ and officers’ insurance and indemnity arrangements may reduce financial expo - sure, but they do not remove statutory duties. 3.10 Payments to Directors/Officers In an OOD, the general meeting appoints the man - ager and determines remuneration. The relationship is regulated by a written management contract entered into on behalf of the company by a person authorised by the general meeting or the sole owner. In a one-tier AD, the general meeting determines the remuneration of board members who are not assigned management functions. The board determines the remuneration of executive members. In a two-tier AD, the general meeting determines the remuneration of supervisory board members, while the supervisory board determines the remuneration of management board members. Members of the board of directors, management board and supervisory board must provide a man - agement guarantee. The amount is determined by the general meeting but may not be less than three months’ gross remuneration. Public companies must adopt and apply a remunera - tion policy for members of their management and supervisory bodies. Their remuneration, tantiemes (bonus) and payment period are determined by the general meeting. Public companies must also disclose a report on implementation of the remuneration policy. A joint-stock company’s annual business report must disclose the total remuneration received by board members and certain information on their holdings, rights and participation in other companies. Failure to comply with approval requirements may lead to repay - ment claims, damages, refusal of release from liability or regulatory sanctions for public companies.
A Bulgarian company is a separate legal entity from its shareholders, quota-holders or partners. Sharehold - ers and quota-holders do not own the company’s assets directly. They hold membership rights, usually including voting rights, dividend or profit distribution rights, information rights, liquidation rights and rights to participate in key corporate decisions. The relationship is governed by the Commerce Act, the company’s articles of association or statute and, where applicable, special laws such as the Public Offering of Securities Act. Shareholder agreements may regulate relations between shareholders but can - not override mandatory law and generally bind only their parties. Ownership information is public to different degrees. For OODs, quota-holders and their participation are recorded in the Commercial Register. For private ADs, shareholders are not generally listed in full in the Com - mercial Register. Registered shares are recorded in the company’s shareholder book, while dematerial - ised shares are recorded through the Central Deposi - tory. For public companies, there is no single public full shareholder list. Significant shareholdings are dis - closed when voting rights reach, exceed or fall below 5% or a multiple of 5%. Beneficial ownership infor - mation is regulated mainly under anti-money launder - ing rules, with specific treatment for listed companies subject to EU or equivalent transparency require - ments. 4.2 Role of Shareholders Shareholders and quota-holders participate mainly through the general meeting. Their role is to decide on fundamental corporate matters rather than manage day-to-day business. In an OOD, the general meeting has a stronger prac - tical role because the manager must act in accord - ance with general meeting resolutions. In an AD, the separation between ownership and management is stronger. Shareholders act through the general meet -
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