BULGARIA Law and Practice Contributed by: Yordan Naydenov, Mihail Vishanin and Hristian Gueorguiev, Boyanov & Co.
ing of Shareholders’ approval and publication of the policy on remuneration for Board members, as well as publication of a report on the fulfilment of the remu - neration policy, etc. 2025 saw new amendments to the POSA aiming to implement the concept of European Green Bonds and the related requirements of Regula - tion (EU) 2023/2631 in this respect. One of the most interesting developments of recent years continued to be in play in 2025. This concerns the change in practice of the tax authorities regard - ing the payment of so-called “advance dividends”, which are not regulated by the Bulgarian corporate legislation (with the exception of public companies). As a rule, the tax authorities would have viewed such distributions as “hidden distribution of profit”, which could have resulted in serious charges and penalties to the company making them. Now, the practice of the tax authorities has changed, and they have issued a formal opinion allowing companies to make advance distributions of dividends before the year end subject to certain conditions, such as the presence of a bal - ance sheet showing the existence of a profit or other distributable items as of the moment of passing of the resolution on the distribution of the dividends and the presence of an opinion from the management of the company, usually supported by an opinion from the chief accountant, that the company is also expected to make an annual profit at least equal to the advance dividends to be distributed. In order to ease the process of creation of start-ups, changes were introduced to the Bulgarian Commer - cial Law allowing for the creation of companies with variable capital. However, the rather low maximum amount of the turnover or the assets of the company, ie, not more than EUR2 million, will probably make those types of company not so popular, as above that threshold they will need to transform themselves into standard commercial companies (eg, LLCs). 2024 saw the registration of the first couple of companies with variable capital, but interest in them remained rather low throughout 2025, despite the initial expectations, especially in the IT and software development com - munity. Undoubtedly, the ongoing change that will most affect the M&A market in Bulgaria is the introduction of a
screening regime for foreign direct investments, as mentioned in 2.6 National Security Review . Another important change is the one mentioned in 2.4 Anti- trust Regulations – the ex-post call-in powers granted to the CPC. Arguably, the most significant amendment to the M&A legislation in Bulgaria that happened in recent years is the implementation of the requirements of Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Direc - tive (EU) 2017/1132 as regards cross-border conver - sions, mergers and divisions. In summary, the forms of cross-border transformations under Bulgarian law prior to these amendments were limited to two (merg - er by acquisition and merger by the formation of a new company), whereas there are now three additional options for cross-border transformations, namely full division, partial division and division by separation. The new amendments also provide that any company formed in accordance with the law of a Member State, which has not only its (i) registered office but alterna - tively its (ii) central administration or (iii) principal place of business in the same or another Member State, may be subject to a cross-border transformation with a company formed under Bulgarian law. Another amendment, which was introduced in line with the above, is the introduction of an option for a capital company (converting company) that has its registered office in the territory of Bulgaria (departure Member State) to “move” to another Member State (destination Member State) provided that: (a) the con - verting company changes its registered office to one in the destination Member State; and (b) the convert - ing company adopts the legal form of a company that was established in accordance with the legislation of the destination Member State, which needs to be one of the types listed in Annex II to Directive (EU) 2017/1132. The same applies vice versa for any com - pany formed under the laws of a Member State other than Bulgaria which intends to “move” its registered office to Bulgaria. 3.2 Significant Changes to Takeover Law In 2020, the POSA was amended to include measures for implementation of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June
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