BULGARIA Law and Practice Contributed by: Yordan Naydenov, Mihail Vishanin and Hristian Gueorguiev, Boyanov & Co.
the sellers (used as an incentive for the management to continue working for the target together with addi - tional earn-out provisions or alone). The latter mecha - nism is also applied to bridge the gap in a deal envi - ronment or industry with high valuation uncertainty, together with other tools, such as closing accounts. 6.4 Common Conditions for a Takeover Offer The law does not regulate the possibility to include conditions in a mandatory takeover offer. Based on the legal framework, we may conclude that a takeover offer is to be unconditional. Exceptions are possible to the extent that a competition clearance or other type of regulatory approval is required for the completion of the shares through the takeover. 6.5 Minimum Acceptance Conditions As noted in 6.4 Common Conditions for a Takeover Offer , mandatory offers cannot be subject to condi - tions, save for the conditions for obtainment of regula - tory clearance. Furthermore, in those cases where a person holding at least 5% of the votes in the General Meeting of any public company seeks to acquire more than one-third of the votes in the General Meeting of said company, that person may publish a tender offer to all voting shareholders – but in such case, the offeror is obliged to purchase or to exchange, as the case may be, all voting shares held by any shareholder that has accepted the offer. Purely voluntary offers may contain conditions for any minimum threshold of acceptance. The relevant control thresholds in respect of Bulgarian public companies are as follows: • A shareholder of more than one-third, more than 50% or more than two-thirds of the votes in the General Meeting of a public company is obliged to make a tender offer to the voting shareholders for purchase of their shares. • The holding of more than 50% of the votes in the General Meeting enables the shareholder to take most of the decisions in the General Meeting, including electing members of the Board of Direc - tors or the Supervisory Board, which, in turn, elects the Management Board’s members, adoption of the annual financial statements and distribution
of dividends, amending the statutes of the public company, etc. • The holding of two-thirds of the votes present at the General Meeting enables the shareholder to make decisions relating to changes in the articles of the company. • The holding of three-quarters of the votes present at the General Meeting enables the shareholder to make the decision to conclude transactions which involve disposal or acquisition of a certain percent - age of the company’s assets, disposal of the entire ongoing concern, entering into a joint venture con - tract, or initiation of a procedure for the corporate transformation of the company. • The holding of 90% of the voting shares enables the shareholder to launch a VTO to all of the other shareholders with a view towards acquiring their shares and delisting the company (subject to cer - tain conditions). • The holding of 95% of the shares, acquired as a result of a tender offer, enables the shareholder to squeeze out all of the other the minority sharehold - ers and delist the company. 6.6 Requirement to Obtain Financing In private M&A transactions, the securing of financing may be included in the transaction documents as a condition (condition precedent) to completion of the transaction. However, the sellers would rarely agree to such a condition. The target, if in the form of a joint- stock company, is prohibited from providing financ - ing to a third party for the acquisition of the target’s shares. In public M&A transactions, the tender offer can be made only after providing an opportunity for full pay - ment or exchange of the shares to the shareholders that have accepted the offer. Furthermore, the tender offer must contain the terms and conditions under which the offeror is to finance the acquisition of the shares and provide proof of availability of the resourc - es necessary for the purchase or of the securities nec - essary for the exchange. 6.7 Types of Deal Security Measures Security measures in M&A transactions may be nego - tiated during any stage of the deal process, to the extent that they do not contradict the law or morals.
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