BULGARIA Law and Practice Contributed by: Nikolay Zisov, Svetlina Kortenska, Deyan Terziev and Teodora Peycheva, BOYANOV & Co.
than 3% of the shares within one year. On such occa- sions, the investor may acquire up to 3% per annum until the mandatory offer threshold is reached and a mandatory offer is placed (please see 6.2 Mandatory Offer ). The Public Offering of Securities Act (POSA) also pro- vides for the option for a person who has acquired more than 90% of the voting rights to register a ten- der offer with respect to the outstanding shares. If it does not wish to register a tender offer within 14 days of the acquisition of 90% of the voting rights, it will be required to notify the shareholders, the regulated market and the FSC of its intent to register a tender offer at least three months in advance of such future tender offer. Finally, a person who holds at least 5% of the shares in a public company and wishes to acquire more than one third of the voting rights will be entitled to publish a tender offer after clearance of the draft tender offer by the FSC. Calculation of the above thresholds is based on com- pliance with the mandatory disclosure of participation requirements under the POSA. The applicable thresh- olds for regulatory disclosure of voting right participa- tion in the general meeting of the shareholders under the POSA are set to 5% of the voting rights and per- centages multiple to five (10%, 15%, etc). These dis- closure requirements apply to both direct and indirect participation and to acquisitions of multiple investors acting in concert or under mutual control, so far as such participation shall entitle the investors to vote their rights in concert, directly and indirectly. Respectively, disclosure requirements apply to divest- ing shareholders whose participation falls below the thresholds multiple to 5%. The details on the deter- mination of the participation which require disclosure, and the disclosure procedures, are set out in a special As a rule, a mandatory offer will need to be registered with the FSC and published (absent prohibition by the FSC) in the following cases: • when an investor or shareholder acquires a control- ling stake of more than 50% of the voting rights Ordinance of the FSC. 6.2 Mandatory Offer
(directly and indirectly) or of more than two thirds of the voting rights, unless the excess shares are transferred within 14 days of the acquisition, so that the percentage falls below the mandatory offer thresholds (where both thresholds are reached, only one tender offer is filed); or • when an investor or shareholder acquires directly or indirectly more than one third of the votes in a public company, which does not have a control- ling shareholder with more than 50% of the voting rights, unless the excess shares are transferred within 14 days of the acquisition. The obligation to file a mandatory offer shall occur in all cases of direct and indirect acquisition of voting rights, including by related parties or parties acting in concert. The filing for registration of the offer will need to be made within 14 days of the acquisition of participation or within one month from the date on which the reorganisation or the capital decrease of the public company have been registered in the Commercial Register, in cases where the thresholds for mandatory offer were reached as a result of the company reorganisation or invalidation of shares due to capital decrease. 6.3 Transaction Structures The typical transaction structures are direct acqui- sitions either at the regulated market (the Bulgarian Stock Exchange) or off the floor of the exchange in OTC transactions. Complicated acquisition approach- es (such as mergers or other forms of business com- binations) are not typical, although legally feasible and practicable. 6.4 Consideration and Minimum Price Public company acquisitions in the technology indus- try are typically structured as cash rather than as stock-for-stock transactions, although the considera- tion may well be discharged by way of stock-for-stock exchange (typically in the context of public company reorganisation). Cash is permissible and can be used in a merger transaction structure as well. It is typically used in cases of voluntary or mandatory takeover/ tender offers. However, this will largely depend on the reorganisation procedures.
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