BULGARIA Law and Practice Contributed by: Nikolay Zisov, Svetlina Kortenska, Deyan Terziev and Teodora Peycheva, BOYANOV & Co.
• undertakings whose transferable securities are admitted to trading on a regulated market in a member state of the European Union. When referring to International Accounting Stand- ards, the local Accountancy Act refers to International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and related interpretations (SIC-IFRIC interpretations), as amended and interpret- ed by the International Accounting Standards Board. 10.4 Disclosure of Transaction Documents In cases where a bid is required to be made public, the tender offer should be registered with the Com- mission and could only be published if the Commis- sion does not issue a temporary prohibition within 20 working days after filing. If the Commission does not issue the relevant act within this term, it is considered that the FCS has rendered a tacit acceptance of the tender offer. This requirement does not apply to a tender offer for the acquisition and/or exchange of shares with voting rights of a company which has its registered office in another member state and whose shares are admitted to trading on a regulated market in Bulgaria, which has been subject to approval by the competent authority of that member state. Furthermore, regarding the general obligation to issu- ers to disclose regulated information, it is required that information relating to the material transactions of the public company for the relevant reporting period should be properly disclosed in the notes to the finan- cial statements.
are also general obligations to act in a transparent and non-deceptive manner to all third parties. On the other hand, it should also be noted that, according to Bulgarian law, the care of a good mer- chant is considered to be higher due diligence care, requiring the possession of relevant commercial expe- rience, professional knowledge and skills. As regards the protection of the company’s interest, the board members are not entitled, on their own behalf or on behalf of others, to carry out commercial transactions, to participate in commercial compa- nies as unlimited partners, or to act as procurators, managers or members of the boards of other compa- nies or co-operatives where a competing activity of the company is carried out. This restriction does not apply if permitted under the company’s by-laws or by express consent. In relation to any business combinations, board mem- bers should not disclose, including after termination of mandate, the information which has come to their knowledge when it could affect the activities and development of the company. 11.2 Special or Ad Hoc Committees Bulgarian law does not impose an obligation to estab- lish special or ad hoc committees in the context of mergers, acquisitions or other business combina- tions, but it is permitted for boards to constitute such committees when deemed beneficial to the interests of sound corporate governance. These committees may be instituted as a best practice measure or pur- suant to internal governance policies. Although their formation is relatively uncommon, companies could nonetheless create ad hoc committees to conduct independent evaluations of business combinations, particularly where potential conflicts of interest risk compromising the objectivity of the board’s decision- making process. 11.3 Board’s Role As described in 11.1 Principal Directors’ Duties , Bul- garian law provides that members of the board (with either a one-tier or two-tier structure) should perform their duties with the care of a good merchant, meaning also that each member of the board should act in the
11. Duties of Directors 11.1 Principal Directors’ Duties
According to the Commerce Act, board members, including the principal directors, should perform their duties with the care of a good merchant in the interest of the company and all shareholders. This obligation refers to all duties of board members, including when entering into any kind of business combination. Their duties are owed to company shareholders, but there
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