BULGARIA Law and Practice Contributed by: Nikolay Zisov, Svetlina Kortenska, Deyan Terziev and Teodora Peycheva, BOYANOV & Co.
best interests of the company and its shareholders, an obligation that could also be required in the process of active involvement in M&A negotiations. Practically, these responsibilities could generally extend to providing shareholders with a well-consid- ered recommendation regarding the proposed trans- action. In making this recommendation, the board is expected to exercise due diligence, conduct a thor- ough analysis, and base its opinion on an informed assessment of the company’s long-term interests and the transaction’s fairness. The concept of shareholder litigation challenging the board’s decision to recommend an M&A transaction is uncommon in Bulgaria. However, shareholders may still challenge a board’s decisions, particularly in high- profile or contentious transactions, on the grounds that directors failed to act in the company’s best inter- ests. Bulgarian law requires board members to disclose conflicts and refrain from decision-making where a personal interest exists. Assessing the management and disclosure of conflicts is crucial for buyers to avoid subsequent shareholder claims based on such issues. 11.4 Independent Outside Advice When referring to a takeover or a business combina- tion in Bulgaria, independent advice is usually sought in relation to legal and financial expertise, to ensure that the transaction complies with Bulgarian law and serves the best interests of shareholders.
The financial advice provided in the process of an M&A transaction often includes assessment of the transaction’s financial structure, pricing, and in some cases the fairness and competitiveness of the offer, etc. Providing a fairness opinion is not legally required under Bulgarian law, and therefore it is relatively uncommon in Bulgaria, but could be prepared for specific M&A transactions. This opinion assesses whether the transaction’s terms are financially fair to the company’s shareholders. Fairness opinions serve as a safeguard, offering directors an objective assess- ment to justify their decisions to shareholders. Other common independent outside advice which is obtained in the process of business combinations in Bulgaria relates to legal due diligence and analysis. A legal due diligence usually includes analysis of the target company from a corporate and commercial per- spective, real estate analysis, litigation and employ- ment analysis and any other analysis which is specific to the company’s business. Other analysis may include various types of technical analysis based on the structure of the planned project and the company’s commercial activity.
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