BULGARIA Law and Practice Contributed by: Nikolay Zisov, Svetlina Kortenska, Deyan Terziev and Teodora Peycheva, BOYANOV & Co
requirements and avoid misleading information or material omissions. 6.10 Types of Deal Protection Measures Upon receiving the tender offer disclosure docu- ment, the target company’s management board is legally prohibited from taking actions that could hinder the offer’s success or impose sig- nificant costs or difficulties on the offeror. Excep- tions include seeking a competing bidder (white knight) or implementing other defensive meas- ures approved by a shareholder meeting (eg, capital increase). Such defensive measures are however uncommon in Bulgarian M&A practice. 6.11 Additional Governance Rights If a bidder fails to acquire 100% of the capital of the target company but holds 95% of the issued share capital of the target, it is entitled within the three-month period after the tender offer com- pletion to acquire the remaining shares for fair consideration under a forced (squeeze-out) sale procedure – please refer to 6.8 Squeeze-Out Mechanisms . Where a bidder fails to acquire the necessary shareholding for a squeeze-out, contractual arrangements can be employed to enhance governance rights. These may involve entering into specific agreements with other sharehold- ers which may secure specific governance privi- leges. Given the strictly regulated nature of listed companies, however, contractual instruments may not always be possible to secure govern- ance rights. 6.12 Irrevocable Commitments The offeror is not explicitly restricted under law from entering into deals with minority sharehold- ers to purchase their shares or secure commit- ments for tender offer acceptance or voting. Therefore, agreements with shareholders in
the target company that provide for irrevoca- ble commitment of shareholders to tender their shares, subject to the fulfilment of specific con- ditions, particularly regarding the offered com- pensation amount, are not uncommon. However, such deals must comply with the tender offer regulations, market abuse rules, and general legal principles, ensuring equal treatment of all shareholders in similar positions. 6.13 Securities Regulator’s or Stock Exchange Process The tender offer process involves registration with the FSC, including the submission of a dis- closure document containing key information about the offer. The FSC may impose tempo- rary or final prohibitions on the tender offer if the documentation is insufficient or if investor interests are at risk. Once approved, the tender offer is announced publicly, and the target com- pany’s management body is required to provide a reasoned opinion on the offer. The timelines are discussed in more detail in 6.14 Timing of the Takeover Offer . During the tender offer period, a shareholder holding at least 5% of the target company’s shares may make a counter- bid to acquire more than one-third of the issued share capital, provided the offer price exceeds the original tender offer price and is approved by the FSC. A counterbid triggers an extension of the offer period and allows the original offeror to improve its offer. While counterbids are legally permissible, they are rare in Bulgaria and spe- cific regulations governing them are limited. 6.14 Timing of the Takeover Offer Acquiring more than one-third, 50% or two- thirds of the total number of votes in a public company will typically trigger an obligation of the acquiring shareholder to register with FSC within 14 days after the date of exceeding the thresh-
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