BULGARIA Law and Practice Contributed by: Yordan Naydenov, Mihail Vishanin and Hristian Gueorguiev, Boyanov & Co.
and of the Council of 19 March 2019 establish - ing a framework for the screening of foreign direct investments into the European Union. In summary, FDI by a foreign investor (a non-EU investor, or an EU entity controlled by a non-EU entity or entities) in the areas of activity listed in Article 4(1) of the EU Screening Regulation that exceeds the threshold of EUR2 million or targets at least 10% of the share capital of a company operating in the country must be notified and approved in advance by a special Interdepart - mental Council on FDI Screening. In view of the vagueness of the legal regime and the fact that the secondary legislation, which is expected to add the necessary detail to the regime’s imple - mentation rules, is still to come, this screening regime could become a rather serious factor to be accounted for in the planning of M&A trans - actions in Bulgaria. The secondary legislation is unlikely to be adopted before May 2025, and only then will the regime become operational and the notification and suspension obligations start to apply. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments Many changes introduced in connection with the COVID-19 pandemic have become permanent. For example, the temporarily extended dead - lines for filing annual financial statements with the tax authorities and for their announcement by Bulgarian companies (from 31 March to 30 June and, respectively, from 30 June to 30 Sep - tember of the following accounting year) have become the regular deadlines. Public companies continue to have the right to conduct their gen - eral meetings without the physical presence of the shareholders, including online participation.
Some of the amendments to the Public Offering of Securities Act (POSA) in the past three years aim at transposition of the Shareholder Rights Directive II into the Bulgarian legislation. Such amendments include regulation of proxy advis - ers, General Meeting of Shareholders’ approval and publication of the policy on remuneration for Board members, as well as publication of a report on the fulfilment of the remuneration policy, etc. One of the most interesting developments of 2023 continued to be in effect in 2024. This concerns the change in practice of the tax authorities regarding the payment of so-called “advance dividends” , which are not regulated by the Bulgarian corporate legislation (with the exception of public companies). As a rule, the tax authorities would have viewed such distributions as “hidden distribution of profit” , which could have resulted in serious charges and penalties to the company making them. Now, the practice of the tax authorities has changed, and they have issued a formal opinion allowing companies to make advance distributions of dividends before the year end subject to certain conditions, such as the presence of a balance sheet showing the existence of a profit or other distributable items as of the moment of passing of the resolution on the distribution of the dividends and the pres - ence of an opinion from the management of the company, usually supported by an opinion from the chief accountant, that the company is also expected to make an annual profit at least equal to the advance dividends to be distributed. In order to ease the process of creation of start- ups, changes were introduced to the Bulgarian Commercial Law allowing for the creation of companies with variable capital. However, the rather low maximum amount of the turnover or the assets of the company, ie, not more than
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