Seedcamp is an early stage mentoring and investment program that engages startups through monthly Seedcamp Events, where entrepreneurs present their companies, network, receive mentoring, and compete for investment by Seedcamp. For more information, visit: http://www.seedcamp.com/ On the 18th April, 2012, Kamen Shoylev, NBLO’s Managing Partner, participated as a mentor at Seedcamp Tallinn.

Commenting on the event, Mr Shoylev remarked: “I was very impressed with the high level of entries to the event. I found the experience of mentoring the entrepreneurs very rewarding, and look forward to following their progress.”

The event featured 8 local teams as well as representatives from Latvia, Lithuania, Finland, and Russia. Participants from Sweden, France, UK and Slovenia also attended. NBLO is delighted to continue to support such events.

For entrepreneurs interested in finding out how to safeguard the legal interests of your company, please get in touch. We would be happy to discuss the specific details of your case.

The Conference opened with a speech from the President of Bulgaria, Mr Plevneliev, and consisted of seven panels which covered:

• The Development of the Trans – European Transport Network and priority axes for the territory of Bulgaria. Environmental infrastructure of Bulgaria 2012.

• The Strategic development of Railway, water and air transport in Bulgaria.

• Development of the project of expansion of Sofia subway – stages 1, 2 and 3.

• Development of the road infrastructure of the Trans – European and the basic national transport axes, funded by OP Transport, 2012.

• Development of major airports and seaports in Bulgaria.

• Bulgarian water legislation and water policy.

• Waste management in Bulgaria.

Overall, the picture painted of Bulgarian Infrastructure was an overwhelmingly positive one:  for example, the Road Infrastructure panel focused on  260 km of highway currently under construction. By the end of 2020, an additional 460 of strategic roads are to be finalised. With regards to railway infrastructure, projects to be concluded by 2020 include the modernisation the following railways: Sofia – Plovdiv; Plovdiv – Burgas; Sofia station and Sofia intermodal terminal and Ruse intermodal terminal; the rehabilitation of Ruse- Varna and Mezdra – Gorna Oriahovica; the modernisation of Ruse – Dimitrovgrad and the overall modernisation of railway stations.

Legal Developments: Public-Private Partnerships

An important and persistently occurring theme throughout the conference was a shift towards using public-private partnerships as a means to raise necessary funds in all spheres. At present, the PPP draft legislation in Bulgaria is in Parliament for consideration, but it is predicted that it will come into force by the end of 2012.

The introduction of the new legislation presents a good opportunity for private companies in the sector.

For a detailed analysis of Infrastructure legislation and information on the legal services we offer, please consult our NBLO Infrastructure Note.

The evening was a wonderful chance to connect with other Oxbridge and LSE alumni working in Sofia and for the community to mingle. Several exciting new initiatives were discussed, and the event is a good basis future cooperation between alumni groups. We hope that this is one of many events of its type, building on the success of the first.

If you are interested in hearing about future events, or would like to share your ideas about  talks, conferences or other ways to draw on the network, please get in touch with Denny Jicheva (denny.jicheva@newbalkanslawoffice.com).  We would be delighted to hear from you.

To read about how we can assist you, and for a list of our family law services, please download our brochure. The brochure is available by clicking here:

NBLO – FAMILY LAW SERVICES

Alternatively,  Contact Us directly.

The second part of the note describes the treatment of awards and determinations by other bodies. This includes a discussion of how various regulatory, quasi-judicial and self-regulatory bodies and interact with court judgments, as well as considering how “Brussels regime” judgments are enforced.

To download our note, please click here:

NBLO ENFORCEMENT CLIENT NOTE

NBLO also contributed a section on enforcement and civil remedies from a foreign investor perspective in the Invest Bulgaria Agency’s “Legal Guide to Bulgaria”.  This was published as a chapter in editions in 2010 and 2011. The contribution can be found here:  http://investbg.government.bg/

Topics the event will cover:

• Avoiding or mitigating disputes in large scale international construction projects
• Advanced topics in standard international contract terms in construction and infrastructure
• Relations between consortium partners in infrastructure consortia
• The impact of EU law on the development, structure and progress of construction and
infrastructure projects in Bulgaria

The event is essential for senior executives in the industry. Places for this free event are limited to 25, with a maximum of two delegates per company.  The event will be held in English, and  a Bulgarian simultaneous translation will be provided.

Reserving your place is easy: simply write directly to New Balkans’ Law Office’s Manager, maria.taneva@newbalkanslawoffice.com or call us at: +359 2 403 1900.

The Seminar took the format of a 40-minute presentation followed by Q&A and a networking opportunity, between 16:00 – 17:30 on the 31st October, and was held at the Hilton Dubai Creek.

“Bulgarian Investment Climate” complemented other talks at the 2011 IBA Conference. The event aimed to offer guidance on the investment climate in Bulgaria to lawyers whose clients have an interest in the Central and Eastern European region or who are more broadly interested in using the modern legal framework and the cost advantages of Bulgaria to step into the EU marketplace.

Topics the seminar covered included:

1. Stable political environment & low country risk (NATO membership; EU membership)
2. Macroeconomic and financial stability
3. EU’s most favourable taxes:

• 10% corporate income tax rate; 0% in high-unemployment areas
• 10% flat tax rate on personal income
• 2-year VAT exemption for imports of equipment for investment projects over € 5 million, creating at least 50 jobs
• opportunity for R&D expenditure write-off
• 5% withholding tax on dividends and liquidation quotas (0% for EU tax residents)

Should you have any questions about the event, simply e-mail Miss Denny Jicheva, Business Development Associate at denny.jicheva@newbalkanslawoffice.com.

According to the new paragraph 8 of Article 25, NNBA, when performing legal acts for the creation, transfer, amendment or termination of property rights in real estates for consideration, the parties are obliged to declare in the contract itself that the price specified in it is the agreed consideration. Pursuant to the new para. 9 of Article 25, NNBA, where the total consideration due under the contract exceeds BGN 10,000, any payment of that consideration must be effected either to a special bank account of the notary, or to a bank account chosen by the parties.

A new Article 25a, NNBA institutes such notary public-held accounts.

The terms on which payments by the parties are made to the special notary bank account and the deposits are then disbursed are set out in a written agreement between the notary and the parties to the contract.

Such accounts are protected from enforcement for obligations of the notary.

These new provisions correspond to recommendations of the European Commission to Member State governments to legislate for the prevention of money laundering through property transactions, as well as for tackling corruption and property fraud. The changes also prevent concealing the real consideration. In turn, this cures evasion of local taxes payable upon acquisition of real estates and improves the quality of market information.

Less obviously, the changes in the NNBA would help in proving the authenticity of effected payments, as well as the receipt of the agreed price by the party to the contract. This should reduce litigation, enhance the legal certainty of the property transactions and the legitimate expectations of the interested persons.

In previous proceedings before it, the Commission had denied that the hospital had acted as a data controller in relation to its patients’ records, within the meaning of the Bulgarian Personal Data Protection Act (“PDPA”). Consequently, the Commission had proceeded to deny that the PDPA imposed obligations on the hospital to ensure the exercise of the Applicant’s usual rights under art. 26 of PDPA .

The hospital had earlier refused requests to provide the medical records twice, claiming invalidity of the requests to it, but without specifying. The Supreme Administrative Court found that after two express but unreasoned refusals to provide the medical records, the arguments of the hospital as to irregularity were spurious. A request for disclosure could be either valid or invalid, but with valid requests capable of being defective. The fact that the request had been refused twice indicated that the data controller had accepted its validity, but had found it defective. If it had been defective, the correct procedure for the data controller should have been to request the removal of the defects, following which the data controller should have considered the request on its merits.

The failures to instruct the Applicant individual how to remove the supposed irregularity and to provide the file, were found to have constituted violations of the Applicant’s rights under art. 26 PDPA and the following.

Bulgarian data protection and the assistance granted by the regulator – the Commission – is still in a nascent state. Applications by patients for the disclosure of their medical records in particular are often treated timidly, partly because of a domestic paternalistic tradition in medical care. The sound decision of the Supreme Administrative Court is thus a welcome addition to the jurisprudence in this area.

Yoana Ivanova, an associate, and Svetlyo Ivanov, of counsel, represented the Applicant (on her own behalf and on the behalf of her infant child).

The beneficiaries of this species of right may only be sports federations, and the right permits only the construction of sport buildings and/or facilities. The right to build can be of no greater than 30 years’ duration. To take advantage of the right, a sports federation needs to meet the requirements in para. 2 of article 50(g)(ie, “г”). The beneficiary would need to complete construction and obtain a usage permit for the structure and/or facility within 5 years of the grant of the right.

Although the right is granted free of charge, all planning, design, construction and usage permit application costs have to be borne by the sports federation. The sports federation is not entitled to transfer the right to build in any way whatsoever and may not dispose of the building and/or facility during the duration of the right to build. The right to build cannot be used to secure the contractual obligations of the federation or third parties either (which is a less understandable restriction which surely minimises the range of efficient uses which the beneficiary could make). The beneficiary must cover the costs of reversion of title to the state or municipality on the termination of the contract establishing the right to build.

It remains to be seen to what extent this will permit an optimisation of financing arrangements for sports facilities, but it would certainly be capable of assisting those sports federations which are able to mobilise state support in order to make lawful arrangements where they would not otherwise be able to.

Another interesting amendment to PESA in 2010 was the new para. 3 in Article 35 (d) (“e” in the Bulgarian text). According to it, a sportsman or woman may now be represented by a range of other agents (including an attorney-at-law, parent or spouse) in negotiations over transfer rights, while previously such representation was only permitted to a registered specialist intermediary.

Given the large number of practising Bulgarian attorneys in particular, we fully expect this to have a liberating effect on the local transfer marketplace, as well as on some outbound transfers.

Follow-up edit: Capital has just published a Special Report on sports infrastructure and sports property development (in Bulgarian only).

A new law (the Limits to Cash Payments Act 2011 (“LCPA”)) was enacted on February 22, 2011, and is already in force. LCPA mandates that payments must be made either by bank transfer, or by a deposit into a payment services provider’s account followed by an onward payment from that provider’s account to the intended beneficiary.

The LCPA applies to all payments in excess of Lv 15,000 (some €7,670) or their equivalent in another currency.

The prohibition is intended to catch also series of contractually linked payments (eg, a series of instalments of the purchase price of a property, or a series of monthly rental payments on a property). Although each payment may itself be below the threshold, when together they exceed Lv 15,000 (€7,670) the payments are caught by the LCPA. All payments under the contract would need to be made in the prescribed manner, starting with the first of the instalments.

Exemptions

The following are expressly exempted:

- withdrawals and deposits of cash out of/into one’s own current bank account(s) as well as accounts held by certain dependants or persons in the care of the drawer/depositor (payments in and out of the bank account of any other persons need to be made by bank transfer from another bank account);

- transactions by those trading in foreign currency;

- certain transactions with the Bulgarian State;

- employment and related remuneration;

- payments by cheque or payments in lieu (datio in solutum).

The stated aim of the Act is to channel into the formal economy payments now in the grey economy. By encouraging transparency in respect of transactions, the government also hopes to increase tax revenue. (See the Directions issued by the Ministry of Finance on the application of the Act (in Bulgarian only)).

Use Cash at Your Peril

The penalties for breach of the new rules are staggering: 25% of the amount transacted where the offender is an individual, and 50% of the amount where legal persons are concerned, with the fine doubled for second and subsequent violations.

The penalty is borne by the payor and/or by any person who permits a breach to occur (it remains to be seen how far the courts would recognise accessory liability for those that may be said to have merely permitted by not facilitated a breach).

Practical Points to Note

Property Owners/Renters

An overseas seller/buyer of a Bulgarian property would be affected by the new Act in relation to the purchase money where the purchase money is paid entirely within Bulgaria. Because of the requirement of Bulgarian property law that property transactions be completed at local notary offices, this would generally apply to purchase monies, except where the buyer and seller agree to exchange it outside of Bulgaria (before or exceptionally, immediately after, the property sale).

However, rent paid in cash by a renter of a Borovetz chalet to its owner at a meeting in Birmingham would not be affected by the Act.

Consultants/Company Directors/Shareholders

Payments due to anyone who is not an employee within the terms of the Bulgarian Labour Code (eg, a shareholder receiving a dividend) must, going forward, be transacted through the banking system where they are deemed to have occurred in Bulgaria. Companies would need to ensure they are compliant when remunerating staff or distributing to shareholders.

Conclusion

The practical effect of the Act is yet to be assessed. In residential and holiday property transactions, a large percentage of which used to see the bulk of the purchase price exchanged in cash, the law is likely to have a noticeable effect and may have the welcome consequence of providing better quality data on this market and increasing tax compliance. However, buyers and especially sellers bent on avoidance have historically used a number of avoidance techniques which may now be revived/adopted widely. These may have the further effect of raising the legal transactional risks (eg, a part of the price being paid as a fee to an offshore entity).

As with similar proscriptive initiatives, the LCPA may have a moderate effect given the persistence of the culture it attempts to change, while in the meantime generating substantial work for businesses and individuals looking to ensure compliance.

The Act would possibly make the enforcement and verification tasks of National Revenue Agency officials easier – taxpayers would no longer easily be able to plead loans, consultancy fees and similar (at least where said to have been paid domestically) as means of explaining income or outgoings – at the risk of a steep fine for failing to evidence these through banking transactions.

This typically forces the hand of the client, who may often be more concerned to proceed with his plans (and necessarily, make use of his documents) than to dispute the lawyer’s fee claims. Would clients be less amenable if they realise that such assertions by lawyers are on thinner ice in Bulgaria than they may be elsewhere?

Unlike other legal systems (eg, the rights that English solicitors may be able to exercise), Bulgarian law does not envisage the possibility of a lien by an advocate.

On the contrary, there is an express statutory obligation on advocates to return to his or her client his or her original documents, after the end of an instruction (art. 47 (1) Bulgarian Bar Act). General rules as to the right of lien would apply only insofar as they are strictly compatible with the provisions of the lex specialis, here, the special provisions of the Bar Act. The use of the rights of lien would thus appear to be strictly limited to certain cases and certain narrow conditions, interpreted against the proposer of a right of lien.

Bulgarian law in this area would appear to relate to the distinction between official and private documents.  A lawyer may be able to withhold a contract, proxy, statement, court claim or in general a private document drafted by him- or herself on his or her client’s request, in case the client has not paid.

But at the moment this document becomes “official” – in the broadest meaning of this word, namely the contract, proxy, etc. is certified by a Notary, a draft statement of claim is filed at court, the lawyer would not have the right to refuse to hand over the document to the client. The one area where a right of lien may remain as a residual right would relate to the drafts of official documents – notary deeds, writs of execution, freezing injunction order, notary certified agreement or declaration or to documents which are otherwise entirely private but would never extend to “official” documents.

To download our brochure on the citizenship, please click on the following link:

Citizenship on the basis of origin

For information on other routes to citizenship, please consult our brochures on citizenship on the basis of residence and the Investor Program in Bulgaria.

The process of deciding on the best route to citizenship, obtaining citizenship and collating the necessary documents can appear daunting. New Balkans Law Office will advise on the best solution for a client’s needs, and offer support throughout the process ensuring that the correct and full set is filed from the start. The following brochure intends to give a broad overview.

To download the brochure, please click on the link below:

The Investor Program for Residence and Citizenship

To download the brochure, click on the link below:

NBLO: Acquiring Citizenship on the basis of Residence

Similar restrictions were already in place for members of the boards of directors, the managing and the supervising boards of joint-stock companies but are now extended to private limited companies and sole traderships.

The recent changes to the Commerce Act were motivated by a desire to clamp down on non-payment of public debts. This was said to be causing losses to the state coffers and had the risk of skewing competition. One way to restrict non-compliance was to penalise individuals supervising such breaches.

Due to the introduction of the new restrictions, the Registry Agency (housing the Bulgarian company register) has announced that declarations for non-existence of the circumstances listed in Art. 21, Para 3, Art. 57, point 4 and Art. 141, Para 8, CA will be required with immediate effect for all new filings. Failure to declare accordingly would most likely lead to a refusal for registration of the filing.

Several key amendments, relevant to the photovoltaic solar sector are introduced. We focus on two: the introduction of a fixed FiT level for the life of each Power Purchase Agreement and an attempt to introduce predictability in the capacity available for grid connections by agreeing detailed plans at the beginning of each 1 year period.

We find that the approach of having a fixed price/FiT level for the life of each agreement or 25 years (whichever is the shorter) is superior to the existing approach to pricing and contributes to certainty;

We would expect that there is a substantial risk that authorities and the Regional Electricity Distributors (REDs) would experience uncertainty as to the legal position in advance of the coming into effect of the new legislation and would lose enthusiasm in implementing the existing position – we would strongly urge that the Bill contains an express statement (of the obvious point) that the applicable regime remains in place until a named future date;

As regards one of the other major innovations — the introduction of a system of advance planning of the available capacity, we find this on the whole positive but would caution as follows:

a) a flattening of the decision-making structure may be preferable;

b) a greater clarity and spelling out of procedure as to the planning process would be needed at the level of implementing regulations under the Statute (and no doubt is being planned);

c) an express obligation for REDs and SCEWR/NEC to make public specific data (eg, access maps by capacity and levels of connectible voltage) (eg, via the web as well as their offices) may be recommended;

d) mechanisms for private as well as private enforcement (carefully considered and agreed for their practicability with stakeholders) would be highly desirable.

Download the brochure here:

http://www.newbalkanslawoffice.com/english/downloads/NBLO_PRIVATE_EQUITY_BROCHURE.pdf

NBLO  also provided descriptions of the Bulgarian law relating to private equity and venture capital and, separately, of the law on enforcement and civil remedies, from a foreign investor perspective for the Invest Bulgaria Agency (http://investbg.government.bg/). These were published as chapters of the English-language ‘Legal Guide to Bulgaria’ editions in 2010 and 2011.

This seminar, co-organised with SAP Labs, examined how Intellectual Property law can be effectively used to protect the interests of Bulgarian software entrepreneurs. The Bulgarian IT sector is particularly strong, since a highly skilled, relatively inexpensive workforce has led a number of global companies to outsource software research, design and production, as well as related services, in Bulgaria. In turn, this has meant that in the last few years a wealth of companies/entrepreneurs have started up or have sought to change their models and develop their own products (over 1,100 companies in Bulgaria).

However, given the relative novelty of the market, some entrepreneurs do not make full use of the protection and benefits that intellectual property offers. The seminar offered a clear explanation of the basics of intellectual property as applied to software; offered a comparative perspective to European and US law practice and demonstrated practical case studies, including a presentation by SAP on their experience in using and leveraging IP.  The day finished with an interactive session, during which start ups can  addressed their questions to our panelists.

TOPICS THE EVENT COVERED INCLUDE:

- Explaining Copyright in Computer Programs;
- Industrial Property Rights (patents for inventions, utility models, trade marks, industrial designs);
- Rights to Confidential Information and Trade Secrets;
- The multiple national systems of intellectual property and the ways in which they interact;
- European law and practice with regard to patents;
- US law and court practice; other countries, with emphasis on UK and Bulgaria;
- The significance of IPRs in software for financing from private and government sources;

You may download a full programme of the event here: Intellectual Property Explained: Programme of the Day

Following substantial interest, we have made presentations from the day are available to download here:

SAP Presentation: SAP Presentation: Overview and Leveraging Intellectual Property Case Study

Presenters: Radoslav Nikolov (SAP Labs Bulgaria), Philip Vulev (SAP Global IP Bulgaria)

FinAnalytica Presentation: FinAnalytica: Intellectual Property and Software

Presenter: Todor Iotov (FinAnalytica, Inc.)

Patents and Intellectual Property for Software (in Bulgarian): Radi Koseva & Yordan Politov (Patent Attorneys)

Presenters: Yordan Politov (NBLO Sofia), Dr Radislava Koseva (EPO PA)

Copyright and Other Rights in Software Presentation: Copyright and Other Rights in Software

Presenter: Kamen Shoylev (NBLO London)

Software and the Legal Framework for Intellectual Property (in Bulgarian): Software and the Legal Framework for Intellectual Property

Presenter: Professor Bojana Nedeltcheva (UNWE, Sofia)

Enabling the Knowledge Enterprise (in Bulgarian):

Enabling the Knowledge Enterprise

Presenter: Stefan Kiryakov (Sirma Group Holding)

To celebrate our recent move to a new office, we are hosting an Open Evening. We would like to invite those who are interested in finding out more about our firm to meet the team informally.

The event will be held from 18:00 – 20:30 on Wednesday, 19th January, 2011. Our new office is located on 14, Shesti Septemvri Street, Sofia 1000, and refreshments will be provided. Should you require directions, please don’t hesitate to get in touch.

Reserve your place now by confirming your participation by email to: natalia.corjescu@newbalkanslawoffice.com.