Improvement to right to citizenship by investment

Recent legislative changes in Bulgarian investment laws now do indeed provide a direct route to citizenship.

Foreign nationals who have obtained permanent residence on the basis of participating in an investment programme, may acquire Bulgarian citizenship via an accelerated route. They become eligible for citizenship after one year from the date of issuance of their permanent residence permit.

This is contradistinction to the more usual case, in which the qualifying period is five years.

To qualify through the new routes, candidates must make additional qualifying investments after obtaining a residence permit.

The options are as follows:

Option 1

Investing BGN 1,000,000 (approx. EUR 513,0001) or more in the shares of 1 or more companies traded on the Bulgarian Stock Exchange. Upon obtaining a permanent residence permit on this basis, investing an additional BGN 1,000,000 in the equity of a Bulgarian company, undertaking a priority investment project certified as such by the relevant agency of the Bulgarian Government (“a certified investment project”);

Option 2

Investing BGN 6,000,000 (approx. EUR 3,070,000) or more in the share capital of an unlisted Bulgarian company and upon obtaining a permanent residence permit on this basis, investing a further BGN 1,000,000 in the equity of a Bulgarian company, undertaking in a certified investment project;

Option 3

Being either:

(1) a holder of 50% or more of the shares in the capital of; or

(2) the registered Managing Director

of a Bulgarian company (“the SPV”), engaged in a certified investment project. On obtaining a permanent residence permit, the foreign national must continue to be a holder of shares in the SPV;

and

(3) the SPV completes investments during its first year, amounting to more than BGN 20,000,000 (approx. EUR 10,260,000).

A new Bill was proposed to Parliament in July, intended to amend the currently applicable Foreign Nationals in Bulgaria Act and particularly is very likely to add the following option (Option 4) to the above list:

Option 4 (proposed)

Depositing BGN 1,000,000 (approx. EUR 513,000) or more in an account held with a regulated banking institution in Bulgaria under an discretionary funds management agreement for a term of at least 5 years. After obtaining a permanent residence permit on this basis, investing an additional BGN 2,000,000 in a similar account, OR BGN 1,000,000 in the equity of a Bulgarian company, engaged in a certified investment project.

Under all accelerated options above (existing and proposed), investors may apply for naturalization without having to meet the requirements of knowledge of the Bulgarian language or of renouncement of their existing citizenship.

The application process for permanent residency could take between 3 and 5 months. Citizenship applications on the above grounds are required to be treated with priority and to be reviewed within 6 months.

Family members of permanent resident foreign nationals or of newly-naturalized Bulgarian citizens may apply for residence on the ground of their Bulgarian resident/national’s status. Certain new changes introduced in the new Bill intend to facilitate the processing of family member applications by the members of the families of investors in Bulgaria.

At present family members can apply for residence permits on separate grounds and apply for citizenship after 5 years of residency in Bulgaria.

Lastly but perhaps no less importantly to planning, investors and their family members are also excluded from the categories of permanent residents who are obliged to reside physically in Bulgaria.

We will be happy to advise in further details about residence permit application process and Bulgarian citizenship acquisition procedure as well as to assist with any of the stages.



Recent work:

Stopping the improper use of insolvency proceedings

A client of our dispute resolution team (led by Kamen Shoylev and Yordan Neshkov) was recently the subject of an indirect claim by a Bulgarian bank with which this client has been engaged in a multi-stage dispute. Unusually, the bank acted through a vehicle registered in an African state, which made an unfounded claim in the tens of millions of euros against our client and sought the commencement of judicial insolvency proceedings against this client. The offshore vehicle was chosen to isolate the bank from liability and create certain evidential difficulties for our client's representation.

NBLO succeeded in terminating the insolvency proceedings, with direct loss fully awarded to our client. A second claim to recover our client's indirect losses is currently under way.

Where targeted in this way through insolvency proceedings, a company may be prevented from trading properly (e.g., by suffering restrictions on its financing or being unable to participate in public procurement).

Through our considerable experience in insolvency litigation, both entirely domestic and where there are European and cross-border elements, we are ideally placed to assist clients in resisting such attacks and recovering the real and considerable losses that may be suffered.

© New Balkans Law Office 2019