In this note, we provide an overview of the requirements an overseas-incorporated business must generally meet to open a bank account in Bulgaria. We restrict our analysis to those organisations or businesses which are structured as companies or corporations in their home jurisdiction. Bulgarian law recognises legal forms originating in other jurisdictions without discriminating in principle, but since non-corporate structures tend to be less similar across borders they call for separate treatment.
As of June 2015, there are 22 standalone banking corporations or subsidiaries and 6 branches of overseas banking institutions, which are licensed in Bulgaria. For an up-to-date list, see the Bulgarian National Bank's list of credit institutions.
All these 28 licensed banks (“Bulgarian banks”) as a rule provide current account facilities to businesses, including businesses established overseas, though they vary in the business for which they have appetite.
Regulation 3 of 16 July 2009 of the Bulgarian National Bank (“the Regulation”) sets a general framework of requirements for the opening of bank accounts. The Regulation appears to have been drafted with Bulgarian corporate law and administrative practice at the tops of the draftsmen’s minds, but is generally painlessly applied by analogy when Bulgarian banks open accounts to international businesses or organisations.
Each licensed bank has its own policy on the documents that must be supplied by an applicant and on their substance and form (and indeed this appears to be envisaged by art 5(5) of the Regulation insofar as such requirements can be additional to the list provided in the Regulation).
All banks require a specific set of information about the applicant organisation to be disclosed in the application for an account opening. First and foremost applicant companies need to produce a document proving that the company is properly registered and active at the time of the application. This document is usually in the form of a Certificate of Good Standing issued and certified by the relevant Companies Registrar but there may be other acceptable alternatives (for instance, a recent Certificate of Incorporation or similar document).
Further, corporate applicants must show who are the officers authorised to represent and bind the company and how are they authorised to act according to its Articles of the Association (or other “constitutional” documents, e.g. Charters, Bye-laws, and others). Again, this information can be contained in one of several documents and there is no strict requirement as to its layout. Thirdly, companies must declare the identity of the ultimate beneficial owners who or which control the business (typically, control is defined as a holding of shares above a 10% threshold share in the company’s capital). Each bank requires a Declaration to that effect to be signed by either an officer of the company or an authorised representative.
Finally, banks require the usual know-your-client/customer-due-diligence information about the person(s) authorised to run the proposed account.
Some banks may require that the applicant company is registered for tax purposes in its country of origin. Other institutions ask for certified incorporation documents and a list of shareholders. Importantly, if an applicant company wishes to instruct a local representative to open and/or manage the account, the applicant should present to the bank a Power of Attorney (PoA). Each bank has its own requirements as to the content of the PoA and usually requires that the PoA is as tailored to that particular bank as possible.
Given the international element, banks tend to adapt complex international customer identification and verification methods that aim to comply with evolving national and European laws. Accordingly, banks have stringent requirements on the authentication and legalisation of each document supplied in connection with the application. Applicants are well advised to choose one institution and tailor their documents accordingly.
In general, the physical presence of an international business' directors is not required at the time of application or account opening as long as certain identification requirements are met.
For further information, please contact us and we will be happy to assist you.
Asset tracing and fraud: Use of evidence from parallel criminal proceedings in a civil trial
Over the last year, we have assisted the victims of a multi-million dollar large-scale international fraud. Certain of the scheme’s operations were embedded in Bulgaria’s thriving business process outsourcing (BPO) ecosystem.
As part of our representation for clients, we have pursued a claim in a regional Bulgarian court (the organisers of the fraudulent scheme having transferred the registration of the relevant entity to a disused building in that location). We were pleased to obtain a very helpful intervention from the court at first instance including an order to append files containing a substantial amount of evidence generated through a criminal investigation into the fraud to the civil case. This provides rich evidential pickings for proceedings which are either already being conducted or are being contemplated in a range of international jurisdictions as well as Bulgaria.
© New Balkans Law Office 2018