Recent amendments in the Commerce Act restrict eligibility for directorship

23 February 2011

Recent amendments (in force since the 15th of February, 2011) in the Bulgarian Commerce Act (“CA”) have created new provisions: arts 21 (3) 3, Art. 57(4) and art. 141(8) 8, CA. These introduce stricter requirements for the eligibility of procurators (прокуристи), sole traders and managing directors of private limited companies (LLCs). As a result, one will be ineligible for a procurator, sole trader and managing director of a LLC if he or she was declared bankrupt or was a director, a member of a managing or supervisory body of a company, which was itself dissolved or wound-up due to insolvency in the two years immediately preceding the date of the winding-up judgment, where such an insolvency has left any unsatisfied creditors.
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.


Recent work:

An ~€1M claim on behalf of real estate consultants

NBLO’s dispute resolution lawyers represented UK-based real estate consultants who had structured a € 40-million-worth commercial property project on the Bulgarian Black Sea coast.  In breach of an applicable contractual obligation, the consultants had not been paid the agreed success fees for their services. The then director of the defaulting party had been tragically shot dead in the meantime.

Following a hotly contested first instance, with below-the-belt attempts by the other side (the least untypical perhaps being the claim that the contract had been a forgery and a trial-within-a-trial on the issue), our team succeeded in obtaining a judgment at first instance.  The parties were then able to achieve a significant settlement.

The key skills we were able to bring to bear in providing a solution included searching for solutions across the problem domain; appropriately involving representatives of Bulgaria’s EU partner member-states to buttress judicial independence; and resourcefully dealing with heterodox approaches by our judicial opponents.

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