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.
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.
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