Bulgarian corporate life: Adapting to a new informal normal

Looser requirements for publication of annual financial statements

Shortly after a state of emergency was declared in Bulgaria due to the COVID-19 outbreak, many statutory deadlines were extended, a noteworthy one being the deadline for companies to publish their annual financial statements for 2019 in the Bulgarian Commercial Register. The deadline was extended from 30 June to 30 September 2020. Further, this year the annual financial statements may be electronically signed, i.e. they do not need to bear a "wet signature" as previous years.

Another noteworthy (non-COVID-19- related) change is the new relieved proce- dure for the publication of annual financial statements in the Commercial Register which was introduced into Bulgarian law in 2020. Prior to the amendments, companies had to file all documents related to the approval of the annual financial statements by the shareholders. Documents such as invitations to convene the shareholders meeting, resolution protocol from the shareholders meeting, translated, and legalised company excerpts in case some of the shareholders were foreign companies. This created an immense administrative burden around 30 June when the annual financial statements publication is usually due. Now, with the relieved procedure, for most companies a simple form declaration signed by the management of the company is sufficient. In the declaration, the management certifies that the annual financial statements were indeed approved. No further documents need to be provided to the Commercial Register in evidence of this. Thus, the approval of the annual financial statements now largely remains an internal company matter.
In 2022 further changes which will make it easier on companies are anticipated, namely no state fee for the publication of the annual financial statements will be due. Currently the state fee is approx. EUR 10 if documents are filed electronically and approx. EUR 20 if documents are filed in hard copy.

Electronic registers as the new normal

Not only the annual financial statements need to be published in the Bulgarian Commercial Register, also share transfers, managing director appointments and dismissals, changes to share capital, and amendments to the articles of association need to the reflected in the Commercial Register. The Commercial Register in Bulgaria is organised as an electronic database, which allows not only online references in regard to the status of a company but also electronic filings. This year the Commercial Register was united with the Real Estate Register and the new electronic system was modernised to fit technological standards.

The physical offices of the two registers are still open and continue to operate, however there has been a rise in online filings, and even fewer people are choosing to physically attend the premises of the registers. Online filings have been around for quite some time, and now more people are adapting to the digital space rather than the physical one.

In absentia shareholder meetings and simple written form resolutions

In Bulgaria shareholders' meetings in limited liability companies may be held either in person, or shareholder resolutions may be adopted in absentia via circular vote provided all shareholders have agreed to the decision in writing, i.e. in the case of a circular vote, the resolution must be anonymous. So, in limited liability companies shareholders have an easy way to avoid holding a shareholders' meeting in person, which was a desired effect in 2020 (provided there is no disagreement between the shareholders).

The convenience of a circular vote is defeated with resolutions that require a specific form. For instance, some resolutions (e.g. managing director appointment) require a notary certification. This means shareholders will have to visit a notary public to adopt the resolution. A convenient way to avoid a trip to the notary is to repeal the notarisation requirement in the company's articles of association (which is permissible under Bulgarian law). Therefore, a number of corporate actions are possible without a trip to the notary if the current articles of association so provide. If the articles of association do not stipulate that simple written form is sufficient, the articles may be amended. The shareholder resolution to amend the articles of association does not require certification, but can be adopted in simple written form.

In absentia shareholder meetings and simple written form resolutions are also not really something new, simply more people are now recognising this option and taking advantage of it.

author: Gergana Roussinova