In a long-awaited stride towards aligning with European Union regulations, the Bulgarian Ministry of Law introduces reforms enhancing cross-border transactions. The Bulgarian Ministry of Law has unveiled a legislative proposal to amend the Bulgarian Commerce Act, heralding a new era for cross-border transactions involving Bulgarian and EU companies. This move is poised to revolutionize the landscape for businesses, paving the way for more fluid, cross-border transformations, mergers, spin-offs and separations, thereby fostering a more integrated European business environment.
More specifically, the Ministry of Law has published for public consultation a draft bill amending the Commerce Act in this regard on the national website for public consultations. All interested parties may submit their opinions by 8 April.
Embracing European Integration
At the heart of this legislative overhaul is the adoption of Directive 2019/2121, which amends Directive (EU) 2017/1132 concerning certain aspects of company law. This directive aims at facilitating cross-border operations of companies within the EU, ensuring that the freedom of establishment, a cornerstone of EU law, is upheld. The proposed changes to the Bulgarian Commerce Act are a testament to Bulgaria’s commitment to removing barriers for businesses operating across EU borders, thus enhancing the country’s appeal as a destination for foreign investment and economic activity.
Key Aspects of the Reform
The bill introduces comprehensive mechanisms for cross-border transformations, mergers, spin-offs and separations of companies. Here’s a glance at what the proposed amendments entail:
Cross-border Transformations
For the first time, companies in Bulgaria will have a clear legal framework allowing them to change their legal form and relocate their registered office to another EU member state, without losing their legal identity. This process ensures the continuity of the company’s legal personality and operations across borders, which is a significant step forward in facilitating business mobility within the EU.
Cross-border Mergers, Separations and Spin-Offs
Building on existing regulations, the amendments provide a more perfected, streamlined and efficient process for cross-border mergers. The bill also envisages the creation of a legal framework that would allow cross-border separations and spin-offs with the participation of companies from member states.
Safeguarding Stakeholder Interests
A pivotal aspect of the proposed legislation is the emphasis on protecting the interests of various stakeholders, including employees, creditors, and minority shareholders. The bill mandates thorough reporting and documentation requirements for companies undergoing cross-border transformations, mergers, spin-offs and separations, ensuring transparency and safeguarding against fraud and abuse.
Enhancing Competitiveness
By aligning its commercial law with EU directives, Bulgaria aims to enhance its competitiveness and attractiveness as a business hub within the European Single Market. The amendments are expected to stimulate economic growth, foster innovation, and attract foreign investment by simplifying the legal framework for cross-border business activities.
