In a major step toward full integration with European Union regulations, the Bulgarian Ministry of Justice has introduced legislative reforms aimed at enhancing cross-border business operations. A new bill amending the Bulgarian Commerce Act marks a pivotal moment for companies engaging in transformations, mergers, spin-offs, and separations across EU borders. This reform seeks to foster a more unified and efficient European business environment, significantly improving the conditions for international transactions.
Embracing EU Standards: Directive 2019/2121 Implementation
At the core of these legislative changes lies the transposition of Directive (EU) 2019/2121, which amends Directive (EU) 2017/1132 concerning certain aspects of company law. This directive is designed to facilitate the freedom of establishment for businesses within the EU — a fundamental pillar of the internal market.
On the national front, the Ministry of Justice has submitted the draft amendments for public consultation on the official government platform, with all opinions and feedback to be collected by April 8. This open dialogue underlines Bulgaria’s commitment to ensuring transparency and collaboration in the legislative process.
Key Highlights of the Bulgarian Commerce Act 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, Bulgarian companies will have a structured legal framework to relocate their registered office to another EU member state without losing their legal identity. This ensures seamless business continuity across borders, opening new opportunities for corporate expansion and mobility within the Single Market.
Cross-border Mergers, Separations and Spin-Offs
The proposed amendments significantly improve the process for cross-border mergers. In addition, they establish a legal foundation for cross-border separations and spin-offs, involving companies from different EU member states. These innovations provide greater operational flexibility and strategic options for businesses looking to restructure or expand internationally.
Protecting Stakeholders’ Rights
A crucial component of the reform is the protection of stakeholders, including employees, creditors, and minority shareholders. The bill introduces strict reporting, documentation, and transparency requirements for all cross-border activities, ensuring fairness and reducing the risk of fraud and abuse.
Strengthening Bulgaria’s Competitive Edge
By aligning its commercial legislation with EU standards, Bulgaria is taking important steps to increase its attractiveness as a business destination. The amendments are expected to stimulate economic growth, encourage foreign investment, and promote innovation by making cross-border operations more accessible and legally secure.
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