On 23 October 2018, amendments to the Bulgarian Commerce Act came into force, which entirely repeal bearer shares in Bulgaria.
According to this amendment, all existing joint-stock companies and partnerships that have issued bearer shares must substitute them with registered shares.
Also, within the next nine months (no later than 23 July 2019) such companies must amend their articles of association, replace bearer shares with registered ones, begin keeping shareholder registers, and file these registration amendments with the Bulgarian Commercial Register.
Any company that fails to comply with this requirement by 23 July 2019 may find itself brought to court with a termination claim.
To this end, after 23 September 2019, the Bulgarian Commercial Register will prepare a list of all companies that failed to fulfil the new requirements or have not filed their registration amendments with the Commercial Register. These lists will be sent to public prosecutors for the purpose of initiating legal claims against the defaulting companies. The Commercial Register will update this list every six months until all companies with bearer shares have complied or are terminated.
Every holder of bearer shares should ask the company issuer that these shares be exchanged with registered ones by the 23 July 2019 deadline. If this is not done, the holder's shares will be cancelled, the cash contributions made for the bearer shares will be transferred to a reserve fund, and the company will be required to offer the sale of new registered shares in the place of the cancelled ones.
A shareholder, whose bearer shares have been cancelled, will be entitled to claim back his contributions within a period of six months from the date they became aware of the share cancellation, but no later than five years after the cancellation date of the shares.
2019 is also the final date for the pledgees of bearer shares to request an exchange for registered shares.
These amendments to the Commerce Act follow the requirements contained in EU Directive 2015/849 of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. This directive amended EU Regulation No. 648/2012,and repealed Directive 2005/60/EC and Commission Directive 2006/70/EC.
For more information on this amendment and the Bulgarian Commerce Act, please contact one of our local experts: Atanas Bangachev and Mirela Dyukendzhieva.