|TBP Legal News March 2013|
Newly appointed caretaker government declares as first priority financial stability
After resignation of government, headed by Mr Boyko Borissov, the President of the Republic of Bulgaria, Mr Rossen Plevneliev, appointed a new caretaker government on 12 March. The new Prime Minister is Mr Marin Raykov who formerly took the position of Bulgarian Ambassador to France.
The basic task of the caretaker government is to prepare the parliamentary elections which are scheduled for 12 May. The new government declared that its primary priority within the two months of its work will be to ensure favourable business environment and political and financial stability which currently does not involve rising of taxes.
Amendments to the Investment Promotion Act
With the recent amendments to the Bulgarian Investment Promotion Act (the “IPA”), the Foreigners in the Republic of Bulgaria Act and the Bulgarian Citizenship Act the regulations of acquiring Bulgarian citizenship based on investments have been supplemented, aiming to provide flexibility to foreign investors. New provisions have been adopted to provide different options for acquiring citizenship depending on the amount of investments or type of investments and/or the capacity of the natural person – foreign investor (manager, procurator, shareholder or employee in a company which meets certain requirements) or combinations of these factors. Along with that investors carrying out investments above certain thresholds in Bulgaria are now released from some of the mandatory requirements for acquiring Bulgarian citizenship (e.g. knowledge of Bulgarian language, release from previous citizenship).
The amendments to the IPA introduce also a new incentive measure for investors, namely an opportunity for partial reimbursement of the social contributions for new staff hired by an investor for the implementation of an investment project.
Reform of Claw-back Rules in Bankruptcy Proceedings and Payment term Restrictions – Long-awaited Amendments to the Bulgarian Commercial Act
Important and in many respects long-awaited amendments to the Bulgarian Commercial Act, purposed to limit claw-back options in bankruptcy and enhance payment discipline, entered into force as of 4 March 2013.
1. Claw-back rules reform - one of the most significant disadvantages of the previous rules was the legal possibility for declaring void an excessively large number of transactions and acts effected after the initial date of insolvency, (i.e. in the “suspicious” period which has often happened to be more than 10 years). By way of example only, as per the repealed statutory provisions payment of financial debts by the debtor or establishment of pledge or mortgage or other security interest of the assets of the insolvent debtor after the initial date of insolvency (or overindebtedness) was able to be declared null and void vis-à-vis the creditors in the bankruptcy proceedings. As per the newly adopted rules the maximum length of the suspicious periods will be calculated back from the date of filing of the bankruptcy petition, rather than from the initial date of insolvency, respectively the date of the court decision for initiation of the bankruptcy proceedings. The suspicious periods are now relatively short and differentiated depending on the specifics of the voidable acts or transactions, as well as on the position of the third party (e.g. shorter for good faith commercial partners and longer for insiders or other persons being aware or presumed to be aware of the state of insolvency of the debtor at the time of the transaction or act). Also, creditors are already ensured with an option to defend the validity of payments in relevant suspicious periods when they are made in the normal course of business.
2. Payment Term Restrictions - the requirements of Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions were implemented by way of amendments to relevant provisions of the Commercial Act. The amendments determine maximum deadlines for payments, aiming to combat the trend payments in commercial transactions between economic operators or between economic operators and public authorities to be made with material delay. The new provisions envisage as a general rule that parties under commercial agreement can agree on payment periods no longer than 60 days (no such limitation existed till now). When the debtor is a public contracting authority (such as state authority, public law governed organisation, etc.), the deadline for payment shall be limited to 30 days, where the parties can agree on longer deadline, however not exceeding 60 days. In the absence of an agreed payment deadline, payment shall be made within 14 days as of receipt of the invoice or other invitation for payment or as of receipt of the purchased goods or services, if later than the receipt of the invoice or payment invitation.
The law further provides for a particular amount of compensation (unless otherwise agreed) due upon delay in payment of a monetary obligation, if the creditor has fulfilled its contractual obligations. Damages in excess of the said compensation may be claimed in line with the general rules of the Bulgarian private laws.
The payment discipline - related rules do not apply to agreements executed before 15 March 2013.
For further information and analysis of the new regulations you may refer to: http://tbp.bg/en/publication/id/37
Baby on Board!
On 27 March 2013 a new member joined our team! Our colleague Venelin Dimitrov became a father of a wonderful boy – Martin. We wish new parents happiness and all the joy, love and smiles in their lives!