Draft Law on Company Law: Modernization and Harmonization

Company Law Bill: Modernization and Harmonization

The Committee on Constitutional and Legal Affairs adopted at first reading a key bill aiming to modernize and harmonize Bulgarian company law with European norms. The bill, submitted by the Council of Ministers, is aimed at significant amendments and additions to the Commercial Register and Register of Non-profit Legal Entities Act. The committee's decision was made by an overwhelming majority – 13 votes "for," with only two "abstained" and not a single vote "against," which underscores the broad support for the proposed changes.

Harmonization with European Law and Market Strengthening

The main purpose of the proposed amendments is to transpose Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019. This directive, which amends Directive (EU) 2017/1132, focuses on the use of digital tools and processes in the area of company law. By adopting it, Bulgaria will achieve full compliance of its legislation with European regulation, which is essential for integration into the single market.

The motives for the bill state that this step is of exceptional importance for strengthening the internal market and increasing financial stability in the country. By ensuring a higher degree of legal certainty in economic, social, and commercial life, the aim is to increase the reliability of commercial turnover. This is expected to stimulate investment activity by attracting both local and foreign investors who will have a more reliable and transparent legal framework for carrying out their activities in Bulgaria.

Unified Register of Persons Deprived of Management Rights

One of the most significant changes provided for in the bill is the creation of a unified register of persons who are deprived of the right to perform the functions of managers or directors in commercial companies. This register will be maintained by the Registry Agency and will contain circumstances regarding natural persons for whom there are legal obstacles to being managers or members of boards of directors, supervisory, or management boards of commercial companies.

The motives for the bill emphasize that the availability of this information in one place will ensure an immediate and effective check. This is particularly important in the context of the system of interconnection of registers, as it will allow the Bulgarian authorities to respond quickly to inquiries from other member states as to whether a person is entitled to perform management functions under Bulgarian law. This transparency and speed of information exchange are key to preventing abuses and protecting commercial turnover within the EU.

Additional Measures for Transparency and Accessibility

Furthermore, the bill proposes the creation of a new Article 17a in the Commercial Register and Register of Non-profit Legal Entities Act. It introduces an obligation for the Registry Agency to provide a technical capability for storing the acts and documents available in the registers in a machine-readable format. This format must allow for full-text search, which will facilitate the access and processing of information by interested parties.

• The issuance of a new ordinance is also foreseen, which will further regulate the rules for maintaining, storing, and accessing the newly created register of persons deprived of management rights.

These measures are aimed at ensuring maximum transparency and legal certainty, which are the foundation for a stable economic environment and attracting capital.

The adoption of the bill at first reading is an important step towards implementing these reforms, which are essential for the compliance of the Bulgarian legal system with European standards and for stimulating economic growth in the country.