The last issue of the Bulgarian State Gazette for 2016 (№ 105/ December 30, 2016) introduced significant changes in the Law on Commerce and the Law on Commercial Register regarding the limited liability companies (LLC). The new legal provisions became effective on January 2, 2017. LLC are the most commonly established type of commercial companies in Bulgaria both by local and international investors, therefore the amendments will have significant implications on the businesses.
The introduced changes aim at protecting the investors from frauds and schemes for stealing companies or draining their assets. Moreover, they should strengthen the internal market, safeguard the interest of the traders’ community and help improving the registration procedures.
The newly altered provisions of the Law on Commerce now state that not only the signatures on the agreements for LLC share transfers and the respective powers of attorney must be certified by a notary public but also the content of such agreements and power of attorneys. The certifications of the signatures and the content shall be done simultaneously by the notary public, who shall enter the certified document in the required register.
In addition, the form of some of the most significant acts of the LLC general meetings has been changed, namely the decisions for: acceptance and exclusion of shareholders, transfer of shares, increase or decrease of LLC capital, appointment of manager, and sale and purchase of real estate assets. Now the signatures on the general meetings’ protocols and the content of the acts must be certified simultaneously by a notary public. Otherwise the acts shall be null and void unless the articles of association provide for a simple written form of such acts. However, provision in this sense may be included in the articles of association from now on because so far, the law did not require a special form. Consequently, the new requirement for certification shall apply to all existing LLC.
A corresponding amendment was also introduced in the Law on Commercial Register. Upon submission of the documents with certified signatures and content before the officers of the Commercial Register, the latter must perform a verification of the documents through the informational system of the Notary Chamber and confirm their content to prevent potential frauds.
Despite the good intentions, the actual implementation of the amendments did not start smoothly. Just a couple of days after the changes became effective, some of our foreign clients experienced problems with the Bulgarian diplomatic and consul officials abroad. Even though as per law such officials are authorized to authenticate certain types of documents as a notary public, they were not aware of the new amendments and certified only the signatures on the documents missing the content certification. Following extensive discussions with the officials, the certifications were repeated and finally done correctly. However, our clients had to spend additional time and make double payments. Therefore, to ensure that all competent authorities and interested parties comply with their statutory obligations, we may recommend that important amendments in laws do not enter in force immediately, especially during national holidays, but the legislature provides for a sufficient longer period therefor.