Overview
1 January 2008 saw the implementation of the 10% flat rate of income tax, while March 2008 saw the introduction of the new civil procedure code, of great importance to litigators in particular. Yet both changes were eclipsed by other developments. The effect of the economic downturn is evident. Previously bullish attitudes to the strength of the real estate market are being revised. The much-trumpeted developments in Bulgarian capital markets over recent years already appear hollow in the wake of the global freeze in liquidity. The introduction in 2008 of the Market in Financial Instruments Directive (MiFID) is more interesting as an economic anachronism than as a relevant legislative change. Worse, the relationship with the EU has become increasingly strained after it withheld development funds from Bulgaria, cancelling €220m of PHARE money and refusing to release a further €300m earmarked for the country. The sticking point is corruption; the EU feels that Bulgaria has made little or no progress in meeting its pre-accession commitments. The highest levels of Bulgarian government are implicated and the situation has got worse, to the extent that the EU is even considering not recognising Bulgarian court rulings.
However, not everything is doom and gloom. GDP growth is forecast to be – very marginally – positive in 2009. Commentators remain optimistic that Bulgaria’s having entered the international money markets late may prove the economy’s saving grace. Although transactions have been delayed and the flow of new work has stagnated slightly, firms remain buoyant in their outlook. If banking, capital markets, M&A and real estate are to decline as markets – which nearly all firms agree will happen – then the future is in infrastructure work and, unsurprisingly, insolvency. No one imagines that these areas will make up the shortfall in work, but they will go some way to mitigating the economic fallout. Similarly, as western and central European investors find Bulgaria increasingly unattractive, the hope is that regional and leading domestic companies will step up to take a greater role in the economy. Most law firms believe that 2009 will be a period of economic introspection.
If the industry players are relatively sanguine about recession, that calm belies greater internecine tensions in the market place. In early 2008, leading domestic law firms brought a complaint against foreign firms before the competition commission, resulting in (primarily symbolic) fines for Rizova & Partners Law Firm (part of DLA Piper) and CMS Cameron McKenna in cooperation with Petkova & Sirleshtov Law Office in August. The central argument was that foreign entrants to the market were not practising law in accordance with the Bulgarian Advocacy Act, which imposes various conditions that seem arcane to anyone used to more liberal markets. These include requirements that firms must have Bulgarian partners who have been lawyers for three years, and that new entrants to the market must register as new firms, precluding any firm names that include deceased partners. The foreign firms believe that the Bulgarian state ruling contravenes EU law and have appealed their case to Europe. In the interim, the foreign firms continue to operate.
Domestic twin giants Borislav Boyanov & Co and Djingov, Gouginski, Kyutchukov & Velichkov continue unambiguously to dominate the market, although Spasov & Bratanov, Tsvetkova Bebov & Partners (Landwell) and Kambourov & Partners are all seen by international clients as viable alternatives. Despite the tussle with the Bulgarian supreme bar council and local firms, the foreign entrants’ presence has grown. CMS Cameron McKenna in cooperation with Petkova & Sirleshtov Law Office is an undisputed major force and Schönherr goes from strength to strength. 2008 also saw the arguably ill-timed arrival of Wolf Theiss into the market. Whether it is strong enough to weather the dual economic and political storms remains to be seen. Other significant foreign presences include the DLA Piper network’s Rizova & Partners Law Firm (part of DLA Piper), Greek regional player PI Partners, and additional CMS Alliance firm CMS Reich-Rohrwig Hainz and CMS Cameron McKenna in cooperation with Ružička & partners, s.r.o..
Press releases
Legal Developments in Bulgaria
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RECENT LEGISLATIVE CHANGE BOOSTS INVESTMENT IN BULGARIA
The recent changes in the Bulgarian Investment Promotion Act (amend. as of 2nd of June, 2009) that are in compliance with the requirments under the Regulation (EC) No 800/2008 facilitate the implementation of significant investment projects in Bulgaria. Prior to the recent legislative changes promotional measures used to be applied to investment projects in the following economic sectors only:(a) Industrial sectors: manufacturing industry and production of electricity from renewable energy sources; and (b) Service sectors: high technology activities in computer technologies, research and development, as well as education and human health care. -
Procedure on the issuance of Permanent Residence Permit in Republic of Bulgaria, recent amendments
Permanent Residence Permit (PRP) is a special residence permit which allows the living of foreigners in Republic of Bulgaria for an unlimited period of time. The basic act regulating the issuance of PRP is the Act for the Foreigners in Republic of Bulgaria (AFRB), amended on 15th of May 2009. One of the most important changes affects the procedure for issuance of PRP. -
Mergers and Acquisitions 2009/10: Bulgaria
The Bulgarian public M&A market remains underdeveloped. The key reasons for this are the insufficient development of the securities market itself and the insignificant free float of public companies on the stock exchange (about 22% of the equity, on average). The limited free float means low market liquidity and makes it virtually impossible to accumulate considerable holdings in a company through offers to minority shareholders. -
Public Procurement 2009: Bulgaria
The main Bulgarian law regulating public procurement matters is the Public Procurement Act (PPA), in force as of 1 October 2004 adopted by the Bulgarian Parliament (promulgated in the official Bulgarian State Gazette, issue 28 of 2004, as amended from time to time). -
Are the servitudes a hurdle in the construction of the electronic communication network?
Bulgaria has made a priority for itself the building of an information society as a basis for a modern and efficient economy of knowledge that encourages innovation and competitiveness. Building an information society is among the main targets of the Lisbon Strategy of 2000 where it is seen as a tool for creating more jobs and improving the social standing of citizens. Providing such services is considered a national and a European priority with a significant social charge. -
Can Representation Offices Carry Out Economic Activities?
A specificity in Bulgarian legislation is the existence of a trade representation office outside scope of the Commerce Act, and namely representation as set out in the Investment Promotion Act. This often leads to conflicting interpretations and lack of understanding with regard to the representation office’s exact status. -
New Registration Rules for .bg Domains
The registration of .bg domains is regulated by the General Terms and Conditions for Registration and Maintenance of .bg and subordinated Domains, as amended and supplemented in order to reflect the development of the relations connected with the provision of domains, as well as any disputes that may arise. The latest amendments of these Terms and Conditions (18.09.2008) rendered the greatest change in the registration regime made so far, with some new mechanisms of domain protection established. -
Cartels & Leniency 2009: Bulgaria
A practical insight to cross-border Cartels & Leniency -
BULGARIA NEW LAW ON PROTECTION OF COMPETITION
On 14 November 2008 Bulgarian Parliament adopted new Law on the Protection of Competition (“LPC”), which was promulgated on 28 November 2008 and entered into effect on 2 December 2008. The LPC aims to harmonize the domestic regulatory framework with Council Regulation No. 1/2003 and Council Regulation No. 139/2004. It introduces a number of changes as compared to the regulatory regime under the abolished Law on Protection of Competition (“LPC 1998”). In the field of investigations of prohibited agreements and abusive unilateral conduct, the LPC abolishes the procedure for grant of individual exemptions of prohibited agreements and aligns the de minimis exemption thresholds with those under Council Regulation 1/2003. -
Getting the Deal Through – Insolvency and Restructuring 2009 - Bulgaria [chapter]
The primary legal act regulating bankruptcies and reorganisations of commercial companies is the Law on Commerce. Certain businesses, however, have their own specific legislation on the matter: bankruptcies and reorganisations of banks are regulated by the Law on Bank Insolvency; insurers – by the Insurance Code; and pension funds and pension fund managing companies – by the Social Security Code.
Press releases
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Agrofert Successful in Law Suit against PKN Orlen
PRAGUE (30 June 2009) – The Arbitration court in Prague has decided in favour of company Agrofert Holding (“Agrofert”) in its claim against Polish company Polski Koncern Naftowy Orlen (“PKN Orlen”). The Polish company has to pay, on the basis of decision of the arbiters, a contractual penalty which exceeds EUR 77.2 million (over 2 billion CZK) with accessories. -
UBS CHF 3.8bn share placement
On June 25, 2009, UBS AG (SIX: UBSN) announced that it is offering 293,258,050 newly issued shares from authorized capital to a small number of institutional investors at a price of CHF 13.00 per share. After deducting cast associated with the placement, the amount of new equity capital expected to be raised is approximately CHF 3.8 billion. -
DWS reprises advisory role for MENA Infrastructure fund's investment in Oman's power sector
Denton Wilde Sapte continues to act as legal advisor for MENA Infrastructure Fund, picking up an instruction to advise on its second investment, in which it has taken 32.8% of the shareholding in Oman's United Power Company SAOG (UPC). -
Three partner admissions at Carey Olsen in Jersey
Carey Olsen is strengthening its corporate, finance and fiduciary teams in Jersey by admitting three partners to these key practice areas. -
Penningtons celebrates SRA and Farriers Registration Council tender wins
Penningtons Solicitors LLP's professional regulation group is celebrating two key appointments with the news that it has been successful in tenders to advise both the Solicitors Regulation Authority (SRA) and The Farriers Registration Council. -
Penningtons advises on Trans-Siberian Express luxury travel deal
Penningtons Solicitors LLP has advised international tour operator Australian Pacific Touring (UK) Limited on its purchase of a majority share in GW Travel Limited, the market-leader in long-distance luxury rail tours. GW Travel's flagship holidays are trips on the world-famous Trans-Siberian Express. -
Penningtons trainee encourages young Londoners to choose a career in law
Catherine McCann, a trainee solicitor at Penningtons Solicitors LLP's City office, has been invited to contribute to a new guide published by the London Chamber of Commerce & Industry to help young people consider the many types of jobs available in the capital. -
BAKER & MCKENZIE ADVISES FIBERWEB ON JOINT VENTURE WITH PETROPAR
London/Chicago/Sao Paolo, 26 June 2009 - Baker & McKenzie has advised Fiberweb plc on its proposed joint venture with Petropar S.A. The 50/50 joint venture, which will be named FitesaFiberweb, is intended to create the second largest producer of spunbond and non woven fabrics in North and South America. Completion of the transaction is subject to the approval of both Fiberweb and Petropar shareholders. -
Salans awarded Best European Law Firm
Salans has been awarded a Special Distinction in the Best European Law Firm award category at the 2009 International Legal Alliance Summit & Awards (“ILASA”). -
unit specialising in transaction and financing consultancy
HERMANN Rechtsanwälte Wirtschaftsprüfer Steuerberater and the Munich-based team at Grub Brugger join forces: Joint establishment of a unit specialising in transaction and financing consultancy