Mergers - Bulgaria

Updated 09/2011

• European Union
• Austriadeen
• Belgiumenfrnl
• Bulgariabgen
• Cypruselen
• Czech Republiccsen
• Denmarkdaen
• Estoniaenet
• Finlandenfi
• Franceenfr
• Germanydeen
• Greeceelen
• Hungaryenhu
• Irelanden
• Italyenit
• Latviaenlv
• Lithuaniaenlt
• Luxembourgenfr
• Maltaen
• Netherlandsennl
• Norwayenno
• Polandenpl
• Portugalenpt
• Romaniaenro
• Slovakiaensk
• Sloveniaensl
• Spainenes
• Swedenensv
• United Kingdomen

Legal requirements

Basic legislation on merging with another company:

• Commercial Code (TZ)
• Competition Protection Act (ZZK)

Types of merger

Merger through joining (absorption): a takeover   is when an existing company takes over all the assets of another, which then stops trading without being wound up.

Merger by setting up a new company: this is when the assets of two or more companies are merged into a new entity which becomes their legal successor. The companies involve also cease their activities without being wound up.

The Competition Protection Act (ZZK) states when a merger or acquisition becomes a concentration: any operation between independent enterprises resulting in a permanent change in control over the participating enterprises.

Forms of concentration:

• merger of two or more independent enterprises;
• acquisition of sole or joint, direct or indirect control over other enterprises or parts of other enterprises;
• setting up a joint venture which permanently exercises all functions of an economically independent entity.

There are three exceptions under the law where acquiring control is not considered a concentration of enterprises:

• when securities are bought by companies whose primary activity is trading in securities, and the securities are only held temporarily;
• when control is acquired by a person who under the law carries out functions relating to the liquidation of a company (liquidator, administrator);
• if control is acquired by financial holdings, but only as long as the control is exercised solely for the purpose of maintaining the full value of the investments.

Operations are not regarded as concentrations under the law if they do not result in a permanent change in the nature of the control exercised over an enterprise. Mergers, absorptions or acquisitions between enterprises in the same economic group constitute intra-group restructuring rather than a concentration.

• Competition Protection Act (ZZK)

Merger conditions

There are some basic rules for the merger or absorption of companies engaged in activities relating to supplementary pensions insurance. They require a permit for their transformation from the Financial Supervisory Commission in accordance with the Social Security Code.

Buying an existing company, with an already established structure, can be a good way of expanding your business.

• Takeovers — Bulgaria

Administrative procedures

Notification

All companies intending to concentrate their economic activity must notify the Competition Protection Commission (CPC).

A concentration has to be notified if it to the CPC if it comes within the scope of the Competition Protection Act (ZZK), unless it is within the competence of the European Commission or the EC Merger Regulation.

Concentrations must be notified to the CPC, if the sum total of the turnover of the enterprises involved on the territory of Bulgaria exceeded BGN 25 million in the previous financial year and the turnover of at least two of the enterprises exceeds BGN 3 million or if the target enterprise's turnover is over BGN 3 million.

Enterprises must inform the Commission of a concentration after concluding an agreement, publishing an invitation to tender or acquiring control, but before   real action is taken to implement the transaction.

Notifications of concentrations must be submitted jointly by the enterprises being merged or absorbed, jointly established or acquiring joint control, and by the person acquiring sole control.

• Competition Protection Commission
• Competition Protection Act (ZZK)
• Model notification of a concentration and instructions for completion [160 KB]  

Measures to assess a concentration are put in place within three days of receipt of the notification by the CPC, or when all the necessary information has been submitted.

A notification is announced via the Commission's electronic register, allowing any interested parties to submit information or their opinions on the effect the concentration will have on the market in question.

• Public e-register of the CPC

Registration

After it has been formed, the administrative body of the newly-established enterprise must apply for registration in the Commercial register.

• Commercial Register
• Registry Agency

When you submit an application you need to provide the transformation agreement and the resolution of the participants. Depending on your activity, you may be asked to submit additional documents as required under the Commercial Code (TZ). Registration is carried out at least 14 days after the application has been submitted.

• Commercial Code (TZ)

Any transformed entity which has been liquidated needs to calculate its closing balance as at the date of the transformation, and every newly formed entity has to calculate its opening balance as on the same day. This is done on the basis of a fairly-priced balance-sheet valuation of the assets and liabilities, acquired during the transformation.

The VAT Act (ZDDS) requires the mandatory registration of anyone who acquires goods and services from a registered person as the result of:

• transformation of a business under the Commercial Code (TZ);
• transfer of a business under the Commercial Code (TZ);
•  non-monetary contribution to a business.

The registration date is the date the particular fact is entered in the Commercial Register.

The transfer of ownership in a particular trading activity involves additional fees and taxes, which includes VAT.

• Value Added Tax Act (ZDDS)
• National Revenue Agency

Resources

You can find more information about mergers and acquisitions on the Competition Protection Commission 's website.

• Concentrations of business activity - Competition Protection Commission
• Public e-register of the Competition Protection Commission
• Bulletin of the Competition Protection Commission

Check also the legislation on this topic in:

• European Union
• Austriadeen
• Belgiumenfrnl
• Bulgariabgen
• Cypruselen
• Czech Republiccsen
• Denmarkdaen
• Estoniaenet
• Finlandenfi
• Franceenfr
• Germanydeen
• Greeceelen
• Hungaryenhu
• Irelanden
• Italyenit
• Latviaenlv
• Lithuaniaenlt
• Luxembourgenfr
• Maltaen
• Netherlandsennl
• Norwayenno
• Polandenpl
• Portugalenpt
• Romaniaenro
• Slovakiaensk
• Sloveniaensl
• Spainenes
• Swedenensv
• United Kingdomen