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June 2026 – In 2026, Bulgaria adopted legislative changes related to the country’s lobbying framework and introduced new cybersecurity requirements for local businesses, while a reform on foreign direct investments is to be implemented at the EU level.
Bulgarian courts have issued significant rulings related to the criteria for insolvency and claims against managers. The Bulgarian competition authority has ruled on non-competition clauses in M&A agreements and there is a pending interpretative case on the validity of certain agreements.
Our overview provides detailed information about these updates and outlines their practical implications for businesses and transactions.
Legislative updates
1. New lobbying legislation in Bulgaria
Bulgaria’s first regulatory framework governing lobbying was introduced with the aim of providing transparency to the interactions between special interest groups and public officials. The Transparency in Representation of Interests Act was adopted in March 2026 in line with OECD requirements and with the European Commission’s cooperation. The new legislation uses the term “representation of interests” instead of “lobbying” in order to avoid possible misinterpretation and negative connotations.
The new law introduces special procedures for interest representation before public authorities such as the National Assembly, the president, the Council of Ministers, municipal bodies, and other public institutions. Interest representation before these authorities should be conducted in line with ethical guidelines, which are to be adopted by the end of September 2026. Interest representatives conducting this activity on a professional basis are subject to registration in a special Transparency Register, which should be operational by the end of June 2026.
Potential investors and existing businesses in Bulgaria should consider the new legislation as an opportunity to pursue their legitimate interests more effectively. In particular, it could allow them to lawfully impact laws, national strategic documents, and local rules in line with their legitimate interests. This ability to potentially influence public decision-making could be useful for facilitating planned corporate transactions, infrastructure projects, and other investments.
2. New cybersecurity requirements
In February 2026, Bulgaria implemented the NIS2 Directive in its national legislation through amendments to its Cybersecurity Act, introducing new requirements for certain businesses. The law now applies not only to organisations operating in traditional sectors such as energy, transport, banking, healthcare, and drinking water supply, but also to waste management, electronic communication networks/services, food production and distribution, data centres, trust services, content delivery services, and others.
Businesses in the above sectors may be required to take appropriate technical and operational measures to manage the network and information system security risks in the course of their business. Such companies could also be subject to additional reporting requirements, and their management bodies might need to adopt cybersecurity measures in accordance with new rules, with the possibility of personal liability in cases of non-compliance.
While additional legislation needs to be further adopted for the new changes to become fully operational, businesses should note that failing to comply with the new requirements may result in sanctions of up to EUR 10 million or two percent of annual turnover. It is important for businesses to assess whether they fall within the scope of the new requirements, which depends on factors such as size of their enterprise, the importance of their service for public safety, and others.
3. EU Foreign Direct Investment reform
An updated FDI Regulation aims to fundamentally revise the EU-wide framework by harmonising investment control within the EU, closing existing gaps and providing Member States with more effective tools for reviewing and controlling foreign direct investments.
The revised FDI Regulation would introduce a revised minimum scope of sectors that would be subject to screening in Bulgaria. Consequently, a wide range of indirect acquisition scenarios may fall under the scope of the FDI Regulation, including investments by EU investors, which are currently exempt from FDI approval.
The changes also seek to establish an expanded information-sharing and cooperation mechanism with the European Commission. As a key takeaway, more certainty will be introduced as to which M&A transactions require FDI clearance going forward, while making the overall FDI framework more effective and better synchronised across the Member States. The revised FDI regulation was adopted by the Council of the EU on 8 June and the new rules will start applying 18 months after the entry into force of the regulation.
On a separate but related topic, a new Coordination Council has been established with the Bulgarian Council of Ministers. The aim of the new Coordination Council is to facilitate foreign investments in Bulgaria, including by attracting potential investors and providing assistance for investment projects.
Case law overview
1. Non-competition clauses in M&A deals
Transaction documents in M&A deals often contain non-competition clauses, which temporarily restrict the economic activity of the seller post-completion. However, it is important to note that such clauses may be in breach of competition law requirements, if disproportional, and therefore impede an M&A deal’s completion.
The Bulgarian competition authority (the “CPC”) has recently provided clarity on the validity criteria for non-competition clauses in relation to a notified merger. The CPC held that non-competition clauses are necessary when intended to protect the buyer’s investment and ensure the effective implementation of the transaction, including the achievement of its economic benefits. The CPC also found that, as outlined in established CJEU practice, non-competition clauses are valid if directly related to and necessary for the transaction. Under EU rules, such clauses are justified for periods of up two or three years, depending on the transaction, or for longer periods when concerning certain non-competition obligations between joint ventures and parent undertakings.
This decision once again highlights the importance of competition law aspects (including non-competition clauses) to the timely and effective completion of Bulgarian M&A deals.
2. Company claims against Directors
In Order 168 of 19 January 2026 / Case No. 1531/2025, the Bulgarian Supreme Court of Cassation (the “SCC”) ruled on a matter concerning a claim of a company against its former managing director for compensation for damages. The SCC confirmed that a general assembly resolution is a mandatory prerequisite for bringing claims against managing directors. Claims brought without prior general assembly resolutions are inadmissible according to the Bulgarian courts.
Other recent case law focuses on the specifics of general assembly resolutions, which release managing directors from liability. Such resolutions are often adopted when changes to management structures are made. Based on established case law, a company can only release managing directors from liability that arises from actions that the company is aware of. Companies are considered to have been aware of detrimental transactions if they were recorded in the accounting books or other company documents. This case law shows the need for careful considerations before initiating management restructurings.
3. Pending interpretative case on the validity of agreements detrimental to a company
Under Bulgarian law, agreements between proxies and third-parties are null and void in relation to principals if concluded to their detriment. For example, a sale may be ineffective towards the seller if his/her proxy and the buyer have agreed on a price far below market value.
The case law of Bulgarian courts is ambiguous on whether the above rule applies to agreements concluded by company statutory representatives. In essence, the Bulgarian courts have different opinions on whether companies should be protected from detrimental agreements that are signed by their statutory representatives.
To resolve this issue, the Supreme Court of Cassation (the “SCC”) will decide on the matter with an interpretative judgement. The SCC’s interpretation of the law will be mandatory for all courts and public bodies in Bulgaria. Once issued, the interpretative judgement will have a significant impact on the relationship between companies and their representatives. If the SCC decides that the rule does not apply, businesses might start considering more restrictive management agreements to protect themselves from detrimental agreements.
4. Criteria for insolvency
Bulgarian companies are subject to insolvency proceedings in the event of insolvency or over-indebtedness. Failure to initiate the proceedings on time can result in civil or potentially criminal liability for the company’s directors. In case No. 62/2026, the Supreme Court of Cassation (the “SCC”) made a ruling on the criteria of establishing over-indebtedness.
The court found that in order to assess whether a company is over-indebted, the general financial and economic condition of the company should be considered. However, a mere comparison between assets and liability is not sufficient. Instead, specific metrics, such as the overall liquidity ratio, the financial autonomy, and financial indebtedness should be used for the assessment. This decision once again shows that companies and their directors need to closely monitor their financial status, so as to be able to prepare for a restructuring in time.
Did you know that?
The European Commission has presented EU Inc., a new set of corporate rules that will be the same and apply across the EU, making it easier for businesses to start, operate and grow across the EU.
Main features of EU Inc. include faster registration and simpler procedures, fully digital operations, helping founders restart faster and cheaper, better conditions to attract investment, full access to the single market and strong safeguards against abuse.
Given its key importance for the EU's competitiveness, the Commission is calling on the European Parliament and the Council to reach an agreement on the EU Inc. proposal by the end of 2026.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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