- within Transport, Immigration and Intellectual Property topic(s)
November 2025 – Over the past months, Bulgaria has adopted and implemented several important legislative changes affecting foreign investment screening, merger control, corporate reorganisations, and company transparency.
In addition, the country is preparing for euro adoption on 1 January 2026, which will bring adjustments to corporate governance and registration procedures. Courts have also issued significant rulings clarifying directors' duties in insolvency, the validity of detrimental transactions, and shareholder rights.
Our overview provides detailed information about these updates and outlines their implications for businesses and transactions.
Update on Bulgarian legislation
1. Foreign Direct Investment Screening regime
The foreign direct investments (FDI) screening regime is now fully applicable in Bulgaria. This is an important regulatory development that concerns all potential foreign investors, as the transitional period for an exemption for filings no longer applies.
All transactions that fall within the scope of the FDI regime and that were initiated after February 2024, but were not completed before 22 July 2025, must now be notified and authorised before being implemented. To fall within the scope for notification, a transaction should meet the following requirements: (i) it should be made by a foreign investor; (ii) the foreign investor should make a foreign direct investment; (iii) the investment should be made in one of the sectors listed under Article 4(1) of the FDI Screening Regulation; and (iv) the investment should meet certain thresholds or other specific conditions under the Bulgarian Investments Promotion Act.
Businesses investing in Bulgaria should now carefully consider if the FDI screening regime applies to their potential deals. Kinstellar has recently advised multiple clients in Bulgaria on the FDI screening regime, including on the first successful application and approval under the new system.
For further analysis on the topic, please see our July FDI Sofia office alert and our recent article in Capital Weekly (available in Bulgarian).
2. New call-in powers for the Bulgarian merger control authority
On 23 October 2025, the Bulgarian National Assembly adopted changes to the Competition Protection Act, introducing below-threshold merger filings. Following the changes, in addition to transactions that meet the standard turnover thresholds, the Bulgarian Commission for the Protection of Competition (the "CPC") will now be able to review new types of transactions in some instances.
The CPC may now exercise "call-in" powers for post-closing control and request submission for a merger filling if two cumulative conditions are met: (i) the combined total turnover of the concerned undertakings in Bulgaria exceeds BGN 25 million (approx. EUR 12.5 million) for the preceding financial year; and (ii) the transaction raises concerns that it will significantly impede effective competition on the relevant market due to the creation or strengthening of a dominant position. The CPC may exercise these powers within six months from completion of the transaction. The concerned undertakings should then submit a filing within the term indicated by the authority. In terms of scope, the CPC has broad discretion to "call-in" transactions in any sector, provided that the two cumulative conditions are met.
Parties to agreements may also submit a voluntary filing even if their transaction does not meet the turnover thresholds.
The new changes will require further legal due diligence from dealmakers, particularly in cases of multi-jurisdictional transactions, where different regulatory regimes apply.
For more information on the new changes in Bulgarian competition law, please see our article here.
3. Delays in the implementation of cross-border reorganisations and fast-track liquidations
Last year, the Bulgarian Commercial Act was amended to allow for cross-border reorganisations. Under the new rules, Bulgarian companies can merge and demerge more efficiently with entities from the European Union or relocate to another country by converting their legal form to a form under a foreign legislation. The Minister of Justice has proposed a draft ordinance that addresses the issue of the technical capacity of the Commercial Register in relation to such reorganisations. The intended deadline for building the capacity has been further delayed until 30 June 2027, from the originally envisioned deadline of September 2025.
The Bulgarian Commercial Act was also amended to allow for a new, faster procedure for liquidation of certain types of companies. The new procedure allows companies that had no activity for the past 12 months, have no employees and no public obligations, and which are not parties to court proceedings (among other things) to benefit from a shorter liquidation period of three months instead of the six months under the regular liquidation procedure and a more streamlined and centralised application process. However, the deadline for building the capacity of the Commercial Register in relation to the new liquidation procedure is also postponed until 30 June 2027.
4. Euro adoption in Bulgaria
Bulgaria will adopt the euro as its official currency on 1 January 2026, and the national authorities are in the process of organising the currency transition. While most businesses are already aware of the conversion rules related to dual-price display, accounting, and tax, it should be noted that companies must also implement certain changes related to their corporate governance.
Pursuant to the Introduction of the Euro in the Republic of Bulgaria Act, companies should amend their incorporation documents in line with the currency revaluation rules within 12 months of the adoption date. Companies will need to organise these amendments before or with the next filing they make for corporate changes in the Bulgarian Commercial Register. All companies should also amend internal rules, procedures, and documents if revaluation rules are applicable to them.
Certain entities that require a special licensing regime, such as insurance or investment companies, will first need to submit their amended corporate documents to the Financial Supervision Commission.
The registered capital of Bulgarian companies will automatically be converted to euro by the registration authorities without affecting the rights of shareholders. Any differences in capital, arising from the rounding rules in revaluation from BGN to euro will be accounted for as retained earnings / uncovered loss from previous years.
5. Transparency of company ownership
A draft bill to amend corporate registration rules was proposed in September 2025 with the aim of providing greater transparency on company ownership. Under the proposed bill to amend the Bulgarian Commercial Register and Register of Non-Profit Legal Entities Act, additional information on the owners, registered auditors, accountants, and public entity participation will be visible on the Bulgarian Commercial Register extracts of each company. As part of the proposed changes, all certificates and extracts from the Bulgarian Commercial Register will be available in transliterated versions.
The draft bill includes a major reform on the ownership transparency of joint-stock companies (JSCs). Currently, full information of share ownership is only available for limited liability companies and solely owned JSCs. The amendments will require all JSCs to disclose their shareholders with at least 5% of shares and apply also to listed companies. This marks a significant shift, as legislators have traditionally allowed for greater anonymity in JSC ownership to facilitate investments without reputational risk.
The proposed amendments will significantly expand the functionality of the Bulgarian Commercial Register, and the competent authorities will be given an 18-month period to prepare the systems for technical operation. Once the systems are operational, all companies will have to make several additional fillings and present more information on their ownership to comply with the new legislation.
6. Register of disqualified directors
The Bulgarian government has introduced amendments to the Bulgarian Commercial Register and Register of Non-Profit Legal Entities Act to implement European legislation on the use of digital tools and processes in company law. Under the current rules, certain individuals are prohibited from serving as statutory representatives of companies due to harmful previous business practices (e.g., management of insolvent companies and non-compliance with legislation). Based on the proposed changes, all such ineligible directors will be automatically registered in a centralised electronic system, maintained by the Bulgarian Registry Agency.
While the register will only be accessible to certain public authorities, individuals will have the right to access information concerning their own registration and all related documentation. Deregistration will be possible after a special administrative procedure, where the applicant must prove the grounds for renewed eligibility (expiry of punishment periods, revocation of judgements, etc.). The registration system will be operational within the next six months.
Other European requirements will also be implemented. The Bulgarian Registry Agency will additionally ensure that all publicly available documents and information in relation to companies and company branches are stored by the Commercial Register in a machine-readable and searchable format or as structured data to provide easier user access.
Case law overview
1. Liability of managers of insolvent companies
Under the Bulgarian Commercial Act, directors and managing bodies of companies are obliged to file an insolvency application within 30 days of the occurrence of insolvency (in Bulgarian: "неплатежоспособност") or over-indebtedness (in Bulgarian: "свръхзадълженост"). Failure to file such application results in their joint and several liability towards creditors for all liabilities caused by the late filing. In decision No. 81 / 21 March 2025 in case No. 2793 / 2022, the court provided clarifications on the application of this provision.
The first question towards the court was whether the insolvency application should be filed after the company has defaulted on its debt. The court found that a manager's obligation to file for insolvency arises from its objective occurrence, which can be expressed in liquidity ratios and other economic indicators such as financial results and credit burden. There is no need for the company to have actually defaulted on its debt, as the managers who organise the company's operations and accounting have access to all relevant documents.
The second question was related to the applicable criteria for determining the manager's guilt. The court established that the manager's liability for damages caused by mismanagement (including failure to file for insolvency) is assessed on the abstract criteria of a good manager —a manager who is fully aware of the financial situation of the company, who analyses commercial risk, and who actively participates in the company's affairs. Managers cannot claim error or ignorance regarding the fact of the insolvency. The obligation to obtain the necessary information and to analyse it correctly is included within the scope of the criteria of a good manager, as per the court's ruling.
2. Invalidity of agreements detrimental to companies
Pursuant to Bulgarian contract law, agreements between authorised proxies and third parties are null and void in relation to the principal if concluded to his detriment. In case No. 2442/2024 the Supreme Court of Cassation ("SCC") was asked to annul a decision in which a company was ordered to pay damages for defaulting on an agreement. The SSC found that there is ambiguous case law on the issue of whether the invalidity rule applies in relation to companies and their directors.
In some judgements, it is established that detrimental agreements concluded by company directors are non-binding to the companies, given the general rule described above. However, the most recent case law finds that company directors are not regular proxies but rather have a special representative power deriving from the law, which renders the invalidity rule inapplicable.
Given the uncertainty in case law, the question of whether or not detrimental agreements concluded by managers are binding to companies was proposed for an interpretative judgement to the General Assembly of the SCC. The General Assembly's interpretation will have effect on all courts and administrative bodies and will provide clarity on this important issue.
3. Dismissal of directors who are shareholders
Directors of limited liability companies can be dismissed by the general meeting of shareholders at any time through a resolution with a simple majority. In case 2424/2024, the SCC was asked whether it is possible for two shareholders with 50% of shares to dismiss each other in their capacity as directors.
The rules on majority formation, organisation of the general meeting of shareholders meetings, and conflict of interest make it unclear whether such resolutions are valid. Both legal doctrine and lower-instance courts are uncertain on the issue with no prevailing view. The SCC took the case for review and is expected to issue its judgement, which will set an important precedent in corporate law, as it will interpret various unclear provisions.
4. Servicing a notice for a company general meeting
Pursuant to national legislation, general meetings of companies are to be held after all shareholders are duly serviced a notice, which contains the agenda and date of the session. Failure to notify each shareholder in line with the requirements of the Bulgarian Commercial Act and the company's articles of association could render all adopted resolutions invalid, if challenged within 14 days. The common practice of servicing such notices through third parties has led to uncertainty as to the validity of the service in certain cases.
The recent Order No. 1631 / 28 May 2025 in case No. 622 / 2025 summarised the relevant case law and established that the notice may be serviced by any appropriate means, provided that the content of the document received fully corresponds to the content of the document sent and is easily legible. Where the shareholder is a legal person, the notice shall be addressed to the registered office or to a correspondence address that was expressly indicated previously.
5. Ad hoc representation of companies
As a general principle, when there is a conflict of interest between a principal and its agent, the court appoints an ad hoc representative to ensure full protection of the principal's rights. The law does not explicitly establish what constitutes a conflict of interest, which has caused ambiguous interpretation. Order No. 1604 / 28 May 2025 in case No. 695 / 2025 provided clarity on the applicability of the ad hoc representative mechanism in relation to companies.
Court practice up to that point had found that a conflict of interest was present when the principal and agent are opposite parties to a certain legal dispute, or the two opposite parties to a dispute are represented by the same proxy. This particular case saw the court provide a wider interpretation and establish that ad hoc representation will be required in cases where the interests of a company and its representative are opposed, providing as an example an action brought by a shareholder for the annulment of a general meeting decision to dismiss the manager.
Did you know that?
While the EU-27 continued to attract significant investments, FDI inflows slowed in 2023 and 2024 due to a decline in greenfield investments, even as mergers and acquisitions began to recover unevenly across Member States and sectors. By the end of 2024, 24 EU Member States had operational FDI screening mechanisms, with Croatia, Cyprus, and Greece advancing toward implementing their own regimes in 2025.
Legislative updates across the region, including in Romania, Hungary, Bulgaria, and the Czech Republic, reflect growing alignment with EU and international standards. Notably, Romania issued its first conditional FDI clearances, while Croatia introduced a draft law to establish a national screening system. Meanwhile, negotiations continue at the EU level on a revised FDI Screening Regulation, which aims to make screening mandatory for all Member States and to harmonise procedures across the Union.
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.
