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New Substantial Amendments to the Commercial law

In the last workweek of 2016 the National Assembly adopted amendments to the Commercial law which are aiming to create more legal certainty, strengthen the market and provide an effective business environment.

Immediate effect is provided for the norms aggravating the form of transfer of the commercial enterprise, the sale of shares in the limited liability companies (LLC) and the adoption of some important decisions by the General Meeting in the limited liability companies. In 2017, the sale of commercial enterprise and shares will be accompanied by an obligatory simultaneous certification by a notary of the signatures and the content of the document. The notary will be obliged to keep a copy in his archives. Up to now, the notaries were bound to certify only the signatures which led to absence of traces of the actions of the parties to the transaction.

Simultaneous notary authentication of the signatures and the content is also provided for some of the decisions of the General Meeting of LLC such as acceptance and exclusion of a shareholder, giving consent for a share transfer to a new member, augmentation and reduction of the capital, election of a manager and the acquisition and expropriation of property and the corresponding property rights. This aggravated form should apply unless the articles of formation explicitly state that these decisions must be in written form. The decisions of the General Meeting adopted in case of non-observance of these requirements are void.

The purpose of these amendments is to limit the so-called company thefts that have become popular in recent years. A major omission that is allowing circumvention is the absence of obligation for a notary to certify the decision of the General Meeting on the adoption of new articles of formation or statute. Thus, the possibility remains for the articles of formation to be amended by a protocol in a simple written form and to avoid the subsequent aggravated form for making important and serious decisions by the Meeting.

A substantive amendment is regulated in Chapter IV – “Insolvency”. According to the amendment in Article 608, paragraph 2 – if the trader has not declared his annual financial report for the past three years prior to filing the claim for the opening of insolvency proceedings, it is presumed that he is unable to meet an executable monetary liability arising from or relating to a commercial transaction. In this case, the trader is considered insolvent, which is the basis for opening insolvency proceedings. According to par. 4 of the same Article, the insolvency shall be presumed, even if in enforcement proceedings, initiated for the execution of an act of the creditor that has entered into force when the creditor has filed an application under Art. 625, the claim has remained wholly or partially unsatisfied within 6 months of the receipt of the invitation or notification for voluntary payment.

In the context of the recommendations of the European Commission, a completely new procedure has been created, namely “Trader Stabilization Proceedings”, which will apply to traders who are not insolvent but are in imminent danger of insolvency. The aim is to regulate the possibility of reaching an agreement between the trader and his creditors in order to prevent the opening of insolvency proceedings. A debt restructuring procedure has been established, thus giving a chance to rescue and stabilize the enterprise and continue its business. The law sets out in detail the conditions for the opening of the proceedings, the consequences thereof, a stabilization plan and its effect, the termination of the proceedings and the consequences thereof. The provisions relating to the stabilization will be in force from 01.07.2017.

 

author: Vesela Velinova, attorney-at-law

Member of “Velinov and partners” Consulting House

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