Category: Bulgaria

CMS has advised Astronergy on the acquisition of the Boychinovtsi 60-megawatt photovoltaic project in Bulgaria. Ivanov & Co advised the sellers.

According to CMS, “this acquisition represents the first new purchase of a photovoltaic project by Astronergy Solar Bulgaria EOOD since its successful completion of ten operational photovoltaic projects in Bulgaria in the period 2011-2012.”

Recently, CMS has also advised Astronergy on its EUR 54 million PV portfolio refinancing (as reported by CEE Legal Matters on May 24, 2023).

The CMS team included Managing Partner Kostadin Sirleshtov, Senior Associate Borislava Piperkova, Associates Vaska Solakova, Elena Yotova-Yordanova, and Dian Boev, and Trainee Lyubomira Tanchovska.

The Ivanov & Co team was led by Lawyer Miroslav Ivanov.

In the previous article, we reviewed in detail some of the proposals of the European Commission for a comprehensive overhaul of European pharmaceutical legislation, contained in the new draft Directive on the Union code relating to medicinal products for human use (the “Directive”) and in the draft Regulation laying down Union procedures for the authorisation and supervision of medicinal products for human use and establishing rules governing the European Medicines Agency (the “Regulation”), which were not addressed by the Bulgarian media.

The proposals for changes discussed in the article concerned the introduction of new sub-types of medicinal products, changes to the procedure for authorization of medicinal products and measures to ensure easier market for generic medicinal products.

Although numerous, the above changes are far from all changes falling under the scope of the reform planned by the European Commission. In this article we will try to complement the missing pieces of the legal “puzzle” presented to us by the European Commission.

I. Changes to the rules governing advertising of medicinal products

• The draft Directive expands the definition of advertising of medicinal product by adding a new type of activity considered advertising, under the rules of the Directive – advertising related to medicinal products that does not refer to specific medicinal products. At first glance, it appears that the proposed definition is abstract and vague and may be subject to differing interpretations in the Member States. Under the current legal framework, it is very likely that such an activity would not be deemed to constitute advertising of medicinal products within the meaning of the MPHMA and will not be subject to authorization/notification;
• The draft Directive prohibits comparative advertising of medicinal products aimed to negatively highlight another medicinal product. At the same time, the Directive provides that any other comparative advertising claiming that a medicinal product is safer or more effective than another medicinal product is prohibited, unless the claims are supported by the summary of product characteristics. Similar rules are already present in most industry codes of ethics, but this proposal introduces the concept at the legislative level;
• For the first time, the draft Directive states that, in exceptional cases (no criteria are defined), samples of medicinal products that are not subject to medical prescription may also be provided to healthcare professionals. Directive 2001/83/EC previously stated that “free samples shall be provided on an exceptional basis only to persons qualified to prescribe them”, which suggested that these were samples of Rx medicinal products (although Bulgarian legislators have omitted this specific detail in the MPHMA when transposing Directive 2001/83/EC);
• The Directive provides that the scientific service in charge of information on medicinal products may be set up both within the structure of the MAH and in a separate not for-profit legal entity.

II. Environmental protection measures

• The draft Regulation and Directive specify and extend the ERA requirements that should be applied to applications for MA. Moreover, unlike the current framework, should the competent regulatory body find such assessment unsatisfactory, this may serve as a basis for refusal to authorise the medicinal product;
• The draft legislative acts also contain another “unpleasant surprise” for MAHs – a MAH of medicinal products authorised before 30 October 2005, when the requirement to submit ERA to applications for MA was introduced for the first time (albeit in a simpler version than the proposed version) will have to carry out an assessment of these medicinal products and submit environmental risk data to regulatory authorities. Priority “old” medicinal products subject to ERA will be defined in a programme published by the EMA on the basis of the risk-based approach;
• It is also envisaged that regulatory authorities, both in the issued MA and on an ad hoc basis, may include additional post-authorisation obligations for environmental risk assessment by the MAH, including the conduct of a new ERA. Newly identified environmental risks caused by the medicinal product may serve as a legal ground to suspend or revoke the MA.

III. Changes in respect of orphan medicinal products, advanced therapy medicinal products and medicinal products intended for paediatric use

• Regarding orphan medicinal products, the drafts of the Commission contain only a few but important changes:
• While the basic principle for determining which product is considered an orphan medicinal product (for a disease that affects not more than five persons per 10,000 in the Union) is maintained, powers are delegated to the Commission to adopt additional rules to derogate from the above principle with regard to a specific disease – potentially lowering or raising the prevalence criteria;
• The baseline period for commercial exclusivity of an orphan drug is reduced from 10 years to 9 years. It can be increased to 10 years if the medicinal product addresses a “high unmet medical need” (no other medicinal product is available for the disease and the product significantly reduces morbidity or mortality) or reduced to 5 years, if the medicinal product has received MA solely on the basis of bibliographic data, because its active ingredient has a well-established use in the medical practice.
• Regarding advanced therapy medicinal products (such as gene therapy, somatic cell therapy and tissue engineering), the draft Regulation extends the framework for the ‘hospital exemption’ allowing medical institutions to prepare such medicinal products on site. Member States shall adopt a framework and procedure for the approval of such preparations for medicinal products by medical institutions and shall inform the EMA thereof. Where such authorisation is revoked, EMA should also be informed. The aim of the changes is to carefully find a balance between the needs of the medical practice and patients, but also to establish sufficient controls, in order not to convert healthcare institutions, intentionally or unintentionally, to unregistered manufacturers of such medicinal products on an industrial scale;
• The proposals in the Regulation on medicinal products for paediatric use mainly concern an increase in the requirements concerning the paediatric investigation plan, which should be attached to the application for the issuance of MA. As stated above, a new category of MA is also introduced – pediatric MA which may only be issued pursuat to a centralized procedure conducted before the EMA.

IV. Other changes

The proposed new Directive and Regulation contain a number of other amendments that cannot be categorised in any of the above sections, including changes concerning the manufacture, prescription, administration, etc. of medicinal products. Amongst them, some of the most important changes include the following:

• The draft Directive envisages, for the first time, rules for determining the prescription status of medicinal products (with or without medical prescription). In the issued MA, regulatory authorities shall the product to medical prescription if: (i) its use without medical supervision (irrespective whether used correctly or incorrectly) may pose a direct or indirect danger to human health; (ii) the product contains substances or preparations thereof, the activity or adverse reactions of which require further investigation; (iii) the product is normally prescribed by a doctor to be administered parenterally; (iv) is an antimicrobial medicinal product; or (v) contains ingredients and active substance which, by their nature (persistence, bioaccumulation, toxicity), pose a risk to the environment. Medicinal products not subject to medical prescription shall be those that do not meet the above criteria;
• The draft Directive introduces a new type of manufacturing sites – decentralised manufacturing sites, the establishment of which is not subject to authorisation by national regulatory authorities. The Commission’s aim is to introduce more flexibility and accelerate the manufacturing of medicines in the EU (which would also help to alleviate the shortage of medicines in the Union). Each decentralised manufacturing site should be under the supervision of the qualified person at the central (authorised) production site, who has an obligation to monitor compliance with good manufacturing practice in decentralised sites;
• The rights of pharmacies to prepare prescription medicinal products are supplemented. Under the current legal framework, a pharmacy is entitled to compound or prepare a prescription product only when the same product has already been prescribed by a doctor to a particular patient. The proposal lays down that pharmacies shall have the right to prepare products on a prescription in advance – based on the estimated medical prescriptions for the following seven days. Such a change would solve the problem of Bulgarian pharmacists, who protested at the beginning of the year against sanctions imposed by the Bulgarian Drug Agency for the advance preparation of prescription products;
• The draft Directive also provides for increased accountability of pharmaceutical companies. Under the proposed changes, the MAH should make public any funding from a state or publicly funded body received in connection with the development of a medicinal product that has received a MA in a Member State or in the Union as a whole.
  All the changes described in this and the previous article are part of a proposal by the European Commission to change pharmaceutical legislation and can be substantially amended during the legislative process before the European Parliament and the Council of the European Union. Depending on the outcome of the complex negotiations between MEPs, governments of Member States and taking into account the concerns raised by the pharmaceutical sector and patients’ rights associations, it is possible that many of the above changes will not find place (or will be significantly modified) in the final text of the new Regulation and Directive.

The European Commission’s ambition is for the final texts to be approved before the term of the European Parliament expires in 2024, but this deadline seems too ambitious and is highly likely to be missed. Even with swift approval of the final text of the legislative acts, they will certainly contain a long transitional period before their entry into force (in view of the current European practice – most likely several years), during which Member States shall transpose the provisions of the Directive into their legislation and the participants in the pharmaceutical market will have to make the necessary preparations to adapt to the numerous changes.

By Philip Kiossev, Senior Associate, and Eleonora Mateina, Managing Associate, Eversheds Sutherland

CMS Sofia has advised Astronergy Solar Bulgaria on receiving a EUR 54 million refinancing for its portfolio of ten operational photovoltaic plants from the recently merged KBC United Bulgarian Bank.

“The portfolio, which was originally financed by the China Development Bank for EUR 104 million, consists of ten operational photovoltaic plants [built in 2012], which initially enjoyed a fixed Feed-In Tariff and, from 2016 onwards, transitioned to the current Contracts for Difference Guarantee scheme,” CMS informed.

The CMS team was led by Managing Partner Kostadin Sirleshtov and Senior Associate Borislava Piperkova and included Associates Elena Yotova-Yordanova and Dian Boev and Trainee Lyubomira Tanchovska.

Boyanov & Co has advised Swedish manufacturing company Note on its acquisition of Bulgarian electronics manufacturer ATM Electronics.

“Through the acquisition, Note gets its second plant in Eastern Europe,” Boyanov & Co informed. “The plant in Bulgaria is expected to meet a rapidly growing need for cost-effective production close to customers in Europe.”

Note is a Swedish manufacturing company with a presence in Finland, the UK, Estonia, Bulgaria, and China. ATM Electronics focuses on manufacturing electronics and has operations in Sofia, with electrical assembly done in nearby Petrich.

“We are enthusiastic about this acquisition, which, in addition to adding another profitable plant to the group, also expands our manufacturing capacity in Eastern Europe,” Note CEO and President Johannes Lind-Widestam commented. “We see great value in the fact that we are now expanding the possibilities to offer our existing customers advanced electronics manufacturing in a very cost-effective part of Europe. Together with existing customers, staff, and management in Bulgaria, we look forward to developing the business further and continuing our profitable growth journey.”

The Boyanov & Co team included Partner Yordan Naydenov, Counsel Mihail Vishanin, and Associate Nikol Rahmanlieva.

On 26 April 2023, the European Commission presented its long-awaited proposal for a comprehensive reform of the European pharmaceutical legislation.

The reform aims to replace Directive 2001/83/EC on the Community code relating to medicinal products for human use with a new Directive (“the Directive”) and the integration into a new general regulation (“the Regulation”) of the Regulations establishing the European Medicines Agency and the centralised procedure for the authorisation of medicinal products (Regulation No 726/2004), orphan medicinal products (Regulation No 141/2000), advanced therapy medicinal products (Regulation No 1394/2007) and medicinal products for paediatric use (Regulation No 1901/2006).

The idea for codification of European pharmaceutical legislation aims not only to make it easier to work with the legislative acts, but to implement several key EU policies that the European Commission considers have not enjoyed satisfactory progress thus far. The focus is on equal access to innovative medicines in all EU Member States, the fight against antimicrobial resistance, and measures to address the shortage of key medicinal products on the European market, etc.

All these priorities of the European Commission should also be key priorities of the Bulgarian state, which, according to publicly available data, has access to only about 30% of recently authorised medicines in the EU, where the use of antibiotics (and therefore antimicrobial resistance) is at alarmingly high levels, and the shortage of key medicines is a daily topic in the media and an unpleasant fact in the life of us all. According to EFPIA data, as of 5 January 2023, out of 168 new therapies approved for the entire EU, Bulgaria has access to only 56.

Due to the importance of the topic, as well as the multitude of information and support materials of the European Commission accompanying the proposed overhaul, the reform of the European pharmaceutical legislation found leading coverage in most Bulgarian media, including those that do not specialize in medical or legal topics.

At the same time, due to the volume of the legislative acts proposed by the European Commission and the huge number of changes envisaged by them, the majority of attention was paid to a limited part of the changes envisaged by the proposals for new Regulation and Directive – those concerning the reduced regulatory data protection periods and the various incentives to increase them, including incentives to develop new antimicrobial medicines, as well as measures to address drug shortages.

Overshadowed by the aforementioned, many other key changes in the two pieces of legislation remained “under the radar” of media attention. With this article we would like to draw attention to these changes, many of which are of comparably important for pharmaceutical companies and the European healthcare sector, as a whole.

I. Introduction of new sub-types of medicinal products

The proposal for a European Commission Directive introduces definitions and specific rules for many new sub-types of medicinal products, including:

• hybrid medicinal products (Art. 10 of the Directive)and bio-hybrid medicinal products (Art. 12 of the Directive)– medicinal products similar to generics that do not meet the definition of a generic medicinal product due to changes in the strength, pharmaceutical form, route of administration or therapeutic indications, compared to the reference medicinal product. Regarding these medicinal products, the draft Directive stipulates that the marketing authorisation applicant shall submit results of non-clinical tests or clinical studies to the extent necessary to establish a scientific bridge between the hybrid medicinal product and the reference medicinal/biological product, specified in the application. This enables the applicant to benefit from the clinical and preclinical data submitted during the registration procedure of the reference product;
• antimicrobial medicinal products (Article 17 of the Directive) – The European Commission is elevating antimicrobial medicinal products to a separate category of medicinal products, since under the proposal they will be subject to additional requirements before their authorisation, including a requirement to attach to the application an antimicrobial stewardship plan, that shall outline the mitigation measures to address antimicrobial resistance that is expected to gradually arise as a result of the prescription and use of the medicinal product;
• integral combinations of medicinal products and medical devices (Article 18 of the Directive), medicinal products in exclusive use with medical devices (Article 19 of the Directive) and combinations of medicinal products with products other than medical devices (Article 20 of the Directive) – in the procedure for their marketing authorisation, the applicant shall submit, together with data on the safety of the medicinal product and the medical device/products other than medical devices, when used separately, safety data for their combined use as a single product;

II. Changes to the authorisation procedure for medicinal products

• The drafts of the new Directive and Regulation provide for comprehensive changes in the procedure for the authorisation of medicinal products in all its phases – the preliminary phase (while clinical trials are being carried out and the application is being prepared), types of applications and marketing authorisations (“MAs“), examination of the application, issuance and validity of the MA, etc.:
• The draft Regulation provides that the European Medicines Agency (“EMA”) may provide scientific and regulatory support to pharmaceutical companies as early as the development phase of their new medicinal products – in parallel with the scientific support provided to developers under Regulation (EU) 2021/2282 of the European Parliament and of the Council of 15 December 2021 on health technology assessment (more information about the content of this Regulation can be found here).
• The Regulation significantly expands the categories of medicinal products subject to a centralised marketing authorisation procedure by the EMA (essentially taking away further powers from national drug authorities). In addition to the categories of products subject to the centralised procedure under Regulation (EC) No 726/2004, centralised MA shall also receive:
• all medicinal products whose active substance was not authorised in the European Union on 20 May 2004 (the current regime provides for the issuance of centralized MA only for medicinal products with a new active substance for AIDS, cancer, diabetes, neurodegenerative disorders, auto-immune and viral diseases, while for other new active substances the centralized procedure is optional);
• medicinal products with a paediatric use marketing authorisation (a new type of marketing authorisation introduced by the Regulation for medicinal products intended exclusively to be used by children);
• priority antimicrobials under Article 40 of the Regulation;

Although the Directive and the Regulation do not provide for any major changes to the currently well-established mutual recognition procedure and decentralised procedure for issuing MAs, the draft Directive introduces the possibility for a Member State to opt-in on its own initiative in an applicant-initiated mutual recognition procedure or a decentralised procedure for issuing MA. This change transfers control over the matter where a medicinal product will be authorised from the applicant to the Member States with all the positive and negative consequences thereof – improved patient access, especially in Eastern European countries, but also regulatory and financial risk for pharmaceutical companies that do not have sufficient financial and administrative resources for the successful completion of the administrative procedure in more countries than originally planned;

The Regulation introduces a new type of marketing authorisation granted by the EMA – temporary emergency marketing authorisation (“TEMA”). The introduction of the TEMA is the result of the lessons learned by the Commission from the COVID-19 pandemic, during which it was established that there was no legal instrument of Union pharmaceutical legislation for emergency response to pandemics and health crises (the result of which was that the UK and USA issued authorised coronavirus vaccines significantly faster than EMA). It is envisaged that the TEMA will be issued through the most simplified procedure possible, in the event of a public health emergency at Union level and only for the duration of that emergency. Should the marketing authorisation holder (“MAH”) elect to continue the use of the medicinal product beyond the end of the health emergency, the MAH should apply for issuance of one of the standard MAs.

The draft Directive introduces several additional conditions that can be included in the national MAs, namely: that the medicinal product is authorised for use, subject to an obligation to carry out: (i) post-authorisation studies to substantiate the clinical benefit; (ii) post-authorisation environmental risk assessment studies (“ERA“); (iii) post-authorisation studies to improve the safe and effective use of the medicinal product; (iv) a medicinal product-specific validation studies to replace animal-based control methods with non-animal-based control methods;

A significant shortening of the deadlines for authorisation of the use of a medicinal product is envisaged: the deadline for issuing a centralized MA is reduced from 277 days to 226 days, while the deadline under the national procedure is reduced from 210 days to 180 days.

The Directive and the Regulation introduce new grounds for refusal to issue a MA – if the ERA enclosed to the MA application is incomplete, insufficiently substantiated or does not sufficiently address the identified environmental risks, and if the labels and package leaflet do not comply with the applicable requirements;

If the proposed changes are adopted, the issued MA will be valid for an unlimited period (under the current legal framework the term of validity of the initial MA is 5 years). It remains possible, for reasons based on the safety of the medicinal product, for EMA or Member States to consider that the initial marketing authorisation should be granted for a period of 5 years.

III. Better market access for generic medicinal products

• With certain exceptions, the requirement to enclose a risk management plan to the application for the issuance of a МА for generics and biosimilar medicinal products is abolished;
• The Directive and the Regulation extend the so-called “bolar exemption” – the rule transposed into Аrt. 33 of the Bulgarian Medicinal Products in Human Medicine Act (“MPHMA“) that the conduct of the necessary studies in order to prepare marketing authorisation documentation and subsequent practical requirements in relation to the MA of the generic medicinal product does not constitute an infringement of the patent or the supplementary protection certificate of the reference medicinal product. In this revised and extended version of the exemption, the following are added amongst the authorised activities: activities relating to health technology assessment, price registration and reimbursement procedures, as well as actions related to the above administrative procedures, including the offer, manufacture, sale, supply, storage, import, use and purchase of patented medicinal products or processes, including by third party suppliers and service providers. By extending this exemption, the Commission aims to facilitate the release of generic medicinal products to the European market at the earliest possible moment after the expiry of patent protection of the original product (in Bulgaria, pricing and reimbursement procedures may take more than a year).

In the next article, which will be published soon on our website, we will review in-depth additional changes outlined in the Commission’s proposals for a new Directive and Regulation – changes to the advertising of medicinal products, new measures and requirements for environmental protection, changes to the legal regime concerning orphan medicines, advanced therapy medicinal products and medicinal products for pediatric use and other significant changes that will affect the pharmaceutical market in the European Union.

By Philip Kiossev, Senior Associate, and Eleonora Mateina, Managing Associate, Eversheds Sutherland

In the midst of ongoing political gridlock following Bulgaria’s fifth parliamentary election in two years, industries such as energy, renewables, high-tech, and healthcare still make the country an attractive investment destination, according to Schoenherr Office Managing Partner Alexandra Doytchinova.

“In April, Bulgaria witnessed its fifth parliamentary election in just two years, adding to the prevailing political deadlock,” Doytchinova begins. “With no majority party and the inability to form a government, discussions on government formation continue to dominate the agenda.”

“Consequently, some international investors perceive it as a barrier to entering Bulgaria, and the country is starting to regain its reputation as (allegedly) politically unstable, reminiscent of an image we had 15 years ago,” Doytchinova notes. “However, we strongly disagree with this viewpoint, and it seems the market shares a similar sentiment. While it is true that we currently lack a government, all election-winning parties have a clear Euro-Atlantic orientation and Bulgaria possesses a stable legal EU-based framework that facilitates business operations, with functioning authorities and courts. Although the absence of a government may result in slower progress, it does not introduce any increased risk to investments, nor should it hinder strategic and financial investors from pursuing opportunities in our country.”

Regarding the market specifics, Doytchinova says “FDIs in 2022 surpassed the levels seen in 2021, indicating positive growth.” However, she says there has been, reportedly, a concerning decline of 40% in FDIs during the first quarter of 2023 compared to the same period in 2022. “We hope that this is a temporary phenomenon limited to the start of this year,” she notes.

“In terms of industries, we have not observed a significant shift compared to previous years,” Doytchinova says. “There is a notable and continued strong interest in the energy and renewables sector, particularly in Bulgaria where the potential for solar power is promising. Furthermore, there is a consistent and ongoing interest in the high-tech/IT and telecommunication sector. This trend appears to be continuing at present.”

“Additionally, we are witnessing a potentially encouraging development in the healthcare and life sciences sector,” Doytchinova continues. “Historically, FDIs in this sector have been rare, with only occasional deals involving clinics and hospitals. However, we have already seen two interesting deals in the first quarter of this year – the acquisition of Home Medic by the SAT Health Group and the acquisition of Medical Center AmeriMed by the Bulstrad Life Vienna Insurance Group.” This emerging trend is logical, she points out, “after the rapid development of telecommunications and the need for adequate medical care during the pandemic. The sector is very intriguing for us, as it may have positive implications for both individuals and overall societal well-being.”

“Unfortunately, due to the lack of a stable parliament, there has been limited success in enacting legislation to adapt the laws to meet the requirements of the fast-developing economy,” Doytchinova notes. “This has resulted in a lack of progress in updating laws and a slowdown with the absorption of European funds.” For example, she says “Bulgaria is one of the few countries that still does not have any FDI regulation. Unlike other European jurisdictions, there are no state supervision or checks on the sources of investments. One could speculate that this intentional absence of regulations is aimed at attracting investors – who can freely make Europe-based, high-quality FDI without any filtering or scrutiny.”

Bulgarian law firm Dinova Rusev & Partners has joined the South East Legal Alliance.

According to SELA, “after much careful consideration, Dinova Rusev & Partners was selected as it shares the same values and goals as SELA and will therefore add significant value to the network while allowing us to maintain our guarantee for seamless legal service across Southeast Europe.”

Founded in May 2005 by Anelia Dinova and Milen Rusev, Dinova Rusev & Partners is an independent law firm providing full-scope legal services.

SELA is a regional network of independent law firms advising clients on their operations across South East Europe. SELA’s membership spans across eight jurisdictions, with alliance members in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Montenegro, North Macedonia, Serbia, and Slovenia.

On 4 May 2023 the Bulgarian Act on the protection of persons who report or make public information on breaches (“Whistleblower Protection Act” or “WPA”)1 adopted earlier this year enters into force, giving effect to the provisions of Directive (EU) 2019/19372 and imposing a number of obligations on employers in both the public and private sector.

Purpose and scope

The WPA is aimed at ensuring the protection of persons who report or make public information on breaches of Bulgarian or EU law that they have become aware of by virtue of their employment or otherwise in connection with work (commonly referred to as “whistleblowers”). Eligible for protection under the act are:

• current or former employees;
• self-employed persons;
• volunteers, interns/trainees;
• contractors;
• shareholders, members of management or supervisory bodies;
• job candidates, etc.;
• as well as persons who have aided whistleblowers with reporting and other categories of related natural/legal persons.

While the WPA provides that proceedings are not initiated with respect to anonymous reports, persons who anonymously report or disclose information on breaches but are subsequently identified and subjected to retaliation may nevertheless be eligible for protection.

Protection under the act is offered to persons reporting or disclosing information on a wide range of breaches, including those related to AML/CFT, public procurement, financial services, transport safety, data and consumer protection, environmental protection and more, as well as breaches of Bulgarian employment law. The scope of the WPA also covers reports and disclosures on any infringements related to the internal market or affecting the financial interests of the EU. Several categories of reports are explicitly excluded, such as those disclosing confidential health information, etc. Importantly, proceedings under the act are also not initiated with respect to infringements older than two years.

Employer’s internal reporting channels

Under the WPA, several categories of employers are obliged to create an internal reporting channel in accordance with the specifications of the act, including by designating an employee responsible for receiving, registering, reviewing and, if necessary, referring reports externally. This obligation applies to (from date):

• employers in the public sector (except for some categories of municipalities) (4 May 2023);
• employers in the private sector with more than 249 employees (4 May 2023);
• employers in the private sector with 50 to 249 employees (17 December 2023), and
• employers in the private sector, regardless of the number of employees, whose activities fall within the scope of certain EU legal acts, including in the field of banking, financial and
• payment services as well as in other areas of importance such as transport safety, offshore oil and gas operations safety, etc. (4 May 2023).

Under the act, internal reporting channels must be managed in a way that guarantees the completeness, integrity, and confidentiality of information, prevents unauthorised access, and makes it possible for the information to be stored on a durable medium for investigation purposes. To this end, internal procedures governing such reporting must be revised and, if needed, updated every three years. In addition, the act lays down specific requirements as regards the protection of whistleblowers’ identities and the information received.

Employers in the private sector may also utilise an internal reporting channel that already exists within their corporate group if that channel is in full compliance with the requirements laid down in the WPA. The act also requires employers to provide clear and easily accessible information on the procedures and conditions for internal reporting, once established, on their internet page(s) and in a visible place at their office premises.

Further, qualifying employers are required to designate one or more employees responsible for receiving, registering, and reviewing reports. These employees may also carry out other functions for the employer (subject to conflict-of-interest rules), including that of a Data Protection Officer (DPO). Private sector employers may also choose to outsource the functions of receiving and registering the reports to legal/natural persons outside their organisation. In addition, private sector employers with 50 to 249 employees may essentially share a reporting channel by designating a common responsible person or unit. This opportunity, however, does not extend to employers who are obliged to create an internal reporting channel because their activities fall within the scope of certain key EU legal acts.

Reports are submitted in writing (including via email) or orally (including via telephone or other similar audio medium) and registered in the form and with the minimum content prescribed, upon which the designated person(s) must acknowledge receipt of the report, review the report, provide a diligent follow-up, and organise further action. The act also establishes the obligation for qualifying employers to create and maintain a register of submitted reports in accordance with the specifications laid down and to regularly submit the necessary statistical data to the competent external reporting body (see below).

External reporting

• The WPA authorises the existing Bulgarian Personal Data Protection Commission (“PDPC”) to be the competent central external reporting authority under the WPA (the PDPC is also the reporting authority under the Bulgarian Personal Data Protection Act). As such, the PDPC is empowered, among other things, to conduct the overall organisation and coordination of external reporting, to receive reports and to refer them to other authorities competent to review them based on the infringement(s) concerned. The PDPC is also empowered to issue guidance to qualifying employers, to conduct trainings for designated persons, and to establish specific rules for the registration, keeping and referral of internal reports to the external reporting authority, where needed.

Protection measures

The act prohibits any form of retaliation (including threats and attempted retaliation) against whistleblowers that puts them at a disadvantage or is repressive in nature. This includes termination or temporary suspension from work, demotion or delay in promotion, any direct or indirect discrimination, the imposition of disciplinary sanctions, etc. (this list is not exhaustive). As protection under the act is offered to a wide range of whistleblowers, including those that perform work for the qualifying employer but are nevertheless not employees, prohibited measures may also include, for example, early termination or cancellation of a supply contract. In cases of breaches of the above prohibition, the whistleblower is also entitled to compensation for pecuniary and non-pecuniary damages suffered as a result of the breach.

Liability

Finally, subject to conditions, reporting persons are immune from liability for their acquisition of or access to the information, as well as breaches of confidentiality obligations or commitments regarding the disclosure of trade secrets with respect to the information. However, the persons affected by the report or disclosure (i.e. the natural/legal persons or other associated parties to which the infringement is attributed) are entitled to compensation for pecuniary and non-pecuniary damages if the whistleblower knowingly reports or makes public false information, or was under a duty to assume that the information was false under the circumstances.

By Tereza Shishkova, Attorney at law, and Ema Stoyanova, Associate, Schoenherr

Did You Know that, according to the Activity Rankings function of the CEELMDirect website, only five lawyers in Bulgaria worked on more than one client matter reported in the first three months of 2023?

Those five lawyers are Boris Teknedzhiev of Tokushev & Partners, who worked on four reported client matters; Georgi Tzvetkov who worked on three, with his DGKV colleagues Gergana Monovska and Valentin Bojilov working on two each; and Katerina Kraeva of Wolf Theiss who also worked on two reported client matters.

Want to see which deals these partners worked on, or which other lawyers have reported working on deals in Bulgaria – or anywhere else in CEE – this year? Visit CEELMDirect.com, the world’s only truly dynamic legal directory, and find out!

Wolf Theiss has advised Eleven Ventures on three start-up investments in Bulgaria, including BibeCoffee, True Insight, and Native Teams.

Eleven Ventures is a Southeast Europe venture capital fund established in 2012 with over 150 collective investments to date.

According to the firm, BibeCoffee is the developer of a real-time IoT solution connecting any professional coffee machine or grinder to the cloud, “allowing users across the globe to monitor and improve the quality of each cup of coffee prepared on their watch.” True Insight is the developer of a software-as-a-service product that employs “proprietary AI to help e-commerce brands and store owners analyze, track, compare, and diagnose their product pages and listings.” And Native Teams is a start-up offering an “employee of record service and a digital wallet to facilitate company-freelancer relationships in an ever-shifting employment environment.”

“At the end of January, Eleven stepped into UK-Greek startup BibeCofee’s investment round with EUR 1.2 million, more than half of the fully raised funding of EUR 2.1 million,” Wolf Theiss informed, while the True Insight investment was part of Eleven’s dedicated program for supporting pre-seed CEE founders: Eleven Alpha.

The Wolf Theiss team included Partner Richard Clegg, Senior Associates Staniella Todorova and Zhulieta Markova, and Associate Kristian Yabalkarov.

The firm could not provide additional details on the matter.