Category: Bulgaria

Our team achieved significant success defending a client before the Supreme Court of Cassation (SCC) in an employment dispute related to the amount of remuneration in the event of reduced working hours established by the employer in the event of a declared state of emergency or emergency epidemic situation (Article 138a, para. 2 of the Labour Code).

The Court held that in this case the general rule set out in Article 247, para. 1 of the Labour Code shall apply. As per the said rule the amount of remuneration depends on the actual duration of working time. This decision not only protected our client’s interests but also contributed to clarifying the new legal regulation of employment relations during the period of a declared state of emergency or a declared epidemic situation.

In connection with the declaration of the state of emergency in Bulgaria and the need to regulate labour relations, a new paragraph 2 has been introduced to Article 138a of the Labour Code, effective from 13.03.2020. The new paragraph provides the employer with the possibility to unilaterally establish reduced working time for full-time employees in the enterprise or at unit thereof for the entire period of the declared state of emergency or for part of this period. The aim pursued by the new paragraph 2 of Article 138a of the Labour Code is to preserve employment by giving the employer the possibility to reorganize its activities during the state of emergency or the epidemic situation. Subsequently, an amendment to Article 138a, para. 2 of the Labour Code was adopted, with effect from 14.05.2020. The amendment provides that an employer may introduce reduced working time in the enterprise or at a unit thereof not only in the event of a declared state of emergency but also in the event of a declared epidemic situation.

A legal dispute arose between parties in an employment relationship concerning the amount of remuneration due to an employee who worked reduced hours under the terms of Article 138a, para. 2 of the Labour Code. Given the absence of case law on the matter and pursuant to Article 280, item 3 of the Civil Procedure Code, the case was admitted to cassation appeal. With a decision dated from January 22.01.2025, the SCC definitively resolved the issue of the amount of remuneration due to an employee who worked under the terms of Article 138a, para. 2 of the Labour Code.

According to the decision of the SCC, in case of unilateral establishment of reduced working time on the basis of Article 138a, para. 2 of the Labour Code, the general rule set forth in Article 247, para. 1 of the Labour Code shall apply. As per the said general rule the amount of remuneration depends on the actual duration of the hours worked. The arguments supporting the decision of the SCC is the absence of a special law derogating the application of the general provision and the rule against unmerited gain.

In the case of Art. 138a, para. 2 of the Labour Code, the provision of Art. 267a of the Labour Code, according to which the employee is entitled to his/her gross remuneration for the period of cessation of work during a declared state of emergency or epidemic situation (Art. 120c of the Labour Code), could not be applied. The provision of Art. 267a of the Labour Code is a special norm and compulsory and cannot be interpreted broadly, nor applied by analogy to other situations not expressly provided for by the law.

Teodora Shopova, Senior Associate, Gugushev & Partners, PONTES

Kinstellar has advised TSH Investment on the acquisition of the Park Center shopping mall in Sofia from Revetas Capital Advisors. Schoenherr advised Revetas on the deal.

TSH Investment is a joint venture between real estate investment companies Trinity Capital and HUS Invest.

Revetas Capital Advisors is a European real estate investment advisor focused on distressed opportunities and value-added investments. 

The Kinstellar team included Partner Antonia Mavrova, Counsel Atanas Mihaylov, Managing Associate Georgi Kanev, and Senior Associate Nikolay Gergov.

The Schoenherr team included Partner Ilko Stoyanov and Attorneys at Law Gergana Roussinova-Ivanova and Dimitar Vlaevsky.

At the beginning of each year Bulgarian Competition Protection Commission announces (the “CPC”) its priorities. The priorities for 2025 do not differ very much from those set in the previous years and show consistency.

In 2025 CPC will again prioritise the fights against prohibited practices and cartels in the fundamental economic sectors, such as: energy, fuels, food, and pharmaceuticals, as well as in some rapidly developing sectors, such as: digital economy, sustainability, telecommunications, financial services and employment. These sectors are in the radar of the CPC constantly since the pandemic.

As per the CPC’s annual reports CPC has increased slightly its activities in the food and pharmaceutical sectors since 2021. However, despite increasing prices in food sector and supply shortage of some drugs CPC has not established prohibited practices in these sectors although several markets (e.g., food trade, manufacturing and trade with diary product and eggs, pharmaceuticals wholesale) have been investigating in the last two years. For the purposes of the investigations in the food sector CPC conducted dawn raids at the sites of some undertakings concerned. However, in the food sector some potential restraints on the vertically related markets have been identified which will be scrutinised by CPC as well as information exchange. In pharma sector practices which might affect parallel import and distribution of generic drugs will be of particular interest for CPC in 2025.

As for the fuel sector, the markets in the sector have been periodically reviewed for prohibited practices in the past 15 years and no such practice have been found. However, in 2023 CPC sanctioned the leaders in the sector Lukoil Neftohim Burgas AD and Lukoil Bulgaria EOOD for abusive practices on the market of fuel storage in the form of denying access to importers and manufacturers of automotive fuels to their own tax warehouses, limiting imports by sea by blocking tax warehouses. The sector will be further monitored considering certain international factors (the war in Ukraine and the situation in Middle East) which can affect the fuel prices on the national markets.

It seems that in 2025 CPC will focus more on fight against bid rigging as a form of cartels. Bid rigging has been taking bigger and bigger part in the antitrust activity of the CPC in the past years. The CPC’s efforts have been and are still directed to increasing knowledge and awareness among the contracting authorities about the bid rigging indicators. As per the CPC these efforts start showing results. The statistics shows that the newly opened bid rigging proceedings per year are up to two for the past two years while the total number of the newly opened prohibited practices cases varies between four and six per year. Another ambition of the CPC in order to increase detection of the bid rigging cases is improving the exchange of information with the Public Procurement Agency and to explore ways for electronic screening of the bidders’ offers, including by using AI. According to the practice of the CPC, it usually conducts dawn raids by such type of investigations.

In terms of the new and developing markets it is expected CPC to provide its final report on the sector inquiry in the digital commerce which might identify prohibited practices and result in some investigations. Obviously, CPC will follow the EU trends and will be attentive about sustainable agreements and how they will impact the competition environment. In the employment market CPC will focus on the agreements between employers with which they mutually agree on the salaries of their employees or not to attract or hire their employees. However, CPC has not had practice on these developing markets yet.

Each year CPC shows by setting its priorities that it intends to have more intensive antitrust practice. However, the annual results still show that CPC is still more busy with the appeal of public procurement procedures. From the consumer prospective it still seems CPC not to be proactive enough to scrutinise market operators’ behaviour (either on traditional markets or on the developing markets) and thus, to guarantee them choices of products with better quality at better price.

By Mariya Papazova, Partner, PPG Lawyers

Kinstellar has advised UniCredit Bulbank as the lead manager on the private placement of a EUR 25 million corporate bond issuance by Minimart. Djingov, Gouginski, Kyutchukov & Velichkov advised Minimart.

Minimart is a Bulgarian convenience store chain. According to Kinstellar, the bond issue comprises 250 bonds, each valued at EUR 100,000, maturing in five years at an interest rate of 7.77%, payable semi-annually. The subscription group included UniCredit Bulbank, Eurobank Bulgaria, Varengold Bank, and KBC Agro–Bulgaria. Proceeds from the issuance will fund Minimart’s retail network expansion to 300 stores by 2025 and support upgrades to its IT infrastructure.

The Kinstellar team included Counsel Svilen Issaev and Senior Associates Nikolay Gergov and Denitsa Kuzeva.

The DGKV team included Partner Georgi Tzvetkov and Senior Associate Tsvetelina Bayraktarova.

As the first publicly listed Bulgarian company in the gaming industry, Telematic Interactive Bulgaria has set its sights on aligning employee engagement with corporate growth through an ambitious Employee Stock Ownership Plan (ESOP). Being part of the team that advised Telematic on this project, in this article, I’ll provide a detailed look at the motivations behind this decision, the structure of the ESOP, and the intricate legal challenges faced during its implementation.

TIB’s Global Operations

Telematic Interactive Bulgaria has been our client since 2022. It is a Bulgarian publicly listed company in the Bulgarian regulated market operating in the online gaming industry. TIB is the licensee of one of the largest platforms for casino games and sports bets in Bulgaria, operating under the brand of Palms Bet, and is the sole owner of the capital of the gaming content provider CT Interactive. In addition to its operations in Bulgaria, the company also has a presence abroad – its group includes subsidiaries registered in Peru and Curacao. TIB is the first publicly listed Bulgarian company in the gaming industry, with over 280 employees.

Why an ESOP?

TIB’s decision to introduce an Employee Stock Ownership Plan stems from its belief in fostering a strong, loyal, and motivated workforce.

Our client firmly believes that employee treatment is the crucial factor for business success.TIB views its team as a large family where everyone supports each other and works together to achieve shared goals. For this reason, a decision was made to implement an ESOP, providing employees with the opportunity to receive shares or share options as a bonus for loyalty and achievements. Our team advised TIB’s management on the development of the ESOP, which was presented to the company’s shareholders for approval in September 2024.

As a public company, adoption of an ESOP by TIB, and the subsequent allocation of share options or shares to employees, are subject to numerous legal requirements. When choosing the specific mechanism by which the share options or shares shall be allocated, both the provisions of supranational regulations and the provisions of national legislation, including the Public Offering of Securities Act, need to be taken into account.

 The allocation of company shares to employees is a trend that is well-established in many countries and has started gaining popularity in Bulgaria over the last few years. The aim of the ESOP is to recruit and retain employees by supporting their development, encouraging growth, and offering them opportunities for advancement. By receiving company shares, employees become more engaged, which in turn contributes to the success and strong performance of their employer.

The program encompasses a broad spectrum of participants. TIB’s ESOP covers a wide array of employees, including senior and mid-level management, as well as expert staff within TIB, its subsidiaries, and affiliated entities. Under the program, a minimum of 12 months of experience within the group of companies is required, as of the date when the Board of Directors decides on the bonus allocation.

The ESOP offers various mechanisms for share allocation, including share transfers, buy-backs, or capital increases. The implementation and execution of the ESOP fall entirely within the authority of the Board of Directors of TIB. The Board independently sets the criteria, evaluates their fulfillment, and determines both the allocation and the size of the bonus in shares.

Challenges and Hurdles

The implementation of the ESOP was not without its challenges, particularly due to TIB’s status as a public company.

As mentioned earlier, TIB is a public company, which makes the procedure really complex. On the one hand, it must comply with the regulations of the POSA and various supranational regulations. On the other hand, it must take into account the specifics of labor and social security legislation. In this particular case, the procedure required several months of hard work, as it was back in July when we started work on convening a general meeting of shareholders to approve the ESOP.

TIB had previously initiated a share buy-back program, the purpose of which was to reduce the company’s capital. For this reason, it was necessary to adopt a new resolution to amend the purpose of the buy-back and to allow the company to use these shares in accordance with the approved ESOP.

The “Most Liquid Issuer”

The Bulgarian Stock Exchange (BSE) awarded TIB with a prestigious award, naming the public company as one of the most liquid issuers in the Standard segment of the BSE’s main equity market in 2024.

The TIB increased the number of shareholders due to transparency of management, communication with investors and а strong dividend policy. This gives reason to believe that the company can be included in the main index of the BSE – SOFIX (a major stock market index which tracks the performance of the most liquid companies listed on the BSE).

Thank You to the Team

On a personal note, I’d like to acknowledge the exceptional professionalism and dedication of Tokushev and Partners Attorney-at-Law Maria Gigova, whose hands-on approach was key to navigating the complexities of the plan, as well as the invaluable support of Managing Partner Mr. Viktor Tokushev alongside his own contributions.

By Boris Teknedzhiev, Partner, Tokushev & Partners

The Bulgarian Parliament has recently adopted an Act to amend and supplement the Bulgarian Commercial Act[1] implementing the requirements of Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions.

I. INTRODUCTION OF CROSS-BORDER DIVISIONS

1.        General requirements

Prior to the adoption of the amendments, the Commercial Act provided for a possibility only for cross-border mergers under the following conditions:

(a) all companies participating in the transformation[2] (“Participating Companies”) have their registered offices on the territory of an EU member state or of a state party to the EEA            Agreement, jointly referred to as “Member States”;

(b) at least one of the Participating Companies has its registered office in another Member State, different from the Republic of Bulgaria;

(c) the legal form of the Participating Companies from another Member State is one of those indicated in Art. 1 of First Council Directive 68/151/EEC of 9 March 1968[3];

(d) the Participating Companies, which have their registered office in Bulgaria, are formed as share capital companies (exclusive of investment company with variable capital). Under Bulgarian law, share capital companies are the limited liability company (LLC), the joint-stock company (JSC) and the partnership limited by shares (each of which referred to as “Bulgarian Capital Company”).

The new amendments provide that any company formed in accordance with the law of a Member State, which has not only its (i) registered office, but alternatively its (ii) central administration, or (iii) principal place of business in the same or another Member State may be subject to a cross-border transformation with a company formed under Bulgarian law. This is not to say that a company, which has its registered office outside a Member State is eligible to an EU cross-border transformation, but is rather to be construed in a way that a company, which has its registered office in one Member State and central administration or principal place of business in another Member State, may choose to engage in transformation under the laws of the latter Member State instead of the former.

This is a practical manifestation of the longstanding EU’s legislative practice of regulating private law matters in accordance with the principle of closest connection. In terms of business, this may provide a fair degree of flexibility, unlike keeping solely to the criterion of “registered office”, which is rather rigid and, in many ways, impractical under the conditions of EU single market.

2.         Procedure

In essence, the introduced amendments do not change the conversion procedure. For the sake of simplicity, the latter could be described as “two-phase”.

2.1 In the first “phase” each of the Participating Companies takes all the necessary corporate approvals, actions and filings in accordance with the national laws of the Member State of their formation. The implementation of the requirements of the national law of a Member State with respect to a Participating Company is attested by a pre-merger[4] or pre-division[5] certificate, as applicable, which is issued by the authority competent to scrutinize the legality of the transformation and confirm compliance with all relevant conditions and proper completion of all procedures and formalities in the respective Member State. The issued pre-merger or pre-division certificates are shared between the competent Member State authorities through the system of interconnection of registers.

2.2 In the second “phase” of the procedure, where the process of conversion is finalized, the authorities of one of the Member States assume the “leading role” in the actual completion and registration of the transformation. The completion of the registration by the leading Member State gives legal effect to the cross-border transformation and determines its date. Which Member State should have the leading role is largely dependent on the exact form of transformation.

To make it clearer through an example, in all the cases when the registered office of:

(a) the newly formed (as a result of merger by the formation of a new company – it. 3.2 below);

(b) the acquiring (as a result of merger by acquisition – it. 3.1 below); or

(c) the converting (as a result of any form of division – it. 3.3 – 3.5 below)

company is in Bulgaria, the registration of the relevant circumstances in the Bulgarian Commercial Register[6] made under Bulgarian law shall give legal effect to the transformation and its effective date will be the date of such registration. In this case the Bulgarian Commercial Register must notify the competent authorities of the respective Member States of the occurrence of the registration and its date through the system of interconnection of registers. The said facts are to be taken into account by the Member States’ authorities with respect to any registrations related to Participating Companies under their jurisdiction. The above applies vice versa in cases when the registered office of the company under it (a) – (c) above is outside Bulgaria.

3.         New forms of transformation

Prior to the discussed amendments, the forms of cross-border transformations under Bulgarian law were limited to two (it. 3.1 – 3.2 below), while at present there are three additional options for cross-border transformations (it. 3.3 – 3.5 below), namely:

3.1 Merger by acquisition

Under this form of corporate transformation, all the assets and liabilities of one or more companies (transforming companies) are transferred to an existing company (acquiring company), which becomes their legal successor and the transforming company(-ies) are wound up without going into liquidation.

3.2 Merger by the formation of a new company

In this case all the assets and liabilities of two or more companies (transforming companies) are transferred to a newly established company, which becomes their legal successor, while the transforming companies are wound up without going into liquidation.

3.3 Full Division

This is a scenario in which all the assets and liabilities of a company (transforming company) passes to two or more newly formed companies (recipient companies), which become its legal successors for the corresponding part of those assets and liabilities. The transforming company is wound up without going into liquidation.

3.4 Partial Division

Upon partial division, part of the assets and liabilities of a company (transforming company) passes to one or more newly formed companies (recipient companies), which become the legal successor(s) of those assets and liabilities. The key difference in comparison to the full division is that upon partial division the transforming company is not wound up and continues its existence.

3.5 Division by separation

The division by separation basically represents a sub-type of the partial division, according to which a separation of the assets and liabilities of a company (transforming company) is made and transferred to a newly formed company (recipient company). Differentia specifica of the division by separation vis-à-vis the partial division is that: (a) the capital of the recipient company is fully owned by the transforming company and not the shareholders in the latter; (b) under Bulgarian law the recipient company may be incorporated either as a single-member LLC or a single-member JSC.

It is to be noted that Directive (EU) 2017/1132 is still reluctant to adopt rules on cross-border divisions, under which the recipient companies are not newly formed, but already existing. Arguably those would be the most complex among any other forms of cross-border transformations. Besides to technical complications with international element, this caution may be due to reasons of legal character, stemming from all the pre-existing legal relations, which an existing company is bound by. Those could lead to problems e.g. in the order (privileges) for satisfaction of the receivables of private creditors, conflict between tax authorities from different Member States, which are public bodies belonging to the administrative system of sovereign countries, employment and social-security related problems due to the differences between national legislations, etc.

4.         Shareholders’ protection

Among other amendments, it is worth mentioning that a shareholder in a transforming company who has voted against the decision of the General Meeting of the Shareholders (“GMS”) for the transformation has the right to leave the transforming company in consideration of a payment of a monetary compensation (corresponding to the equivalent of the shares owned by him/her) if, as a result of the conversion, such shareholder acquires shares in a company from another Member State. Termination of the shareholder’s participation is made with a notarized notification, sent within 1 (one) month as of the date of holding the GMS and the monetary compensation must be paid within no later than 2 (two) months after the date of the transformation.

The above is an example of the manner in which the EU law creates the necessary mechanisms so that the core values and freedoms of the EU, installed in specific individual rights, apply to the majority, but also, in an adequate proportion, to each affected individual.

II. “FREE MOVEMENT” OF COMPANIES

1.        Freedom of establishment

The amendments of the Commercial Act take the freedom of establishment under Art. 54, para. 2 of the TFEU to an entirely different level.

The amendments allow for a capital company (converting company), which has its registered office on the territory of Bulgaria (departure Member State) to “move” to another Member State (destination Member State) provided that:

(a) the converting company changes its registered office in the destination Member State;

(b) the converting company adopts the legal form of a company that was established in accordance with the legislation of the destination Member State, which needs to be one the types listed in Annex II Directive (EU) 2017/1132,

following the completion of the conversion in compliance with the above, such company is to be referred as the “converted company”.

The same applies vice versa for any company formed under the laws of a Member State other than Bulgaria (departure Member State) and having a legal form listed in Annex II Directive (EU) 2017/1132, which intends to “move” its registered office to Bulgaria (destination Member State) and adopts the legal form of a Bulgarian Capital Company.

2.        Procedure

When the converted company receives its registered office in Bulgaria, the Bulgarian Commercial Register completes the registration of the conversion after the competent authority of the departure Member State issues the pre-conversion certificate[7], to be exchanged through the system of interconnection of registers. The date of the conversion is the date of its registration in the Bulgarian Commercial Register.

In case that the converting company had its registered office in the Republic Bulgaria, it has to be deregistered from the Bulgarian Commercial Register on the basis of a notification sent by the competent authority of the destination Member State, confirming the conversion is duly completed in its register. The date of conversion is a date determined by the legislation of the destination Member State.

3.        Legal effect

From the date of conversion:

(a) the converting company from another Member State moves its registered office to Bulgaria and continues to exist as a Bulgarian Capital Company of the relevant type;

(b) the converting company from Bulgaria moves its registered office to another Member State and continues to exist as a company according to the law of that Member State;

(c) the rights and obligations of the converting company become the rights and obligations of the converted company;

(d) the shareholders in the converting company become shareholders in the converted company.

The right under Section I, it. 4 is at the disposal of the shareholders of the converting company, which have voted against the conversion.

4.        Potential economic impact

The discussed amendments may be considered as the climax of the right of free establishment in the context of formation of corporate entities. At first sight it may seem as entirely positive due to the flexibility it offers to business.

On the other hand, it may deprive some national economies from profitable business players, which in the pursuit of larger revenue or market share may easily decide to “migrate” to larger national markets. Although this will not be detrimental to the EU single market, it may have its downsides on Member States with smaller-scale economies.

Looking again from the opposite perspective, it may create a positive competition stimulus between Member States, which will likely adopt proper measures trying to retain or attract, respectively, the large commercial players within their national economies and under their tax jurisdictions. Such measures may include lowering tax rates, decreasing the levels of bureaucracy, easing access to markets, investing in the education of qualified workforce, maintaining lower costs/assuming part of the costs of energy supplies and many other.

In conclusion, we can say that there is enough time for Bulgaria to prepare for any effects those amendments could cause, as the Final Provisions of the Act to Amendment and Supplement the Commercial Act gives a term of 1 (one) year to the Bulgarian Registry Agency to ensure the technical possibility for practical application of the amendments discussed.

[1] Published in State Gazette issue No. 82 of 27 September 2024.

[2] “transformation” is used throughout this article as a generic term for mergers, divisions and conversions.

[3] This reference should be read as a reference to Annex II Directive (EU) 2017/1132, which repeals Directive 2009/101/EC repealing First Council Directive 68/151/EEC.

[4] Under Art. 127 of Directive (EU) 2017/1132.

[5] Under Art. 106m of Directive (EU) 2017/1132.

[6] Its full name is Bulgarian Commercial Register and Register of Non-Profit Legal Entities, which is maintained by the Registry Agency at the Ministry of Justice.

[7] Art. 86m of Directive

By Hristian Gueorguiev, Senior Associate, Boyanov & Co

The European Union’s Strategy for Cooperation in the Indo-Pacific, launched in October 2021, marked a significant shift in the EU’s foreign policy. It represented a comprehensive approach to engaging with the region of the Indo-Pacific, which is increasingly recognized as a global economic and strategic hub. Together, the Indo-Pacific and Europe hold over 70% of global trade in goods and services, as well as 60% of foreign direct investment (FDI) flows.

Assessment of Present-Day Position

Almost four years later the EU Strategy for Cooperation in the Indo-Pacific’s focus on sustainable development, economic and digital connectivity, and security continues to open a wealth of opportunities for businesses in Europe. The document proved that it is not outdated. It continues to evolve to meet emerging challenges and opportunities in both regions, including the inauguration of the new U.S. administration. While the strategy, introduced in October 2021, provides a broad framework, its implementation throughout the years has been dynamic, with ongoing updates to address new geopolitical and economic developments. Currently, the spirit and different aspects of this strategy are also applicable on bilateral basis.

After the Russian invasion of Ukraine in February 2022, the EU has faced the challenge of continuing its realistic commitments to the Indo-Pacific region despite the difficulties created by efforts to allocate resources and capacities under the new circumstances. Security issues started to play a more significant role, but there is even greater potential for renewing the agenda in areas such as economy, trade, investment, and sustainable development, as well as implementing infrastructure projects in the Indo-Pacific. In 2024 an increase in the focus on security and defense could be noted (Japan). At the same time, the preferences on the side of some countries from Southeast Asia go to deepening the relations with the EU member states mostly in the economic field in an attempt to prevent EU’s excessive engagement with security issues.

In December 2022 EU pledged to mobilize 10 billion EUR for green transition and sustainable connectivity projects in ASEAN (Association for Southeast Asian Nations) member states under Global Gateway Initiative. Six months later, Dr.Frederick Kliem, a research fellow at Nanyang Technological University in Singapore most effectively drew attention to his forecast that “the war in Ukraine will inevitably put the brakes on European funding capacities elsewhere. It would be highly unrealistic to expect that the financing of the EU Indo-Pacific Agenda could be fully implemented. Nonetheless, the imperative for the EU to engage in the Indo-Pacific, especially in economic and sustainable development matters, has not faded”. The reality proved such a prediction. The EU Strategy for Cooperation in the Indo-Pacific became more specific and focused on measurable outcomes that would enhance accountability.

This article is focused mainly on the new opportunities for trade & investment for Bulgarian companies in some countries from the region of Indo-Pacific, mainly in East Asia.

The EU aims to maintain a free and open Indo-Pacific, in line with the principles of democracy, rule of law, human rights and international law. The EU’s approach is designed to foster a rules-based international order, a level playing field, as well as an open and fair environment for trade and investment, tackling climate change and supporting connectivity with the EU. The Indo-Pacific Strategy thus commits the EU to further support the ASEAN (Association of South East Asian Nations)-led regional architecture and ASEAN’s centrality within it.

The EU Strategy for Cooperation in the Indo-Pacific focuses on seven priority areas:

Sustainable and Inclusive Prosperity: Promoting economic growth and development that benefits all segments of the society through building more resilient and sustainable supply and value chains by diversifying trade and economic relations. EU has an intention to pursue the extension of its network of FTAs (free trade agreements) with Indo-Pacific partners through the ongoing negotiations with Australia, Indonesia, India and Thailand and possible relaunch of negotiations with other ASEAN partners such as Malaysia and the Philippines. Bilateral trade agreements still remain a priority in the relations between EU and ASEAN, provided that the conditions to ensure a shared level of ambition like the cases with Singapore and Vietnam FTAs are met, especially in the field of public procurement and sustainable development. An EU-ASEAN FTA is still a matter of a very distant future.

EU-ASEAN Dialogue on Sustainable Development and EU-ASEAN Dialogue on Trade and Business are going to play even more important role in the next several years. Regarding Southeast Asia, the biggest challenge here is related to some very visible signs of rising protectionism and economic nationalism on commodities and strategic industries (for example ban on the nickel ore exports from Indonesia in order to boost downstream industrialization of the country). It is largely expected the new administration of Indonesia to focus more on critical minerals sector. At the same time, Indonesia and Malaysia have welcomed last autumn the European Commission’s proposal to delay the implementation of its deforestation regulation. It was seen as a gesture on the side of the EU to the important palm oil sector in both countries. Such a directive was aimed at production of unsustainable biofuels based on palm oil.

Green Transition: Addressing climate change and promoting environmental sustainability are among the key tasks for advancing green transition through conclusion of green alliances & partnerships such as the ASEAN/Southeast Asia Team Europe Green Initiative, Just Energy Transition Partnerships for Indonesia and Vietnam and EU-ASEAN Dialogue on Circular Economy.

Ocean Governance: Ensuring the sustainable use and management of ocean resources, including an increase of the EU support for Indo-Pacific countries fisheries’ management and control systems.

Digital Governance and Partnerships: The EU has successfully set up Digital Partnerships with Japan, Republic of Korea and Singapore as well as Trade & Technology Council with India. EU-ASEAN Dialogue on Digital Economy and Society, included under the EU-ASEAN Team Europe Initiative on Sustainable Connectivity could be underlined. EU has concluded Digital Trade Agreement with Singapore and EU-Japan Agreement on Cross-Border Data Flows. For example, through the EU-Singapore Digital Partnership, both sides explore common approaches to semiconductors, in e-identification and in AI governance as well as working on projects such as interoperable e-invoicing standards to facilitate digital trade and small and medium enterprises digital transformation.

Connectivity: The main focus here is on improving transport, energy, and digital links between the EU and the Indo-Pacific. EU Global Gateway aims to reduce the Indo-Pacific’s infrastructure gaps by providing capital for investment into hard and soft infrastructure, with the support of development banks and the private sector. In this regard, the EU-ASEAN Sustainable Connectivity Team Europe Initiative plays a very significant role.

Security and Defense: This key area is related mainly to strengthening regional security through partnerships and joint operations and deepening the EU’s role in the ASEAN Regional Forum. Main activities of cooperation are focused on maritime security, cybersecurity, counter-terrorism and crisis management. It should be noted that free and secure maritime supply routes are a vital strategic interest of the EU. Freedom of navigation in the Indo-Pacific is the most important issue from business companies’ viewpoint.

Human Security: Providing humanitarian aid and addressing human-induced disasters and natural hazards, with particular attention to the most vulnerable.

From the viewpoint of the Bulgarian economy and Bulgarian business companies four of these seven areas are very important: sustainable and inclusive prosperity, including trade issues; digital governance and partnerships, including research and innovation; connectivity and security (especially cybersecurity).

For Bulgarian business companies, the EU Strategy for Cooperation in the Indo-Pacific offers a gateway to new opportunities for trade & investment, enabling them to access some of the world’s fastest-growing economies and build new partnerships. Deepening the EU economic ties with the Indo-Pacific could lead to new markets for Bulgarian products and services. Such an expansion could lead to diversification of the Bulgarian export markets and reduction of dependency on the Bulgarian traditional trading partners. It would also result in the resilience of the supply chains for both Bulgaria and their reliable Indo-Pacific partners. However, the most important challenge is related to attracting the attention of companies from East Asia to invest in Bulgaria. In this regard, special efforts are needed.

The EU’s focus on green and digital cooperation opens avenues for Bulgarian companies specializing in renewable energy and IT services. Connectivity initiatives under the EU Strategy for Cooperation in the Indo-Pacific create opportunities for Bulgarian construction, engineering and logistics companies to participate in large-scale infrastructure projects. Such projects are not limited to physical infrastructure, but also include opportunities for Bulgarian software companies to build digital infrastructure and digital networks.

Examples: There are two emerging main areas for cooperation between Bulgaria and Singapore: resilience of the supply chains and IT, digital economy and cybersecurity. Bulgaria could contribute to the efforts of the Government of Singapore, business associations and trading companies for achieving a supply chains’ resilience through increase of the exports of Bulgarian high-quality food products to the Singaporean market and other markets in East Asia. Bulgarian companies are also interested in export of food and cosmetic products certified by halal standards to Indonesia, Malaysia and Brunei. As a regional ICT hub and № 1 business process outsourcing in Southeastern Europe, Bulgarian IT, software and start-up companies are interested in collaborating with companies from Singapore, including on EU-funded projects based on the widely recognized talent of the Bulgarian software engineers. Other key sectors for economic cooperation and business partnerships between Bulgaria and some countries in Southeast Asia are: semiconductors (Singapore and Malaysia); clean energy (development and commercialization of green hydrogen with Malaysia and geothermal energy with Indonesia); robotics and automation (Singapore), creative economy (Indonesia).

In the light of many opportunities for serious consideration, in their dealings with companies from Southeast Asia, the Bulgarian companies must navigate certain challenges. Among them understanding local regulations and cultural differences is essential for successful market entry. The high diversity of the region of Southeast Asia means that each country operates within a unique legal framework. Successful collaborations rely on building relationships first and meeting with people face-to-face, either virtually or in person. Identifying the right local partner could be a key for Bulgarian firms to facilitating business operations and expanding to multiple markets within the region of Southeast Asia. The Indo-Pacific is a highly competitive region, requiring companies to innovate and adapt to stand out.

Regarding the geopolitical risks, it should be noted that the regional tensions in East Asia, particularly in areas like South China Sea and Taiwan may pose risks to operations and investment. Expanding business operations from Bulgaria to East Asia involves careful planning and strategic execution involving the following steps: preparation of market entry report; understanding the legal frameworks in the countries from the region; adapting business strategies of the Bulgarian firms to the specific country; leverage the digital economy and online presence; building relationships; identifying the right local partner; exploring government incentives in different countries from East Asia; budget and funding; risk assessment; making choice of the right entry mode; participation in trade shows, business missions, conferences and networking events as well as connections with local industry associations and chambers of commerce.

Conclusion

The EU’s Indo-Pacific Strategy represents more than just a geopolitical shift. It is an economic blueprint with tangible benefits for businesses across Europe, including Bulgaria.

The EU’s Strategy for Cooperation in the Indo-Pacific could play a role of transformative opportunity for Bulgarian business companies. Still this opportunity seems to be largely unnoticed or neglected.  By aligning their marketing and investment plans with the strategy’s focus areas—trade, sustainability, digitalization, and security— Bulgarian firms can expand their reach into one of the world’s most dynamic regions. While challenges such as regulatory complexity and competition remain, proactive strategies and regional collaborations can enable Bulgarian companies to position themselves as key players in the evolving global business landscape.

By Petar Andonov, Business Development Director, Boyanov & Co

Spasov and Bratanov, working with Clifford Chance, has advised the International Finance Corporation and Raiffeisenbank International on the EUR 90 million financing for R Engineering to construct a solar power park. CMS advised R Engineering.

R Engineering is a subsidiary of Rezolv Energy.

The Spasov and Bratanov team included Counsel Nadia Hadjova, Senior Associates Tsvetelina Lazarova and Petar Dyankov, Associates Kremena Yaneva-Ivanova and Vladimir Tashev, and Attorney at Law Krasimir Mitkov.

The CMS team included Sofia-based Managing Partner Kostadin Sirleshtov, Partners Elitsa Ivanova and Atanas Bangachev, Counsel Borislava Piperkova, Senior Associates Konstantin Stoyanov, Diyan Georgiev, and Yavor Danailov, Associates Dian Boev and Viktoriya Dimitrova, Junior Associate Nikola Naydenov, and Lawyer Tsvetozara Kostadinova as well as Prague-based Partners Helen Rodwell and Lukas Janicek and Senior Associates Eliska Copland and Michal Samek.

Tsvetkova Bebov & Partners, member of Eversheds Sutherland, has advised Allianz Bank Bulgaria on its issuance of EUR 50 million MREL notes due December 2028.

Allianz Bank Bulgaria specializes in corporate, retail, and mortgage lending and is part of Allianz Group. 

According to Tsvetkova Bebov & Partners, “these senior preferred notes contribute to the minimum requirement for eligible liabilities of Allianz Bank Bulgaria, as set by Bulgarian National Bank in its capacity of resolution authority.”

The Tsvetkova Bebov & Partners team included Managing Partner Nikolay Bebov, Partner Damyan Leshev, Counsel Maria Karacholova, and Senior Associate Petar Ivanov.