Category: Bulgaria

Former Senior Associates Martin Zahariev and Encho Simeonov have been promoted to Partner at Dimitrov Petrov & Co starting March 1, 2023.

Zahariev, who leads the firm’s IP practice, has been with Dimitrov Petrov & Co since 2012, having first joined as a Legal Trainee. He was promoted to Legal Assistant in 2015, Associate in 2016, and Senior Associate in 2021.

Specializing in dispute resolution, restructuring & insolvency, life sciences, and transport, Simeonov has been with the firm for over 12 years, having first joined in 2010.

“As tradition has it, the promotions for this year were recently announced at Dimitrov Petrov & Co’s annual party and have come into force as of March 1, 2023,” the firm announced. “They come after a careful analysis of everyone’s professional performance and personal growth in 2022.”

Bulgaria has seen its Eurozone and Schengen admission dates pushed back by at least a year, while political instability and frequent elections remain the norm. Still, there is room to hope for better times, according to Hristov & Partners Partner Pavel Hristov, mostly thanks to the vibrant IT, transportation, and logistics sectors.

“Bulgaria, much like other countries in the region and the EU, is mostly influenced by two external factors – the economic crisis and the war in Ukraine,” Hristov begins. “They dominate all aspects of the political and economic life in the country.”

Speaking of politics, it looks like Bulgaria is still on a thorny path. “We have early general elections slotted for April 2, following a series of several extraordinary elections in the past couple of years. Indeed, we have had more caretaker governments than regular ones, with some parliaments dissolving after only a few months,” Hristov explains, adding that the situation is still problematic. “We might see another early election before the year is up. Taking all of this into account, it is no wonder that the legislative process has all but stopped.” 

This legislative halt came at a thoroughly inopportune time. “The big challenges for Bulgaria right now are the Eurozone and Schengen zone entries,” Hristov says. “For these to become a reality, a comprehensive set of legislative measures must be undertaken and the national authorities and regulators must be reformed and reinforced. For example, amendments need to be made to the commercial law to provide for the personal bankruptcy of individuals, updates of laws that govern the financial system are needed concerning the National Bank and anti-money laundering, and an overall judicial reform is required,” he elaborates.

And before Bulgaria adopts the Euro currency certain economic conditions must also be met. “The annual inflation rate of 13% is above the required 3%, and this has also contributed to the Eurozone entry date being pushed back tentatively from January 1, 2024, to January 1, 2025.” The Bulgarian economy is facing a difficult period, primarily due to the current geopolitical context. “Following a relatively good 2022 that saw a 4% GDP growth, the projections for this year are almost halved and are between 1% and 2%. On the flip side, however, our annual inflation projection stands at 7-8% for the end of 2023, which is lower than the 13% of 2022 – giving us room for hope,” Hristov says.

Finally, even within such a framework, there are business sectors that are performing admirably. “Exports are a huge driver of the economy, especially business-to-business services, primarily in the IT services sector,” Hristov says. “The Bulgarian IT sector is robust and is, to an extent, sheltered from the overall turmoil. It clearly outperforms all others and is attracting significant investments, garnering attention from numerous funds,” he says, pointing, as an example, to the presence of VMWare and SAP as major employers of local software developers and engineers.”

In addition to IT, Hristov reports there is an uptick in transportation and logistics as well. “There is a huge demand for (and peak in) construction work, especially related to logistics. We have seen several interesting transactions lately, many with an international aspect to them.” As retail switches from physical to online, Hristov stresses the importance of having a strong infrastructure to support supply channels. “Even if transportation and logistics have a similar level of growth as last year, the growth in terms of volume will be fantastic,” he concludes.

Djingov Gouginski Kyutchukov & Velichkov has advised SAT Health on its acquisition of the Home Medic – Home for Medical Center. Schoenherr reportedly advised seller Danail Danilov.

According to DGKV, Home Medic “operates as a mobile medical center providing regular health examinations and sampling performed at patients’ homes.” The acquisition is part of the ongoing implementation strategy of the SAT Health Group – announced four months prior – to expand its presence on the market “with a view of becoming the largest telehealth provider in the region.”

Back in November 2022, DGKV advised the Invenio Partners Fund II on its EUR 3 million investment into SAT Health (as reported by CEE Legal Matters on November 7, 2022).

DGKV’s team was led by Partner Georgi Tzvetkov and Senior Associate Vlada Tsenova.

In recent years, online platforms have become crucial for individuals and small businesses, providing them with enhanced capabilities to interact, purchase and organize due to the data sharing among all market participants. However, many of these platforms have become quasi-monopolies and engage in anticompetitive conduct against their small-business counterparts, leading to calls for regulation from both theoreticians and EU institutions. The P2B Regulation aims to protect business users of online intermediation services by promoting fairness and transparency.

Although the P2B Regulation has already been applicable, there have been important developments related to the sanctioning regime.

The P2B Regulation does not contain any sanctioning regime but, instead, it has “delegated the responsibility of adopting the legal tools ” to each EU member considered necessary to ensure compliance with this regulation. The time for “enforcing” measures in place has come, so not complying with the P2B Regulation may have severe consequences, depending on the specific country where the breach occurs.

The P2B Regulation pertains to online search engines and online intermediation services (Online Services and Providers). Online search engines are a familiar concept, while online intermediation services are a new and potentially impactful concept in EU legislation. Unlike other Digital Single Market legislation, such as the Copyright Directive, which commentators have criticized for lacking clarity, the P2B Regulation offers a detailed definition of the enterprises to which it applies. Additionally, the Commission has released a Q&A document to provide further clarity on the scope of the regulation, the actions necessary for compliance, and the rights of business users.

The P2B Regulation defines online intermediation services as any service provided electronically for payment, allowing business users to offer goods or services to consumers and provided under contractual relationships between the service provider and business users.

The P2B Regulation specifically includes e-commerce marketplaces, price comparison tools, app stores, and social media within its scope. However, it does not cover peer-to-peer online intermediation services where no business users are involved, pure business-to-business online intermediation services that are not provided to consumers, online payment services, online advertising tools, or online advertising exchanges. It’s worth noting that the P2B Regulation applies regardless of whether transactions between business users and consumers involve monetary payments or are partially conducted offline.

In order to meet this objective and prevent unfair situations, the P2B Regulation imposes a series of measures.

Transparency in the general conditions for business users:

• Vague, confusing, or unclear terms are prohibited. They must be accessible at all stages of the contractual relationship (including the pre-contractual phase).
• The reasons for suspending, terminating, or restricting user accounts must be clear.
• The general conditions can only be changed with a minimum of 15 days’ notice. During this period, the affected business user may terminate the contract with the online intermediation service provider.
•  Online intermediation service provider platforms shall ensure that the identity of the business user is clearly visible.

Suspension, restriction, or termination of accounts:

The affected business user must be given a detailed explanation for any suspension, termination, or similar actions taken against them. They should also have the opportunity to clarify any facts that led to the action. If the action was initiated by a third-party notification, the content of the notification must be shared with the affected business user.

Transparency in the ranking and visibility parameters:

Online platforms must disclose their ranking parameters and possible remuneration opportunities to achieve better visibility of the business user’s offer or profile. While there is no obligation to disclose algorithmic workings, the European Commission has issued guidelines to help platforms comply with transparency requirements.

Differentiated treatment of its own products:

In the event that the platform offers its own products or services (directly or through third parties) in a differentiated manner, the description in this regard must be included in the general terms and conditions, including the main economic, commercial, or legal considerations underlying the differentiated treatment.

Access to data:

Platforms must describe in their terms and conditions the technical access they will obtain to personal data for providing the online service.
Restrictions to the offer of goods or services under different conditions by other means:
Any possible restriction by the platform to offers made by the business user of its goods or services on other platforms and under different conditions must be duly justified in the general terms.

Internal complaints and mediation system:

Online service providers must have an internal system to handle complaints from business users, which should be easily accessible and processed within a reasonable time. The platform must provide information about the system in its general terms and conditions. They must also appoint two or more mediators to resolve disputes with business users, which process is voluntary.

Legitimacy of associations to bring legal actions:

The P2B Regulation includes the legitimacy that users have so that, provided there is a legitimate interest, they can bring legal actions with the aim of preventing or prohibiting any breach committed by an online intermediation service provider.

Regulation 2019/1150 reflects EU efforts to regulate the “online platform economy” and all players, especially providers of online intermediation services and search engines, must comply with it. If not, we recommend acting on it, starting by amending the conditions of the platform according to the requirements of the P2B Regulation.
However, this should be treated with delicacy and legal assistance is highly recommended.

By Yoanna Ivanova, Partner and Tsvetelina Paskova, Associate, Gugushev & Partners Law Office, PONTES

 

Molson Coors Beverage Company’s former CEE Region Legal and Corporate Affairs Director Anton Karlov has been appointed Chief Legal and Corporate Affairs Officer, EMEA APAC Division within the company.

Karlov has been with the company since 2014, first joining as the Legal and Corporate Affairs Director for Bulgaria & Romania. In 2018, he was appointed to Human Resources Director for Bulgaria and Romania at Molson Coors to take on the role of CEE regional role in 2020. Between 2010 and 2014, he served as the Legal & CA Director at Kamenitza AD – a Molson Coors company).

Between 2009 and 2010, Karlov was a Partner with Tocheva & Mandazhieva Law Office. with his experience including working as a Senior Associate at Penkov, Markov & Partners between 2007 and 2008 and as a Visiting Lawyer between 2006 and 2007.

“I am very excited with the opportunity to lead the Molson Coors EMEA APAC Legal and Corporate Affairs team and to work on a variety of complex legal and regulatory matters across the Division,” Karlov commented. “We will be focusing on supporting delivering on our Commercial Strategy in Beer and Beyond Beer categories.”

Originally reported by CEE In-House Matters.

The latest amendments to the Bulgarian Spatial Development Act introducing the simplified procedure for constructing photovoltaic systems on rooftops entered into force on 20 January 2023, easing the regime for the installation of small power plants.

It is now no longer necessary to obtain a construction permit for the construction, repair or replacement of photovoltaic facilities to produce electricity and any other installations for the production of electricity, heat and/or cooling energy from renewable sources on existing single-family homes and country houses and their adjoining land plots.

These amendments are adopted in the light of the expected launch of the programme for receiving grants for households under the National Recovery and Development Plan for constructing photovoltaic systems for electricity production and water heating systems for self-consumption. The amendments were necessary to enable more households to benefit from the grants, as the construction of small installations has become easier. We also expect this simplification of the administrative procedure to result in many households wishing to construct installations meeting the conditions below, which will lead to increased demand for purchasing installations and the development of associated bank products (consumer loans).

Conditions for applying the simplified procedure
For this preferential regime to apply to the construction or renovation of installations for electricity, heat and/or cooling energy production from renewable sources, the following conditions must be met:

• the installations must be constructed on existing single-family homes and country houses or on their adjoining land plots;
• the energy produced by the installations must be used for self-consumption only;
• the installed power must be up to 20 kW.

So far, a construction permit was required for the construction of such small-scale installations for the production of electricity, heat and/or cooling energy from renewable sources for self-consumption. The relevant permitting process was а disproportionate administrative burden for households.

The adopted amendments facilitate the construction and maintenance of small PV installations because neither a construction permit nor approval of the investment designs is required.

Notification procedure instead of approval

The Spatial Development Act introduces a new simplified notification regime for the construction of small installations with power up to 20 kW for energy production from renewable sources for self-consumption.

The authorities that must be notified of the construction or repair of such an installation are the chief architect of the relevant municipality and the relevant distribution system operator.

The notification procedure precedes the construction of the facilities.

A notification letter must be submitted to the chief architect of the respective municipality 14 days prior to the commencement of construction. It must contain information about the capacity of the facilities and their location. Design solutions for “Structures”, “Electrical” and/or “Heating, Ventilation and Air Conditioning” (HVAC) with drawings, schematics, calculations, technical specifications and installation instructions ensuring safe operation and protection against returning electrical energy to the distribution grid have to be attached to the notification.

The owner of the site in which the facilities will be installed, together with the contractor, will sign a declaration that the installation has been placed under electrical voltage and has been completed in accordance with the technical documentation. This declaration must again be notified to the chief architect of the relevant municipality within 14 days after the completion of the installation.

The relevant distribution system operator must also be notified within the same period where the building is connected to the grid.

Sanctions for failure to notify

If the above notifications are not submitted accordingly, the law provides among other things for an administrative penalty in the form of a fine ranging from BGN 1,000 to BGN 5,000.

By Elena Todorova, Counsel, and Marin Demirev, Attorney at Law, Schoenherr

On January 25, 2023, was promulgated an Act to Amend and Supplement the Labor Migration and Labor Mobility Act (“AAS the LMLMA”), adopted by the 48th National Assembly on January 19, 2023. The changes concern the conditions for entry and residence of citizens of countries outside the European Union (“EU”) on the territory of the Republic of Bulgaria for the purposes of highly qualified employment, as well as the procedure for issuing a long-term residence and work permit of the “European Union Blue Card” type, which is regulated by the Foreigners in the Republic of Bulgaria Act (“FRBA”) and the regulations for its application.

Among the reasons that require an update of the Bulgarian legislation in this area is the need to adapt to the dynamically changing situation in the field of labor migration, a better coordination between the labor demand and supply and attracting more highly qualified personnel to the Bulgarian labor market and in this way reducing the insufficiency of work force in key sectors of it.

Changes in the regime for admission of citizens of third countries for the purposes of highly qualified employment in Bulgaria
Along with the above, as a member of the EU, Bulgaria has an obligation to synchronize its legislation with the actions taken at an EU level to facilitate the reception of highly qualified workers from third countries and, more specifically, to reflect Directive (EU) 2021/1883 of the European Parliament and of the Council of 20 October 2021 on the conditions of entry and residence of third-country nationals for the purpose of highly qualified employment, and repealing Council Directive 2009/50/EC (the “Directive”), which member states must transpose into their national legislation no later than 18 November 2023.

Amendments in the LMLMA

The main amendments to the LMLMA are aimed at expanding the range of persons entitled to apply for an EU Blue Card and to favor the subsequent stay and work performance in the country. In this regard, to the criteria for obtaining a permit for access to the Bulgarian labor market, has been added the option to prove higher professional skills relevant to the position or sector by an official document of acquired professional experience, an alternative to the requirement of acquired higher education. According to recital 23 of the Directive, member states are encouraged to facilitate the recognition of documents attesting the relevant higher professional qualifications.

Next, the period during which highly qualified employment can be exercised only on the territory of Bulgaria has been reduced from two years to 12 months, whereas this limitation does not apply in the cases of residence in an EU member state for the purposes of performing certain business activities (see below).

Amendments in the FRBA

With the final provisions of the AAS the LMLMA, practically more changes have been made to the FRBA. The goals set in them are to ensure greater accessibility upon applying for a residence and work permit of the “European Union Blue Card” type, based on objective criteria and accelerating the process.

Most of the amendments in the FRBA refer to the Blue Card issuing procedure itself. One of the key ones is the provision of the possibility for electronic submission of applications together with the necessary documents, as well as subsequent documents accompanying the procedure. For this purpose the necessary technical conditions will have to be created. The latter will significantly ease and practically speed up the whole process.

To achieve a higher level of efficiency, part of the deadlines in the course of the procedure have also been changed – those for sending submitted applications for the issuance of a Blue Card by the Migration Directorate to the Employment Agency and the State Agency for National Security for written opinions, as well as for providing the relevant opinions have been shortened from 14 to 10 days. Furthermore, in case of legal and factual complexity, the term for consideration of the application can be extended by up to 15 days, and not by one month, as the law used to state before the adoption of the changes.

In accordance with the Directive, the procedure for changing employers is significantly simplified. During the first 12 months of highly qualified employment, the foreigner or the new employer has to submit an application for change of employer, with the set of accompanying documents significantly reduced compared to an initial application, and the deadline for a decision by the Migration Directorate is up to 30 days from the date of submission. After the expiration of 12 months, only a notification by the new employer shall be submitted to the Migration Directorate. Before the introduction of these rules, a change of employer required initiation of a completely new procedure.

In connection with controversial practices regarding the performance of labor duties by employees, holders of a Blue Card, in a remote work mode, the AAS the LMLMA expressly introduces and regulates this possibility, by a stipulation in the employment contract or in an additional agreement between the parties to the employment relationship. Measures for control are also foreseen – the Migration Directorate has to be notified by the employer in case of switching to such a work mode and change of address registration of the foreigner is required, in case the work will be carried out from a town or city other than the one specified in the residence permit.

For the purposes of short-term mobility, the contentious circumstances in connection with the secondment of employees have also been overcome. Holders of Blue Cards issued in Bulgaria will be able to enter and reside in the territory of an EU member state for a period of up to 90 days within a 180-day period for the purpose of carrying out certain business activities, respectively holders of Blue Cards issued in another member state, can reside in Bulgaria under the same conditions.

The conditions for holders of a Blue Card issued in another member state to move to Bulgaria are also simplified, whereas the latter are entitled to start work no later than 30 days after submitting an application. In this regard, with an addition in Art. 8 of Chapter II of the FRBA “Entry and Airport Transit” holders of a Blue Card issued in an EU member state that fully implements the Schengen acquis have the right to enter and reside on the country’s territory without a visa or other permit being necessary. In addition, persons with a long-term residence permit, as well as those granted international protection, whether from the Republic of Bulgaria or another EU member state, will now also have access to the procedure.

Last but not least, there is also a change in the terms of validity of the Blue Card, which is expected to have a positive effect on the attraction of talents to the Bulgarian labor market. The maximum period of validity has been increased from 4 to 5 years and a minimum period of 24 months has been introduced, with certain considerations in case the term of the employment contract is shorter.

Amendments in other laws

According to the supplements to the Health Insurance Act, foreign citizens who have been issued a residence and work permit of the “EU Blue Card” type shall be covered by compulsory insurance provided by the National Health Insurance Fund from the date of its receipt. With this provision, in practice, the obligation to conclude and present medical insurance when applying for the issuance of a Blue Card will drop off.

Amendments have been made to the Bulgarian Personal Documents Act in connection with the simplified procedure for changing employers and aiming to reduce the administrative burden thereof. The plastic holder of the EU Blue Card residence permit will no longer contain the field “workplace” and thus it will not be necessary to submit an application for a new permit and issuance of a new plastic holder.

Obligations or possibilities provided for in the Directive that have not been transposed:
According to the current regulation in the FRBA, even at the stage of submitting an application for the issuance of a Blue Card, evidence of insured housing should be presented. This creates difficulties given the length of the procedure and the fact that the foreigner is usually outside of the country when applying. The Directive states that when the third-country national concerned does not yet know his or her future address, member states shall accept a temporary address, and recital 29 preceding the text of the Directive – that the latter could also be the address of the employer. Adopting such a change would greatly facilitate this aspect of the procedure.

The new amendments to the legislation also do not reflect the more favorable conditions for family reunification provided for in the Directive, according to which, where the conditions for family reunification are fulfilled and the complete applications have been submitted simultaneously, the decisions on the applications of family members shall be adopted and notified at the same time as the decision on the application for an EU Blue Card.

Next, the achievements of long-term mobility have not been fully transposed. The directive enables EU Blue Card holders to cumulate periods of residence in different member states in order to fulfil the requirement concerning the duration of residence. Providing a provision in this sense in the Bulgarian law will facilitate the access of highly qualified specialists to the status of long-term residents in Bulgaria.

There are also texts of the Directive that leave it to member states to decide whether to introduce certain changes or not. These are, for example: to allow Blue Card holders to engage in a professional activity other than their main one and/or in a self-employed activity in parallel to the activity in highly qualified employment, where this activity has an additional character to the main employment activity, or the possibility a recognition procedure for employers to be foreseen, through which they could benefit from a simpler and faster procedure for applying and obtaining Blue Cards by their employees. Currently, no similar texts are provided in the law with the AAS the LMLMA.

Taken as a whole, the current amendments and supplements to the Bulgarian legislation give a new impetus to our country’s efforts to progress as a desired destination for specialists from non-EU countries.

By Margarita Zhivkova, Associate, Attorney-at-Law, Eversheds Sutherland

Wolf Theiss has advised the IFC on its acquisition of a minority stake in Vienna Insurance Group-owned pension assurance company Doverie.

Doverie is Bulgaria’s largest pension management company. According to Wolf Theiss, Doverie “has been a steady market leader in Bulgaria for 15 years, managing the country’s two largest universal and professional funds, and ranking third among voluntary funds.”

The Wolf Theiss team included Partners Richard Clegg and Katerina Kraeva, Counsels Katerina Novakova, Oleg Temnikov, and Hristina Dzhevlekova, Consultant Radena Tsvetanova, and Senior Associate Staniella Todorova.

Wolf Theiss did not respond to our inquiry on the matter.

Tokushev & Partners and Musseva & Ivanov have helped MFG Ins obtain an insurance license from the Financial Supervision Commission of Bulgaria.

MFG Ins is part of the Sofia-based MFG Group, which specializes in non-banking financial services and fintech.

According to Tokushev & Partners, this is the first time such a license has been granted in almost ten years. The license grants MFG Ins the right to “access the European single market under the Solvency II framework in force since 2016. The license covers the provision of niche insurance services within four classes of insurance: miscellaneous financial loss, accident, travel assistance, and fire and natural disasters.”

The Tokushev & Partners team was led by Partner Ivan Antov and included Partner Boris Teknedzhiev, Senior Associate Bogdan Karadjov, and Associate Margarita Mitkova.

Musseva & Ivanov’s team was led by Managing Partner Alexander Ivanov.

In the recent years the number of cases where companies tries to protect their trade secret from unlawful use by ex-employees as their competitors in Bulgaria has increased.

Foremost, this trend concerns the IT sector. The companies have two main options to act against violators either claim unfair competition before the Bulgarian Commission for Protection of Competition (the “CPC”), or claim violation their trade secret under the Act for Protection of Trade Secret before the civil court. Very often, the companies prefer the proceeding before the CPC because it is shorter and does not contain risk for the claimant in case it fails to prove its claim. In addition, the companies do not choose the other option because the Act for Protection of Trade Secret is relatively new, and there is not so much court practice.

In general, the Bulgarian Competition Protection Act (the “CPA”) prohibits an undertaking to learn, use or announce trade secret of the competitors as a form of unfair trading practices which may harm competitors. However, in its practice the CPC sets certain additional interpretations what trade secret means and when it should be considered for protected under the CPA. In the CPC’s practice it turns very often so that the companies drawn up and applied certain internal policies, including for protection of their trade secret, which are not acceptable for the CPC and thus, their claims are rejected. This is also the case of the companies which have ISO 27001. Why is it so?!

First, CPC investigates the internal policies of the companies how the trade secret is defined. Usually, these policies, including the ones within ISO 27001, defines the trade secret as different types of information, e.g.: agreements with the clients, know-how, clients and clients’ details, management reports, financial documents, etc. CPC considers these definitions for too broad.

Companies also use non-disclosure agreements (NDAs) with the employees which in the common case contain general definitions of their trade secret according to the CPC’s practice. CPC requires the companies to define the information that is trade secret very specific. However, CPC does not provide guidelines which information is specific. This understanding of CPC makes the application of ISO 27001 policies impossible. As mentioned above the ISO 27001 policies use more general definitions because it concerns companies with high information flow. At such companies specifying information as trade secret is difficult and contains risk for leaving some data out of the policies’ scope.

Second, CPC requires companies to undertake measures for protection of their trade secret. For CPC this means, on one hand, the managing bodies to issue decision by which they appoint specifically which information is trade secret and who has access in the companies to each information – trade secret. Again, such information is not included usually in policies such as ISO 27001. As per the practice, these policies provide only categories of employees which have access to trade secret which is not sufficient for CPC. Moreover, the internal organization of the work process, in the physical and digital environment, must be such that access to the trade secret can only be given to persons who are authorized by the management decision to work with a trade secret.

Very often in ISO 27001 policies is not clearly indicated which company and which management body has approved them and how. In such cases, CPC does not accept the respective policy as authentic document. Further, ISO 27001 policies usually are applied for the entire economic group. Considering the recent practice of the CPC this approach is also not acceptable. It seems that CPC expects the management body of each company within an economic group to approve list of information which is trade secret and the exact employees who are authorized to have access to it.

At the end, CPC requires the employees of the company to be informed about the management decision. So, the companies must be able to prove it. There are different approaches, such as: signing of the policy, participating in trainings, or conducting internal workshops, etc., but CPC does not specify which one it considers as best practice.

In view of the above, companies should be very cautious about the CPC practice on the protection of trade secret. Usually, they believe that they undertook all the necessary steps to protect their trade secret just by having internal policies and/or NDAs with the employees with general definition of the trade secret without any internal organisation of the work process. In view of the CPC practice, irrespective good or bad, this is not sufficient.

By Mariya Papazova, Partner, PPG Lawyers