Category: Bulgaria

Djingov Gouginski Kyutchukov & Velichkov, working with Linklaters, has advised the joint lead managers on the Republic of Bulgaria’s EUR 1.5 billion issuance of sovereign bonds under its global medium-term note program. Tsvetkova Bebov & Partners, working with Clifford Chance, advised the Bulgarian state.

The joint lead managers included BNP Paribas, Citigroup Global Markets Europe, JP Morgan SE, and Unicredit Bank.

In 2022, DGKV advised the joint lead managers on a EUR 2.25 billion sovereign bond issuance by the Republic of Bulgaria (as reported by CEE Legal Matters on October 20, 2022).

DGKV’s team included Partners Gergana Monovska and Valentin Bojilov.

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

Wolf Theiss, working with Shearman & Sterling, has advised BNP Paribas Personal Finance on its sale of BNP Paribas Personal Finance Bulgaria to Eurobank Bulgaria. Deloitte Legal and Boyanov & Co advised the buyer.

Closing is expected in the first half of 2023, pending regulatory approval.

According to Wolf Theiss, “the deal bolsters Eurobank Bulgaria’s presence in the Bulgarian retail banking sector and provides significant opportunities for cross-selling because of BNP Paribas Personal Finance Bulgaria’s clientele.”

BNP Paribas Personal Finance is a European consumer finance group. Eurobank Bulgaria is the Eurobank Ergasias Services and Holdings subsidiary in Bulgaria.

The Wolf Theiss team was led by Partner Katerina Kraeva and included Counsels Hristina Dzhevlekova and Oleg Temnikov and Senior Associates Staniella Todorova and Zhulieta Markova.

The Deloitte Legal team was led by Managing Associates Kaloyan Yordanov and Adelina Mitkova and included Senior Associate Konstantin Ivanov and Associates Simona Toneva and Georgi Stefanov.

The Boyanov & Co team included Partner Yordan Naydenov and Senior Counsel Svetlina Kortenska.

Editor’s Note: This article was updated on February 17, 2023, to fix an error in Deloitte Legal’s team composition.

Subsequently, in June 2023, Boyanov & Co announced that the transaction had successfully closed.

With criminal charges brought against Bulgarian crypto platform Nexo, while everyone is waiting for the MiCA regulation, the country’s latest developments will potentially have far-reaching implications worldwide, according to Mikov＆Attorneys Managing Partner Konstantin Mikov.

“One of the most notable topics in Bulgaria in the past few months has been related to criminal charges against major Bulgarian crypto exchange platform Nexo,” Mikov begins. “This criminal case brought against the company might take years to be resolved and can potentially have a huge impact not only in Bulgaria but worldwide as well.”

“Established by Bulgarian owners, Nexo has provided a platform for borrowing money where crypto is used as a security mechanism,” Mikov explains. “The platform operated as a kind of bank, although not a traditional one – since the company does not hold any fiat money as deposits of the clients.” He adds that “Nexo operates globally, with a large number of clients in Europe, Australia, as well as Canada. According to publicly available information, the cryptocurrency network operated from Bulgaria, Cyprus, and Serbia. Nexo operated the call centers from Serbia and used a technology structure from Bulgaria. One company, part of Nexo group, which created and administered the online platforms through which the allegedly fraudulent activity was carried out, was registered and based in Bulgaria. The money laundering base is alleged to have been in Cyprus.”

Mikov says that, recently, “the Bulgarian prosecution’s office decided to raid local offices in Bulgaria and charged the company with alleged money laundering offenses, carrying out banking and financial activities without obtaining relevant licenses, as well as computer fraud and tax crimes.” According to him, “the precise alleged charges and the related information are not publicly available but are rather confidential. On the other hand, Nexo has decided to fight back, arguing that the raid was illegal and politically motivated. As stated by Antony Trenchev, co-founder of Nexo, the damage caused by the state is more than USD 1 billion and Nexo will sue Bulgaria for the proven damages.”

Consequently, Mikov says that “the criminal case is related to one of the dominant crypto platforms in the world and, together with the recent FTX scandal, might have a significant impact on the crypto market. It is still early to speculate about the number of victims and losses.” Still, he says, if successful, the case can showcase that scammers are not welcome in Bulgaria. “This entire area is slightly nebulous, beyond any kind of regulation,” he explains. “There is no public regulator, which might lead to pyramid schemes and the need for consumer protection.”

In light of that, Mikov says that the legal sector is now awaiting the EU regulation on Markets in Crypto-Assets. “Just as the normal financial market is regulated on the EU level, we anticipate a somewhat similar legal regime to be applied to the crypto market as well,” he notes, adding that, subsequently, local jurisdictions would adopt laws so that the rules are harmonized. “At this moment, there is no such kind of protection, as the only authorities that can control the situation are criminal authorities. Without regulation, the state’s prerogatives remain rather limited when addressing the situation,” he concludes.

New amendments to the packaging waste legislation were promulgated in the 100th issue of the Bulgarian State Gazette dated 16 December 2022. The amendments are in the Ordinance on Packaging and Packaging Waste (the “Ordinance”) and are officially in force as of 20 December 2022.

We have summarised the most important amendments below:

Registration requirements
According to the amendments, each person who places packaged goods on the Bulgarian market must request to be registered in a public register maintained by the executive director (or an official authorised by him) of the Executive Environment Agency (“ExEA”). The registration should be done within one month before the start of an activity defined as “placing packaged goods on the market”.

According to the Ordinance, “placing on the market” means the first release of a product at the disposal of another person, free of charge or against payment, with the aim of distributing the product and/or using it on the territory of Bulgaria, as well as the import and release of the product on the territory of Bulgaria by a given person for their own commercial, industrial or professional activities.

Until 20 February 2022, persons who place packaged goods on the market must provide the following information to the executive director of the ExEA in order to fulfil the newly introduced registration requirements:

• name and Unified Identification Code;
• trademarks that the person uses in Bulgaria (where applicable);
• mailing address;
• contact person;
• type and material of the packaging the person releases on the Bulgarian market;
• manner of fulfilling the obligations (individually or through a collective system);
• method of sale used.

Pictograms now voluntary
According to the amended transitional and final provisions, the pictogram for recycling the packaging and for the type of material from which it is made (“chasing arrows”) and the pictogram for the separate collection of packaging waste (“tidy man”) are to be voluntarily added to the packaging of the products released on the Bulgarian market.
NB! The abbreviation and the code identifying the material from which a given packaging is made remain mandatory.

Separate waste collection systems
Persons who market packaged goods that are single-use plastic products are responsible for establishing and implementing separate waste collection systems.

We expect the competent authority to provide guidance on the implementation of these amendments at the beginning of 2023.

By Elena Todorova, Counsel, Schoenherr

Gugushev & Partners lawyer Ivan Tsvetkov has been appointed a Partner and the firm’s new Head of the Real Estate and Construction department.

Tsvetkov specializes in real estate and construction, litigation, and corporate and commercial law.

Tsvetkov has been with Gugushev & Partners since 2016. Before that, he spent almost a year as an Attorney at Law with Elena Shopova and Partners. Earlier, he spent over four years as a Legal Assistant with EU-BG Legal Consultants and, earlier still, almost two years with the Regional Court of Sofia.

On 27 January 2023, after more than a year of delay, the Bulgarian parliament adopted Act on the protection of persons who report breaches (“Whistleblowing Act“). The Whistleblowing Act finally transposes the Whistleblowing Directive (Directive (EU) 2019/1937) beyond the deadline of 17 December 2021 for all member states. The Whistleblowing Act enters into force within 3 months as from its publication in the State Gazette, which was made on 2 February 2023.

The Bulgarian Act, as required by the Directive, applies to breaches of public procurement; financial services, prevention of money laundering and terrorist financing; product safety; transport safety; environment protection; nuclear safety; food and feed safety, animal health; public health; consumer protection; personal data protection; financial interests of the EU; EU competition law and state aid regulation; cross-border tax schemes. The Bulgarian Parliament decided on a broader scope of breaches compared to the Whistleblowing Directive, where the Act applies not only to EU legislation breaches, but also to breaches of the respective provisions of Bulgarian law.

Moreover, Bulgarian Parliament decided on the application of the Whistleblowing Act to breaches of criminal law (excluding proceeding initiated by a private complaint); breaches of obligations for tax and public payments; breaches of employment legislation; breaches of public service obligations.

The Act unlike previous of its drafts, prohibits anonymous reporting and limits the period for reporting to 2 years. These two topics were subject to discussions and controversy among the members of the Act Working Group. Finally, the decision was to prevent anonymous reporting and to opt for a shorter reporting period.

Addressees of the Whistleblowing Act are all private companies with more than 50 employees and public sector entities excluding smaller municipalities with less than 10 000 citizens. Such addressees are obliged to adopt rules regulating the reporting, to create reporting channels and to organize the processing of the reporting. Irrespective of the number of the employees, certain private companies operating in the field of financial services, prevention of money laundering and financing of terrorism, transport safety, environment protection, etc., shall also comply with the requirements under the Whistleblowing Act.

The Act provides for three channels of reporting – internal, external, and public reporting. The internal reporting is within the company/public entity as per the rules for reporting adopted under the Whistleblowing Act. The external reporting is to be made to the Personal Data Protection Commission. Public reporting is to public media. The employees are free to choose the reporting channel.

Reporting employees are subject to protection, i.e., predominantly employment law protection such as prohibition for disciplinary measures, dismissals, etc. Note shall be taken, that the Whistleblowing Act adopted the minimum levels of protection set by the Directive although the member-states had the option to heighten the level of protection for the whistle-blowers.

The addressees of the Whistleblowing Act have the obligations to establish internal rules and channels for reporting, to process the signals, to take proper measures based on the reported breaches, to protect the identity of the reporting employees, etc.

As per the Whistleblowing Act, companies having more than 249 employees have 3 months to comply with the Act as from its publication in the State Gazette. Companies having between 50 and 249 employees shall comply with the Act not later than 17 December 2023. Non-compliance will lead to financial sanctions.

By Eleonora Mateina, Managing Associate, Eversheds Sutherland

Cytowski & Partners has advised Bulgarian start-up Ampeco on its USD 13 million Series A round with BMW i Ventures, LauncHub Ventures, and Cavalry Ventures. Sidley Austin and Djingov Gouginski Kyutchukov & Velichkov reportedly advised BMW i Ventures.

According to Cytowski & Partners, Ampeco ”has built end-to-end tools for managing electrical vehicles and is expanding into the US.”

BMW i Ventures is the corporate venture capital arm of BMW.

The Cytowski & Partners team included Partner Tytus Cytowski, Associates Eresi Uche and Fabiana Morales, and Trainee Associate Kunal Kolhe.

Bozhko Poryazov has been promoted to a Partner position with Popov Arnaudov & Partners in Sofia.

Poryazov joined PAP in 2020 as a Senior Associated Partner and Head of the firm’s Real Estate and Investments practice (as reported by CEE Legal Matters on April 9, 2020). Poryazov graduated from the University of National and World Economy in 2003. Prior to joining Popov Arnaudov & Partners, he spent 15 years with Delchev & Partners, 14 of which as a Partner, and, earlier, two years as a project manager with Human Dynamics.

“I am always happy to see our people grow and our team become stronger,” Senior Managing Partner Galin Popov commented. “Real Estate is an important part of what we do as a firm and, with this promotion, I am even more confident our clients are being serviced with the utmost care, following the highest industry standards.”

Former Counsel Gergana Monovska and former Senior Associate Valentin Bojilov have been promoted to Partner at Djingov Gouginski Kyutchukov & Velichkov.

Gergana Monovska is now a Partner in the Banking & Finance, Capital Markets, and Dispute Resolution practices of DGKV. She has been with the firm since 2013 when she joined as a Senior Associate before becoming a Counsel in 2022.

Valentin Bojilov is now a Partner with the M&A, Banking & Finance, and Dispute Resolution practices of DGKV. He has been with the firm since 2007.

“We are thrilled to welcome the next-generation partners at Djingov Gouginski Kyutchukov & Velichkov,” Managing Partner Assen Djingov commented. “The promotion reflects our strategy to support home-grown talent and see our lawyers thrive and develop their careers within the firm.”

Tokushev & Partners has advised RTP Global on leading a EUR 2.3 million Plan Delta investment round that also included Eleven and 17 angel investors from Bulgaria, the UK, Germany, and the US. Dimitrova Staykova & Partners reportedly advised Plan Delta.

Plan Delta is a Bulgarian startup for agile financial planning.

The Tokushev & Partners team included Managing Partner Viktor Tokushev, Partner Boris Teknedzhiev, and Lawyer Maria Mitkova.