CEE Legal Matters

Category: Bulgaria

  • The Buzz in Bulgaria: Interview with Ilko Stoyanov of Schoenherr

    The Buzz in Bulgaria: Interview with Ilko Stoyanov of Schoenherr

    Business is good in Bulgaria at the moment, according to Ilko Stoyanov, Partner at Schoenherr in Sofia. He draws particular attention to the real estate market — especially the shopping mall segment, which has seen four Sofia malls change owners already this year. Stoyanov isn’t able to pinpoint a particular reason for the boom, but notes that two of the malls (The Mall and the Serdika Center) are expected to be sold to a “sizeable investor” — New Europe Property Investments. The price of real estate has increased in 2017, according to Stoyanov, “reaching levels close to before the financial crisis.”

    But Real Estate is hardly the only profitable source of M&A work at the moment. “I can say that we are pretty busy,” says Stoyanov. “Starting from the middle of 2016 work has picked up, with Bulgarian sellers selling to strategic investors from abroad.” Stoyanov also points to the “developing NPL market,” and says, “I’m happy with the situation in the market — and ours in particular. I’m pretty happy with how things are starting to develop. Business is picking up, that’s for sure, and competition among law firms is rising.”

    Nonetheless, Stoyanov reports, firms in the market are hardly counting their chickens yet — management of law firms is cautious. “We’re still a bit conservative,” he says. “We’re watching the market to see if the rebound will continue. Then we will make up our minds. We’re still waiting to see. Firms are pretty busy, but they do not respond fast in this market — they do not hurry to fire people in bad times and they do not hurry to hire people in good times. They look to sustain the levels of head-counts.”

    Otherwise, it appears the political situation is fairly stable, though Stoyanov notes the government has announced a moratorium on all privatizations that is likely to hold for a few more months. Otherwise, he says, “it’s business as usual.” And there are no major legislative developments either, with the possible exception of the new emphasis on Data Protection that’s a major consideration across Europe at the moment. “The issues has been there for a while,” Stoyanov says, “but nobody’s paid attention to it, until huge fines were put into the new General Data Protection Regulation that motived attention.” He says, “what we’re seeing now is a new awareness how serious an issue this is both on the part of government and the public, and new focus on compliance issues.”

  • Wolf Theiss Advises FactSet on Acquisition of BISAM Technologies

    Wolf Theiss Advises FactSet on Acquisition of BISAM Technologies

    Wolf Theiss has provided advised FactSet on CEE matters related to its acquisition of BISAM Technologies for USD 205 million from Aquiline Capital Partners. Factset was also represented by Cravath Swaine & Moore in the United States and K&L Gates in Western Europe. Willkie Farr & Gallagher represented the Sellers and BISAM.

    Wolf Theiss provided Bulgarian legal and tax due diligence and transaction advice to FactSet — a global provider of integrated financial information and analytical applications — and continues to provide post-completion implementation support. The firm describes the deal as “a notable transaction in relation to Bulgaria as Bulgarian-founded FinAnalytica, which was acquired by BISAM in 2016, was one of the first Bulgarian-based technology companies to receive institutional venture capital funding.” Wolf Theiss Partner Richard Clegg believes that, “this new acquisition by FactSet will provide further encouragement to the technology sector and venture capital environment in Bulgaria.”

    Clegg led the Wolf Theiss team, supported by Senior Associates Jasmina Uzova and Atanas Mihaylov and Associates Iva Georgieva and Nikoleta Ratcheva.

  • DGKV Facilitates Recognition and Enforcement of VIAC Award in Bulgaria

    DGKV Facilitates Recognition and Enforcement of VIAC Award in Bulgaria

    DGKV has successfully persuaded the Bulgarian courts to recognize and enforce an award in favor of Sandvik Bulgaria EOOD resulting from arbitration against Bulgaria’s state-owned Montagi EAD arising from a contract for erection of coal and lime stone storage and handling systems at Bulgaria’s Maritza East 1 power station.

    According to DGKV, the firm “achiev[ed] a new victory in a rare procedure for recognition and enforcement in Bulgaria of a foreign arbitral award delivered by an arbitration panel in arbitration proceedings under the auspices of the Vienna International Arbitral Centre (VIAC).”

    The VIAC panel rendered its award in Sandvik’s favor, but after failing to receive any payments from Montagi, Sandvik took steps to enforce the award in Bulgaria. According to DGKV, “by [its] Decision of 11 April 2017 the Sofia Appellate Court confirmed the first instance court decision by which the VIAC’s Arbitral Award was recognized and its enforcement in Bulgaria was allowed. The court dismissed all of Montagi’s arguments [regarding the alleged] invalidity of the arbitration agreement and breach of public policy [as purported grounds] for resisting the recognition of the award under the New York convention.”

    The DKGV team was led by Partner Angel Ganev and Associate Vlada Tsenova.

  • Martina Tomova Becomes Head of Compliance at Uniqa in Bulgaria

    Martina Tomova Becomes Head of Compliance at Uniqa in Bulgaria

    Martina Tomova has become the Head of Compliance at Uniqa and Uniqa Life in Bulgaria.

    According to Tomova, her core competences “are related [to] the implementation of the 4th Anti-Money Laundering Directive in Bulgarian legislation, as well as FATCA, CRS, and organization of trainings in the Compliance area.” 

    Her function is separate from the legal department at Uniqa, she reports, and her team at the moment consists of three people, “with the perspective to grow, given the fact that Compliance is starting to develop in the insurance business.”

    Tomova has worked with the Penkov, Markov & Partners and Wolf Theiss law firms in Bulgaria, and in-house in Compliance roles with Alpha Bank Bulgaria, UniCredit Bulbank, and the Paysafe Group. She received her Bachelor’s in Law from the University of Strasbourg in France in 2007, then followed it up with a Master’s from the same University in 2009 and a second Master’s in Law of European Construction and Compliance in Europe from the University of Lorraine in 2012. 

  • DGKV Advises Mundus Services on Acquisition of VM Automation

    DGKV Advises Mundus Services on Acquisition of VM Automation

    Djingov, Gouginski, Kyutchukov & Velichkov (DGKV) has advised Mundus Services AD on the acquisition of 100% of the capital of VM Automation EOOD – a wholly-owned subsidiary of Bulgaria’s VM Finance Group. The deal remains contingent on approval from Bulgaria’s Commission for Protection of Competition. 

    Mundus Services operates in the building automation and control, domestic and industrial air conditioning, refrigeration, ventilation, and uninterruptible power supply sectors. DGKV reports that the company, “which became Bulgaria’s largest corporate structure in the field of facility management after it acquired Facility Optimum Bulgaria and cleaning services firm Viki Komfort 2004 in 2016, is a joint venture of Empower Capital investment fund and the Finnish-based investment firm KJK Capital.” According to DGKV, “the acquisition of VM Automation will add technical capabilities to Mundus’s portfolio, thus it will be able to provide its clients fully-integrated facility services.” 

    DGKV’s work on the project included transaction structuring and generation of transaction documents, SPA drafting, assistance in the negotiation process, closing formalities, and CPC notification. The firm’s team was led by Partner Stephan Kyutchukov, assisted by Senior Associate Valentin Bojilov, while Partner Nikolai Gouginski and Associates Vladislav Antonov and Simeon Vachev are involved in competition clearance matters. 

  • Data Protection Challenges in Bulgaria

    We are living in a digital age. The Snowden case has placed certain aspects of personal data processing and related threats in the spotlight. The ripple effects have been seen far beyond the USA, and Bulgaria has also been affected by discussions on how personal data is used. However, personal data protection is a post factum topic when problems and questions arise. Many Bulgarians have heard about personal data, but few are interested in finding out more. The protection of personal data is, generally, not taken seriously. 

    Unknown to most, Bulgaria’s Personal Data Protection Act (PDPA) has been in place for more than 15 years. The PDPA regulates the rights of individuals and the obligations of data controllers and processors when collecting and processing personal data. Each data controller (e.g., each company that collects, stores, uses, transfers, or somehow processes the personal data of its employees/customers) must apply for registration with the Bulgarian Personal Data Protection Commission (PDPC). Depending on the personal data and the purposes for which it has been collected and processed, registration covers information about the data controller and the personal data controlled, grouped into separate registers (e.g., for “Employees”, “Customers”, “Christmas Marketing Campaign 2016”, and so on). Data controllers must provide information – before starting the processing of personal data – on the legal grounds, the purpose, and the terms of processing; the recipients to whom the personal data may be disclosed; and whether any personal data will be transferred abroad. Data controllers are obliged to use means for processing personal data sufficient to ensure the required level of protection (e.g., encryption if the data is stored electronically, or by locking tangible data (hardcopies) in a safe). So, individuals wanting to know what is going on with their personal data have the statutory right to request and receive all necessary information from a data controller. In most cases individuals can even instruct data controllers to stop processing their personal data. As a result, the PDPA gives individuals sufficient tools to provide informed consent and to control their personal data processing.

    However, in Bulgaria, businesses and individuals have generally neglected current data protection regulations. They consider the PDPA a bureaucratic hindrance to doing business rather than a positive step towards a Digital Single Market where individuals and businesses can seamlessly access and exercise online activities under fair competition conditions with a high level of personal data protection. Neglecting data protection laws can lead to the misuse of personal data, such as credit-card numbers being stolen or personal information being sold or shared without authorization to advertisers. Thus, each click of the mouse that discloses personal data opens people up to the possibility that such data may be misused.

    The European Union’s new Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (the “Regulation”) sets very ambitious targets and provides several completely new concepts. Subsequent to its May 2018 implementation, its application is expected to attract the attention of Bulgarian businesses and individuals alike. 

    The reasons for this are, on the one hand, the benefits for businesses and individuals and, on the other hand, the new obligations for the data controllers linked with significant sanctions in cases of breach. The Regulation provides individuals with more control over their personal data, as they will have access to more information on how their data is processed, as well as gaining the “right to be forgotten.” In addition, businesses will benefit from the Regulation as a result of the implementation of certain principles such as the “One continent, one law” rule (i.e., the creation of one single set of rules to make it simpler and cheaper for companies to do business in the EU), the “European rules on European soil” (calling for the same rules to be applied to companies based outside of Europe when they offer their services in the EU), and so on. At the same time, data controllers and processors will have some new obligations, such as the requirements that they keep registers on their data processing activities, perform privacy impact assessments, and appoint data protection officers in certain cases. Last but not least, the administrative fines for breach of certain data protection provisions are significantly increased and may reach up to EUR 20 million, or in the case of an undertaking, up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher. 

    The increased fines should be an incentive for businesses to undertake the necessary measures and become compliant with the new data protection rules in a timely manner. 

    By Stefana Tsekova, Partner, and Silvia Ribanchova, Attorney, Schoenherr Sofia  

    This Article was originally published in Issue 4.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • DGKV and Boyanov & Co Advise on Pharmastore Acquisition by Sopharma Trading

    DGKV and Boyanov & Co Advise on Pharmastore Acquisition by Sopharma Trading

    Djingov, Gouginsky, Kyutchukov & Velichkov has advised the owners of the Pharmastore pharmacy chain in the sale of the business to Sopharma Trading. Boyanov & Partners advised Sopharma on the deal, which will result in Pharmastore’s 19 pharmacies in the cities of Sofia and Bourgas operating under the SOpharmacy brand. The deal remains subject to approval by the Commission for Protection of Competition.

    DGKV describes Sopharma trading as “one of the largest publicly listed companies in Bulgaria and a leader in the distribution of pharmaceuticals and medicinal products and devices,” and reports that “the project is part of Sopharma’s long-term strategy for enhancement of its operations in the retail segment and shall guarantee the two pharmacy chains a stronger market position.”

    The DGKV team on the deal was led by Partner Stephan Kyutchukov and included Associates Alexander Shpatov, Dimo Staykov, Ivan Punev, and Tsvetelina Bayraktarova.

    The Boyanov & Co. team was led by Partner Yordan Naydenov and included Partner Peter Petrov, Senior Associate Nikolay Kolev, and Junior Associates Nevena Djurova and Adriana Bakalova.

  • Dimitrov Elected Member of Bulgaria’s Supreme Bar Council

    Dimitrov Elected Member of Bulgaria’s Supreme Bar Council

    George Dimitrov, founder and Managing Partner at Dimitrov, Petrov & Co., has been elected a member of Bulgaria’s Supreme Bar Council (SBC). 

    According to Dimitrov, Petrov & Co., elections for the supreme bodies of the Bulgarian bar were held by the General Assembly on February 25 and 26, 2017. The Supreme Bar Council consists of 15 regular members and 10 reserve members, each elected for a four-year term of office. Ralitsa Negentsova was re-elected President of the SBC.

  • Amendment to Bulgarian Legislation Facilitates Mass Claims

    In November, the Bulgarian Parliament began debating the amendments to the Competition Protection Act (CPA) with respect to the implementation of the EU’s Directive 2014/104/EE on Damages Actions for Antitrust Infringements (the “Directive”). Interestingly, the main aim of the Directive and the proposed amendments to the CPA – facilitating the private enforcement of infringements of competition law – coincides with what is probably the biggest cartel investigation in the history of the Bulgarian Commission for Competition Protection (CCP).

    In October 2016, following an eight-month investigation, the CCP accused the six biggest fuel retailers in Bulgaria of forming a price-fixing cartel for the period from January 1, 2012, to June 30, 2015. A final ruling by the anti-trust regulator is expected sooner rather than later. The final results of the investigation are highly anticipated, since they will affect almost all Bulgarian private individuals and companies. If the CCP issues a ruling confirming the existence of a price-fixing cartel and that ruling is upheld in case of appeal, we could face the first serious wave of mass claims in Bulgaria.

    Current Bulgarian legislation also provides a mechanism for compensation of the damages suffered by private persons due to infringement of the competition law, although this mechanism is not as clearly defined as it is in the proposed amendments. Similarly, the case law of the Court of Justice of the European Union holds that any person can claim compensation for harm suffered where there is a causal relationship between that harm and the infringement of competition law. However, in the 25 years of its existence before the CCP began its investigation of the fuel retailers, it did not have any significant ruling which could affect so many persons and thus test the view of the Bulgarian courts on the matter for compensation of the damages.

    One of the most important amendments, in harmony with the Directive, is that the new law establishes a presumption that a cartel causes damages. Thus, claimants would not have to prove the causal relationship between their harm and the infringement of competition law, but the defendants – the participants in the cartel – would have to prove that there are no caused damages.

    Another amendment, which is very important from a procedural point of view and which could have a major impact on any such claim, is that rulings of the CCP which have entered into force will become binding on the civil courts. The rulings of the CCP are administrative in their substance and as such they are subject to appeal before the administrative courts. However, the judgments of the administrative courts are not binding on the civil courts, which may review any matter decided by an administrative court and issue its own ruling. Thus, the proposed amendment will additionally facilitate claims in case a cartel is determined by the CCP. For the sake of completeness, it should be mentioned that the current rules of the CPA provide a similar option for the claimants. Still, the new amendments will strengthen their position.

    The proposed amendments to the CPA will also regulate the statute of limitations for filing claims for damages. The general rule is that such claims must be filed within five years from the occurrence of the damage. Once adopted, the new law would provide that the statute of limitations will not run during the period of the CCP’s investigation, nor for a period of an additional year after its ruling enters into force. Such an amendment could have a significant impact on the amount of the damages that could be claimed. An immediate example is the ongoing investigation for the price-fixing cartel of the fuel retailers, where the alleged infringement started on January 1, 2012.

    The Directive and the proposed amendments to the Bulgarian CPA will not solve all issues with respect to the potential mass claims based on infringement of competition law. One of the biggest obstacles for any claimant in Bulgaria is the high court fees – 4% of the claimed amount. The Directive and the Bulgarian legislature have failed to provide incentives for claimants to bring actions and assume the risk of losing battles with companies that are financially stronger and often equipped with better lawyers.  

    By Ilko Stoyanov, Partner, and Dimitar Vlaevsky, Attorney, Schoenherr Sofia

    This article was originally published in Issue 3.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • DGKV Entrusted with 19 Cases by Bulgarian Financial Regulator

    DGKV Entrusted with 19 Cases by Bulgarian Financial Regulator

    DGKV has been retained by Bulgaria’s Financial Supervision Commission (FSC) to represent it in a total of 19 proceedings before the Supreme Administrative Court based on the appeal of IsaOdit Ltd. (formerly named RSM Bulgaria OOD) against FSC’s decision to remove it from the list of approved auditors to verify the assets of Bulgarian pension and insurance companies.

    The FSC’s decision was made on September 2, 2016, after a report by the European Insurance and Occupational Pensions Authority (EIOPA) revealed that documents provided by the auditor contained significant false information in attempting to prove RSM’s qualifications, experience, and availability of resources. According to DGKV, although RSM had almost completed its inspections of several funds and insurance companies, “the watchdog obliged the insurers and pension companies to immediately terminate their contracts with RSM and to select a new auditor from the approved list.”

    Editor’s Note: On August 27, 2018, DGKV announced that it has been successful for the Financial Supervision Commission before the five-member cassation panel of the Supreme Administrative Court. The DGKV team consisted of Partner Angel Ganev, Senior Associates Anton Krustev and Vlada Tsenova, and Associates Nikola Minchev and Galin Atanasoff.