Disclosure Requirements - Bulgaria
Disclosure Category: 2
In the case of holdings in Bulgarian shares issued by banks, CBL may fall under an obligation, under Law on Credit Institutions (Promulgated, State Gazette No. 59/21.07.2006, effective on the day of entry into force of the EU Treaty of Accession of the Republic of Bulgaria, last amendment SG No. 35/22.04.2014) to disclose the identity and holdings of customers holding applicable positions.
In addition Law on Public Offering of Securities (Promulgated, State Gazette No. 114/30.12.1999, effective 31 January 2000, last amendment SG No. 109/20.12.2013, effective 25 December 2009) and the related Ordinance 39 on Disclosure of a Holding in a Public Company issued by the Financial Supervisory Commission obliges the Central Depository AD (CDAD, the Bulgarian CSD) and the owner of the voting rights to make a disclosure.
In order to comply with the legislation as mentioned below, customers entering into transactions in the Bulgarian domestic market consent and are hereby deemed to consent to disclosure and to the appointment of the requestor (for example, the Bulgarian National Bank) as their attorney-in-fact, under power of attorney to collect from CBL such information as is required to be disclosed.
Customers who do not want to grant such authority to CBL should refrain from holding such shares in their account with CBL.
Background and legal basis
Under the Law on Credit Institutions, with respect to holdings in a bank licensed in Bulgaria, the CDAD is obliged to notify the BNB of the name and registered address of the investor acquiring more than 3% of the shares or voting rights in a bank. The disclosure must be made within seven calendar days of the registration of the respective percentage in the book of shareholders by the CDAD.
If requested by the BNB, the investor is obliged to provide the BNB with:
- Additional information on the persons who have acquired (directly or indirectly) 3% or more of the voting shares in the bank;
- A document of registration;
- Particulars of persons holding shares or interests in the capital or property thereof or exercising control over them;
- Information about its business activity during the last preceding five years;
- A declaration that the shares have been paid with own funds, the origin of the funds and the tax paid during the last preceding five years; and
- Any other particulars and/or documents as may be required by the BNB.
Customers should be aware that the Bulgarian National Bank (BNB) may require CBL on request to disclose to the BNB the identity of CBL customers holding shares of Bulgarian banks in CBL. Furthermore, should the above reporting reveal that a customer's holding in the shares of a Bulgarian bank exceeds a certain percentage, the BNB may require the customer to disclose information about the final beneficial owners of that holding.
The obligation to disclose falls on CBL in whose name the securities are registered at the CDAD and is to be cascaded down to the final beneficial owners.
Obligation to report threshold crossings
Under the Law on Public Offering of Securities, with respect to holdings in Bulgarian public companies listed on the BSE, any holding that has reached, exceeded or fallen below 5% or a multiple of 5% of the total number of voting rights must be reported to the issuer, to BSE and to the Financial Supervision Commission within four business days after the number of voting shares has reached, exceeded or fallen below the above figures.
It remains the duty of beneficial owners of shares to disclose their notifiable interests. The disclosure is to be made by filling in and signing the disclosure form that can be found on the Financial Supervision Commission's website http://www.fsc.bg/.
Under the Law on Credit Institutions any person, who commits or makes another to commit a violation of the Law on Credit Institutions or of any statutory act issued for its application (related with the obligations above), shall be punished according to Article 152 of the Law on Credit Institutions.
- For a physical person the penalty ranges between BGN 1,000 and BGN 4,000 and, for repeated violation, between BGN 3,000 to BGN 12,000.
- For a legal entity, the penalty ranges between BGN 5,000 and BGN 20,000 and, for repeated violation, between BGN 20,000 and BGN 50,000.
- For a bank or financial holding, the penalty ranges between BGN 50,000 and BGN 200,000 and, for repeated violation, between BGN 200,000 and BGN 500,000.
Furthermore, non-compliance by the investor with the request from the BNB may result in temporary suspension of the voting right of the shareholder and/or order in writing for the shareholder to transfer the shares thereby held within 30 days.
Under the Law on Public Offering of Securities and the related Ordinance 39 of the FSC, any person who has committed a violation of the Ordinance 39 of FSC, as well as any person who has admitted such violations, shall be punished according to Article 221 (1) of the Law on Public Offering of Securities.
- For a physical person, the penalty ranges between BGN 5,000 and BGN 10,000.
- For a legal entity, the penalty ranges between BGN 5,000 and BGN 10,000 and, for repeated violation, between BGN 10,000 and BGN 20,000.
Reporting to the Bulgarian National Bank and other authorities
CBL, as a direct participant in the Bulgarian National Bank’s settlement system (ESROT), is obliged to disclose on a monthly basis, to its local agent and the Bulgarian National Bank, all its global holdings per security and holder type of its underlying customers in the different ESROT-eligible securities. The identity of the holders within CBL and the underlying beneficial owners will remain undisclosed.
CBL may have to provide tax information and documentation to the NRA (National Revenue Agency) in the context of NRA’s Audit on Bulgarian National Bank participants.