By Resolution of the Ministry Council No. 204 of October 19, 2023, the form of the declaration under Art. 63, para. 4 of MAMLA was effectively changed. The above is the result of amendments in MAMLA effective from 14.07.2023. So, what is the new data the obliged persons must declare?

First of all, however, we should recall exactly who are the persons obliged by law, in which hypothesis such a declaration is submitted, and what are the sanctions in case of violations.

1. Who is obliged by law to declare the relevant circumstances?

These are the legal representatives of the relevant commercial entities and/or non-profit legal entities.

2. In what scenarios and terms should the declaration be filed?

2.1. According to Art. 63, para. 6 of MAMLA, the legal representatives of the entities are obliged to submit for the registration of their Ultimate Beneficial Owners (UBOs), if, of course, the latter are not stated as partners or sole owners of the capital of their lots in the register itself.

When legal entities or other legal formations are registered as partners or sole owners of the capital, the obligation arises:

– if the UBOs are not entered in the other Bulgarian registers (Commercial Register and Register of Non-Profit Legal Entities, BULSTAT register) as partners and/or sole owners of the capital of the lots of legal entities participating in the chain of ownership or other legal entities established on the territory of the Republic of Bulgaria; or

– if these legal entities or other legal formations are not established on the territory of the Republic of Bulgaria.

In the event that partners and/or sole owners are foreign natural persons without Bulgarian residence, a contact person on the territory of the Republic of Bulgaria should also be indicated.

2.2. The circumstances should be declared within 7 days of their occurrence, according to the Commercial Register and Register of Non-Profit Legal Entities Act (CRRNPLEA).

3. What are the penalties for violations?

Regarding the non-compliance with the deadlines, the CRRNPLEA refers to the sanctions regulated in MAMLA, namely:

– a sanction in the amount of BGN 1,000 to BGN 10,000 for legal entities (after July 2024, the latter is expected to be unified at a fixed amount of BGN 5,000);

– if, after a fine/sanction has been imposed, the obliged person does not submit for the UBO registration in a term of one month from the imposition of the fine/sanction, a new one is imposed in the same amount every month until the registration is submitted;

– a contact person who does not fulfill his obligations to provide information under Art. 61 and Art. 62 of MAMLA, is subject to a fine in the amount of BGN 100 to BGN 1,000, and in the event of a repeated violation – BGN 200 to BGN 2,000.

4. What are the changes in the form?

4.1. The focus is placed on further description of the rights of the UBO.

It is necessary to indicate in more detail the type and volume of the rights possessed by the UBO, for example, whether they are:

– a natural person exercising direct or indirect control as the owner of a sufficient percentage of shares;

– a natural person exercising direct or indirect control through the voting rights they own;

– a natural person exercising direct or indirect control in another way, while the exact method should be described; or

– a natural person who performs the position of a senior management officer,

while the amount of rights owned (e.g. percentage of shares owned) and their description (ownership, control, voting rights, etc.) should also be indicated.

4.2. In addition, with the new para. 5 to Art. 63 it is now required documents to be attached to the declaration from which it can be established that the natural persons specified as UBOs fall within the scope of the relevant definitions under § 2 of the additional provisions of the law.

That is, in the absence of information in the usual certificates/excerpts about current statuses of commercial entities along the chain of ownership, additional documents should be provided such as:

– Certified up-to-date extract from the book of shareholders;

– Documents certifying the ownership of shares, or voting rights in foreign legal entities or legal entities, as well as their amount – certified up-to-date statutes / company contracts / articles of incorporation; shares / temporary certificates, etc.;

– Minutes of founding meetings; minutes of general meetings;

– Current documents certifying the registered beneficial owners of foreign legal entities or legal entities;

Exemplary descriptions of such types of documents have also been introduced as a new column in the declaration form, and persons obliged to submit it can indicate which relevant document they are attaching.

The declaration under Art. 63, para. 4 of MAMLA should be with notarized signature upon application.

For more information on whether you are subject to the obligations of the law, how to declare the relevant circumstances and what you should attach thereto, you can contact our team for support.

Published on: 04/11/2023

Atty. Marin Sarafov

Marin Sarafov specializes in corporate, commercial and bond law. His main focus is helping both local and foreign investors to gain a foothold in the Bulgarian market, gaining a strong start and a clear concept of the processes ahead. To find the best solutions, Marin relies on experience gained in an international corporate law firm, combined with direct contact with clients, as well as the indispensable help of a good team. A major goal for him is to convey to clients a clear picture of what the options are in front of them, the obvious and hidden risks as well as next steps in order to keep the workflow running like clockwork. Member of the Sofia Bar Association since 2019, fluent in English and German.