Dimov&Tashev Law Firm

October 18, 2010 | Proposed changes in the Commercial Act aimed at ensuring transparency for the ownership of company shares

The draft bill for amendment and supplement of the Commercial Act proposed by the Council of Ministers on 18 October 2010 envisages introduction of changes aimed at ensuring transparency of the information relating to ownership of company shares.  

 

The proposed changes would regulate the requirements pertaining to individualization of all shareholders in a company with materialized registered shares as at two specific moments - the date of transfer of registered shares by way of endorsement, as well as the moment of announcement (promulgation) of the annual financial statements of the joint stock company, as approved and adopted by the annual convention of the general meeting of the shareholders.

 

The statutory provision subject to the intended changes is Article 179 of the Commercial Act which regulates the institute of the shareholders book. By way of introducing a new Para 2 in Article 179, the joint stock company would be obligated to register with its shareholders book any change in ownership of company shares within seven days as becoming aware of that. Identical to the current status, the share transfer would take effect towards the company only after endorsement of the company shares is duly registered with the shareholders book. The draft bill also envisages the imposition of fines between BGN 50 and BGN 1 000 for untimely registration of issuance or transfer of company shares with the shareholders book.

  

For the purpose of ensuring regular update of shareholders' data with the commercial register, the joint stock company would be supposed to announce (promulgate) with the commercial register an up-to-date list of shareholders along with the regular announcement (promulgation) of the company's annual financial statements.

 

The final provisions of the draft bill would provide for a transitional three month period after its entering into force and effect, within which all holders of registered shares not yet registered with the shareholders book of the company, will have to request such registration.