Dimov&Tashev Law Firm

January 13, 2011 | News relating to transformation of commercial entities

According to the latest amendments in the Commercial act (in effect as of 1 January 2011), new requirements in the area of transformation of commercial entities have been introduced, as follows:

 

New provisions have been introduced, whereby the management bodies of each transforming (merging) company would be exempted from the obligation to present a written report for the said transformation, provided all shareholders in the transforming (merging) companies and the adopting companies have given prior written consent in this regard.

 

Further, it has been admitted that a company involved in a transformation transaction, may be released from the obligation to present all materials required for adoption of a resolution on the transformation, provided such company, within a specific period of time, uploads these materials on the company's website, until final resolution is obtained on the transformation registration request, or expiry of the term for submission of that transformation request.

 

According to the amended provisions of the Commercial act, in the event of merger, when the adopting company controls more than 90 percent of the voting shares in the merging company (or in case of merger of a company into the sole owner of its capital), it is also allowed to: (i) waive the preparation of a written report of the managing bodies, (ii) not to perform an audit of the transformation, (iii) not to arrange for an auditor's report, as well as (iv) not to present materials regarding the transformation before the General meeting of the shareholders. In this case, a resolution on behalf of the adopting company may not be required, unless within 5 days before the date of the General meeting, shareholders controlling at least 5 percent of the company's capital request the convocation of that General meeting.

 

All transformation procedures in progress as at the date of entering into force and effect of the Act for amendment and supplement of the Commercial Act, shall be completed according to the previous procedures, provided the merger agreement, respectively - the reorganization plan, has been executed prior to entry of the amendment act into force and effect.