Archive for May, 2004

The Privatization of the Electricity Distribution Utilities Proceeds to its Final Stage

Thursday, May 27th, 2004

The Bulgarian Ministry of Energy announced on May 27, 2004 that the privatization of the electricity distribution utilities enters its final stage as the final revised transaction documents have been delivered to the bidders. June 25, 2004 is the deadline fixed by the Privatization Agency for submission of final binding offers for the privatization of the electricity utilities pooled into three packages – Western Bulgaria, Southeast Bulgaria and Northeast Bulgaria. The offers will be ranked only according to the price offered.

The Ministry of Energy also reported that in implementation of a memorandum of understanding with the trade unions the privatization agreements provide for protective social measures related to the labor relations in the utilities after the privatization. These protective clauses cannot be negotiated with the investors.

Borislav Boyanov & Co. is a part of an international consortium led by BNP Paribas which advises the Bulgarian Government on the privatization of the electricity distribution utilities.

Bulgaria Air Leases Two New Boeings

Tuesday, May 25th, 2004

On May 25, 2004 the national flag-carrier Bulgaria Air entered into Lease Agreements with the German Deutsche Structured Finance GmbH for the lease of two Boeings 737.

Borislav Boyanov & Co. advised Deutsche Structured Finance GmbH.

New Member of SEE Legal Group

Tuesday, May 25th, 2004

SEE Legal welcomed its newest member – the law firm Divjak, Topic & Bahtijarevic from Zagreb, Croatia during the SEE Legal meeting in Bucharest, Romania held from May 21, 2004 to May 23, 2004 at the Grand Hotel Marriott. The SEE Legal meeting was attended by the managing partners of all SEE Legal member firms who discussed the success of the organization and explored mutual cooperation. The meeting featured the participation of a magic circle UK law firm.

Amendments to the Foreign Investments Act

Tuesday, May 25th, 2004

On May 4, 2004 amendments to the Foreign Investments Act were adopted by the Bulgarian Parliament, aimed to boost investments in the Bulgarian economy. Measures to that effect have been implemented in two main aspects: (i) provision of investment support to the investors meeting the legal requirements, and (ii) amendments to the regime of real estates’ acquisition by foreigners.

A complimentary memorandum prepared by Borislav Boyanov & Co. on the amendments is available upon request send at

Commission on Protection of Competition Okayed the BTC Deal

Friday, May 21st, 2004

On May 20, 2004 the Bulgarian Commission on Protection of Competition (“CPC”) cleared the acquisition of 65% stake in Bulgaria’s telecom BTC by Viva Ventures which is one of the crucial conditions for the closing of the privatization deal. The CPC has not so far stated on the other question posed by the Communications Regulations Commission (“CRC”), namely whether the awarding of the third GSM licence to the BTC as a part of the privatization deal with Viva Ventures is a form of state aid. The delay in the Commission’s opinion is due to the fact that the preliminary expert opinion of the Directorate-General for Competition to the EC is not given yet. The CPC set additional requirements for BTC’s activities as an operator after the deal is completed, mainly related to keeping the competition on the telecom market.

HeidelbergCement Sold its Operations in Bulgaria

Tuesday, May 11th, 2004

Following a perfectly organized closing process by Borislav Boyanov & Co. to the satisfaction of both contracting parties, HeidelbergCement AG, Germany closed the transaction for the divestment of its Bulgarian subsidiaries in the cement, concrete and aggregate businesses to the Greek company Titan Cement Company S.A. The Share Purchase Agreement was signed on December 8, 2003 and the shares of the Bulgarian subsidiaries were transferred on May 5, 2004 after obtaining authorization by the Bulgarian Protection on Competition Commission. Borislav Boyanov & Co. granted full legal support and services to HeidelbergCement during the negotiations and signing of the share purchase agreement and the process of achieving closing of the transaction. We continue to provide our services in the process of smooth transition of the management of the companies to their new owner.

Foreigners no longer need a special permit to buy real estates in border zones in Bulgaria

Wednesday, May 5th, 2004

On May 4, 2004 the State Gazette promulgated a law on amendments to the Foreign Investments Act. One of the important amendments relates to foreigners’ ability to acquire real estates in border zones and other territories of the country related to the country’s national security. Prior to the amendment foreigners needed a special permit issued by the Council of Ministers to acquire real estates in such zones and territories. As the border zone was defined so as to include any territory within 15 km from the state border, in practice foreigners could not acquire any real estates on the Black Sea Coast (a major preferred area by foreigners at present) unless they obtained the special permit. This resulted in difficulties and impediments to foreign investments in real estates in Bulgaria. With the amendment to the Foreign Investments Act (now named Promotion of Investments Act) promulgated today this restriction has been lifted. Borislav Boyanov & Co. lobbied in Parliament for the lifting of that restriction. The amendment in this aspect enters into force immediately as opposed to all other amendments to the Foreign Investments Act which will enter into force within 3 months. However, foreigners still cannot acquire directly land in Bulgaria (they can do so only via a local vehicle) as this requires an amendment to the Constitution, a proposal which is currently in the pipeline.

Amendments in the Cadastre and Property Register Act

Tuesday, May 4th, 2004

Parliament recently adopted amendments in the Cadastre and Property Register Act (“CPRA”), according to which cadastre maps and registers may be issued upon the initiative of land owners or investors in a particular real estate or group of estates. The amendments aim at facilitating the procedure for obtaining such maps and registers as until recently, only the Executive Director of the Cadastre Agency could initiate the issuance of cadastre maps and registers.

Commission on Protection of Competition Approves Methods for Imposition of Sanctions

Tuesday, May 4th, 2004

The Commission on Protection of the Competition (“CPC”) approved new Methods on Sanctions and Penalties (“MSP”) under the Protection of the Competition Act, effective as of June 1, 2004.

The amounts of the sanctions and penalties imposed by the CPC would depend on three main criteria: (i) the type of the violation – the violations would be divided into “not very grave”, “grave” and “extremely grave”; (ii) the period of the violation – the violations would be classified as “short-term violations” (with a period of one year or less), “middle-term violations” (between one and five years) and “prolonged violations” (exceeding five years) – in general, the longer the violation lasted, the higher the penalty, and (iii) the specific conditions of the violation and its consequences for the respective market.

The sanctions should be commensurate with the economic condition of the enterprise and should not exceed 10% of the enterprise’s turnover for the preceding calendar year.

The MSP regulates the specific sanctions to be imposed on individuals for failure to cooperate with the CPC, assist in the establishment of a dominant position, or engage in unfair competition.

Foreigners Free to Acquire Land in Bulgaria after the EU Accession

Tuesday, May 4th, 2004

A Parliamentary ad hoc commission on changes in Bulgaria’s Constitution recently agreed that foreigners will be allowed to acquire land in Bulgaria as provided by national legislation or by an international treaty ratified by Parliament. The commission’s approach is in line with the commitments of the state under its pre-accession negotiations with the EU on the “Free Movement of Capitals” chapter.

Further Bulgaria agreed to a seven-year grace period starting from 2007 when Bulgaria is scheduled to join the EU.