Archive for August, 2006

Bulgaria Upholds Financial Collateral Enforceability

Wednesday, August 23rd, 2006

By adopting the new Financial Collateral Arrangements Act (promulgated on August 22, 2006 in State Gazette, issue 68) the Bulgarian Parliament brought Bulgarian collateral law into compliance with Community Law by implementing completely Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements. The Act is a significant step toward ensuring unimpeded enforceability both within and outside the context of insolvency proceedings of financial collateral arrangements with Bulgarian counterparties. In particular it has introduced several important changes in the existing regime by allowing appropriation of collateral, regulating collateral replacement (e.g. margining) provisions, recognition of close-out netting provisions, providing for specific priority of claims secured by title transfer or security financial collateral arrangements etc. The law is expected to have a positive effect on the use of some of the widely used OTC trading agreements such as the Global Master Repurchase Agreement, the ISDA Master Agreement as well as various other netting and collateral agreements. The Act has come into effect.

New Value Added Tax Act

Saturday, August 5th, 2006

The Value Added Tax Act (promulgated on August 4, 2006 in State Gazette, issue 63), following on the steps of the adoption of the new Excise Duty Act, completes the radical overhaul of Bulgarian indirect taxation in connection with the forthcoming accession of Bulgaria to the European Union. It introduces inter alia the special rules for the taxation of the supplies made by tax liable persons within the territory of the EU. The Act will enter into force as of the date of entry into force of the EU Accession Treaty and it will repeal the 1998 Value Added Tax Act.