bearer shares

Bulgaria has abolished bearer shares

January 8, 2019

A nine-month replacement period for bearer shares has already started to run or otherwise the securities will be cancelled.

Joint-stock companies in Bulgaria can no longer issue bearer shares. Following amendments to the Commerce Act of 23 October 2018, large companies were required to replace this type of shares with registered shares.

The prescribed period for the replacement of shares is 9 months. Joint-stock companies will have to amend their articles of association. Usually by stipulating that their shares are registered. Companies are obliged to replace bearer shares or temporary certificates replacing them with registered shares. Merchants must also start maintaining registers of shareholders. As well to apply for entering changes, and submit the amended articles of association to the commercial register.

So far, bearer shares have often been used by companies whose owners, for one reason or another, wished to be anonymous. The effect largely resembled that of offshore companies. The new amendments seek to limit such business initiatives where the beneficial owner of the capital remains hidden behind nominal shareholders.

With the adopted amendments, even if a joint-stock company has issued temporary certificates attesting rights attached to bearer shares, the relevant persons may obtain only registered shares.

If a shareholder fails to provide for replacement the bearer shares or temporary certificates replacing them within the statutory deadline, the company should cancel them. A shareholder, whose bearer shares or temporary certificates replacing them are cancelled, may request from the company to pay them the equivalence of contributions made to them within 6 months of becoming aware. But not later than five years from the date of the cancellation.

The amendments aim to turn Bulgaria into a transparent tax jurisdiction. And a good partner in measures against money laundering and combating terrorism. Actually, however, there is no obligation for joint stock companies to maintain constant up-to-date information about the owners of shares in the Commercial register.

So far, Bulgarian law has provided for three main types of shares: registered, dematerialized and bearer shares. Now, following the new amendments, companies can only choose between the first two types.

In the event that you need assistance in relation to replacing shares issued by your company, or if you are a shareholder and have any questions about your rights, please do not hesitate to contact us using the details specified in “contacts” section.

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