LAW ON THE ACTIVITIES OF COLLECTIVE INVESTMENT
SCHEMES AND OTHER COLLECTIVE INVESTMENT
UNDERTAKINGS
Promulgated SG, iss. 77 of October 2011, Amended SG, issue 109 of 20 December 2013,
effective as of 20 December 2013
Part One
GENERAL PROVISIONS
Art. 1. This Law shall govern:
1. the activities of collective investment schemes and management companies;
2. the activities of other collective investment undertakings;
3. the activity of alternative investment fund managers;
4. the requirements to persons managing and controlling the persons under Items 1 – 3,
as well as to persons having a qualifying holding in management companies and
alternative investment fund managers;
5. The state supervision for ensuring compliance with this Law.
Art. 2. The goal of this Law is to:
1. ensure protection of investor rights and interests, including by establishing
2. conditions for enhancement of their knowledge about the market in units of collective
3. investment undertakings;
4. create conditions for development of a fair, transparent and efficient market in
5. units of collective investment undertakings;
6. maintain the integrity and public confidence in the capital market.
Art. 3. The regulation and supervision over the activities and persons under Art. 1 is carried
out by the Financial Supervision Commission, hereinafter referred to as the "Commission",
and fby the Deputy Chairperson of the Commission in charge of Investment Activity
Supervision Division, hereinafter referred to as the "Deputy Chairperson".
Part Two
COLLECTIVE INVESTMENT SCHEMES
Title One
CONDITIONS OF PURSUING BUSINESS BY A COLLECTIVE INVESTMENT
SCHEME
Chapter One
GENERAL CONDITIONS
Art. 4. (1) A collective investment scheme is an undertaking for collective investment,
meeting the following conditions:
1 1. its sole object is collective investment in transferable securities or in other liquid financial
assets under Art. 38, para 1, of cash raised through public offering, and which operates on the
principle of risk-spreading;
2. its units are dematerialized and are subject to redemption, directly or indirectly, on the basis
of its net asset value, at request made by unit-holders.
(2) The actions of the collective investment scheme, taken with the purpose to ensure that the
stock exchange value of its units does not significantly vary from their price, determined on
the basis of the net asset value, shall be regarded as equivalent to its redemption actions.
(3) The collective investment scheme has no right to perform any other activity outside that
indicated under para 1, except where it is needed for performance of the activity under para 1
and the actions under para 2.
(4) A collective investment scheme may comprise of individual investment sub-funds with
assets invested following different investment strategies, and it is not allowed to combine the
assets, liabilities and results of the individual sub-funds. For each investment sub-fund a
separate class of shares or units shall be created.
Art. 5. (1) The collective investment scheme shall be constituted as a contractual fund or as
an investment company.
(2) The contractual fund is a separate property and is considered established with its entry into
the Register according to Art. 30, para 1 of the Financial Supervision Commission Act. In
regard to the contractual fund shall apply Section ХV Company of the Obligations and
Contracts Act, except for Art. 359, para 2 and 3, Art. 360, 362, Art. 363, letters "c" and "d"
and Art. 364, in so far as this Act or the contractual fund rules do not provide otherwise.
(3) The investment company is a joint-stock company with a one-tier management system and
a head office in the Republic of Bulgaria, which is established only at a constitutive meeting.
(4) The activity of the collective investment scheme is managed only by a management
company according a concluded contract, respectively according to the contractual fund rules.
(5) The collective investment scheme may not be transformed into a collective investment
undertaking, which is not a collective investment scheme within the meaning of this Law.
Art. 6. (1) To pursue activities as a collective investment scheme, it is required a license to be
issued for carrying out the business of an investment company, respectively authorization for
organization and management of a contractual fund, by the Commission. The obtained
license, respectively authorization, entitles the collective investment scheme to pursue
business on the territory of all Member States.
(2) No entity shall have the right to pursue activities under Art. 4, para 1, unless it has been
granted a license, or respectively authorization.
(3) A person who does not possess a license, or respectively authorization for pursuing
business under Art. 4, para 1, may not use in its name, advertising or other activity the words
"investment company", respectively "contractual fund", "”mutual fund", "investment fund" or
other equivalent words in Bulgarian or foreign language, meaning the pursuing of such
business.
(4) A collective investment scheme may include in its name the designation "money market",
"money market fund" or "short-term money market fund" only if its main investment
objective is to ensure a rate of return comparable to the interest rates of the money market
instruments, to calculate and disclose on a daily basis the net value of its assets, the issue
value and redemption price of its shares or units, to issue and redeem its shares or units on a
daily basis, as well as to maintain its portfolio structure in compliance with requirements set
forth in a regulation.
2 (5) A collective investment scheme may include in its name the designation "exchange-traded
fund", "exchange-traded investment company" or another term suggesting the trading of the
issue shares or units at a regulated market under Article 73 of the Markets in Financial
Instruments Act or a multilateral trading facility under § 1, Item 19 of the Additional
Provisions of the Markets in Financial Instruments Act only if it meets the requirements of
this Act and of its implementing legislation regarding exchange-traded funds.
(6) Additional requirements and restrictions regarding the names of collective investment
schemes may be set forth in a regulation.
Art. 7. (1) The subscribed capital of the investment company shall be not less than BGN 500
000. In the trade register shall be entered the capital with which the company is established.
(2) The capital contributions can be made only in cash.
(3) Not less than 25 per cent of the capital under para 1 must be paid in upon filing of the
application for the issue of a license to pursue business as an investment company, and the
other part – within a 14-day period of receiving a written notification from the Commission,
that it will issue a license after the full capital amount is paid in.
(4) Since the company’s entry in the trade register, its capital shall always be equal to the net
asset value. The capital may not be less BGN 500 000.
(5) The capital of the investment company is increased or reduced in accordance with the
change in the net asset value, including as a result of the sold or redeemed shares. The
provisions of Art. 192 - 203 and 246 of the Commercial Law shall not apply.
(6) An investment company shall issue only dematerialized, unprivileged shares with a right
to one vote. Besides upon establishment of the company, its shares shall be acquired at issue
price, determined on the basis of the net asset value. The provisions of Art. 176, para 2 and 3
and Art. 188 - 191 of the Commercial Law shall not apply.
(7) The company may not issue bonds and other debt securities.
Art. 8. Unless otherwise provided for by this Law, in regard to the procedure of convening
and holding of a general shareholders’ meeting of an investment company and dividend
distribution, shall apply respectively the provisions of Chapter Eight of the Law on Public
Offering of Securities.
Art. 9. (1) The net asset value of the contractual fund may not be less than BGN 500 000.
This minimum amount must be reached within one year of obtaining the authorization for
organization and management of a contractual fund.
(2) The contractual fund is considered an issuer of the units, into which it is divided. The units
entitle to a corresponding part of the fund’s property, including upon the fund’s liquidation,
redemption right as well as other rights, as envisaged herein and the contractual fund rules.
(3) Contractual funds may also issue on the basis of their net asset value partial units against a
contributed money deposit of certain amount, if a whole number of units cannot be issued
against the deposited amount.
(4) Contractual funds can distribute income proportionately to the held units under conditions
and procedure, as determined by the contractual fund rules.
(5) The conditions for participation in the contractual fund, its organization, management and
winding-up shall be determined by the contractual fund rules.
Art. 10. (1) A person who has been elected a member of an investment company’s board of
directors must not have been:
3 1. sentenced for crimes against property, against the economy or against the financial, tax and
the social security system, perpetrated in the Republic of Bulgaria or abroad, unless
rehabilitated;
2. a member of a management or supervisory body, or unlimited liability partner in a
company, for which a bankruptcy procedure has been initiated, or company wound up due to
bankruptcy, where there are unsatisfied creditors left;
3. declared bankrupt or involved in pending bankruptcy proceedings;
4. not be the spouse or relative in the direct or collateral line up to the third degree inclusive,
or by affinity up to the third degree to another member of the company’s board of directors;
5. deprived of the right to occupy positions involving financial responsibilities. (2) The
requirement under para 1 shall also apply to the natural persons representing legal persons –
members of the board of directors of the investment company.
(3) The requirements of para 1 shall also apply to any other persons who may, independently
or jointly with another person, enter into transactions for the account of the investment
company.
(4) The circumstances under para 1, Item 1 shall be certified by a certificate of conviction, or
respectively by an equivalent document, and under para 1, Item 2 - 5 shall be certified by a
written statement.
(5) The persons under para 1 - 3 shall inform the Commission of any change in the declared
by them circumstances according to para 1 within three business days of such change.
Art. 11. The provisions of this Part shall not apply to the activity of:
1. collective investment undertakings, which raise cash without offering to the public their
units for sale within the European Union or in parts thereof;
2. collective investment undertakings, whose units according the fund rules or the articles of
association of the investment company can be offered to the public only in third countries;
3. The collective investment undertakings, settled in Part Three, unless otherwise provided in
this Law;
4. Holding companies, whose funds are invested through their subsidiary companies
predominantly in assets, other than transferable securities under Art. 38, para 1.
Chapter Two
ISSUING AND WITHDRAWAL OF A LICENSE OF AN INVESTMENT
COMPANY AND AUTHORIZATION FOR ORGANIZATION AND
MANAGEMENT OF A CONTRACTUAL FUND
Art. 12. (1) In order a license to be issued for pursuing business as an investment company,
an application shall be filed with the Commission in a standard form, approved by the Deputy
Chairperson, to which shall be enclosed:
1. the articles of association;
2. particulars about the capital subscribed and paid-in;
3. information and other needed documents about the members of the investment company’s
board of directors, or about the natural persons representing legal entities, members of the
board of directors, or other persons authorized to manage and represent the investment
company, as well as information about their professional qualification and experience;
4. the contract with the management company and the contract for depositary services;
4 5. the names or business names of and particulars about the persons who hold, directly or
indirectly, 10 or more than 10 per cent of the voting shares of the applicant or can exercise
control over it, as well as about the number of the held by them votes; the persons shall
submit written declarations, in a standard form approved by the Deputy Chairperson, about
the origin of the funds whereby the contributions against the subscribed shares were made,
including where these are loan funds, as well as about the taxes paid by such persons over the
preceding 5 years;
6. the rules of portfolio evaluations and determination of the net asset value;
7. the prospectus of the investment company and the key investor information document;
8. the rules of risk management;
9. other documents and information, as laid down in an ordinance.
(2) In order authorization to be issued to organize and manage a contractual fund, the
management company shall file an application with the Commission in a standard form
approved by the Deputy Chairperson, to which shall be enclosed:
1. the contractual fund rules;
2. decision of the competent body of the management company to organize a contractual
fund;
3. the rules of portfolio evaluation and determination of the net asset value;
4. the contract for depositary services;
5. the prospectus of the contractual fund and the key investor information document;
6. the rules of risk management;
7. other documents and information, as laid down in an ordinance.
(3) On the basis of the submitted documents the Commission shall establish to what extent the
requirements to the issue of a license, or an authorization, have been complied with. If the
presented data and documents are incomplete or irregular, or additional information is needed
or evidence for the data correctness, the Commission shall send a notification and set a term
for removal of the found deficiencies and irregularities or for submission of additional
information and documents, which may not be shorter than one month and longer than two
months.
(4) If the notification under para 3 is not accepted at the indicated by the applicant address for
correspondence, the term for their submission shall start running from the posting of the
notification at a specially designated for the purpose place in the Commission’s building. This
circumstance is verified by a protocol drawn up by officials appointed by order of the
Commission’s Chairman.
(5) The Commission shall pronounce on the application within one month of their receipt, and
where additional information and documents have been requested – within two months of
their receiving, or respectively the expiration of the term under para 3, sentence two.
(6) Simultaneously with the issuing of a license to an investment company and authorization
to a management company for organization and management of a contractual fund, the
Commission shall confirm the prospectus and the key investor information document of the
collective investment scheme.
(7) The applicant shall be informed in writing of the decision taken within a 7-day period.
(8) Upon the issuing of a license to pursue the business as an investment company,
respectively authorization to organize and manage a contractual fund, the investment
company, or the contractual fund, shall be filed into the register kept by the Commission
under Art. 30, para 1 of the Financial Supervision Commission Act.
Art. 13. (1) In addition to the particulars required under the Commercial Law, the articles of
association of an investment company must contain:
5 1. the main objectives and restrictions on the investment activity, as well as the investment
policy of the investment company;
2. the investments sub-funds, if any, comprising an investment company and the investment
strategies according to which the assets of each of the investment sub-funds are invested, as
well as the particulars regarding the application of the investment policy of the company for
each of these sub-funds;
3. the share of investments by type of assets, including for each of the investment sub-funds,
if any, comprising the investment company;
4. the remuneration and the methods for calculation of the remuneration of the management
company, of the members of the board of directors respectively;
5. the distribution of powers and duties between the company’s board of directors and the
management company;
6. the conditions and procedure to calculate the net asset value, the issue price and the
redemption price of the shares and the amount of dividend, if such is envisaged;
7. the conditions and procedure for redemption of the shares and the conditions to suspend
such redemption and for distribution of the dividend, when such has been envisaged, or for its
reinvestment;
8. the conditions for replacement of the depository and the rules safeguarding the interests of
shareholders in case of such replacement;
9. the conditions for replacement of the management company and the rules safeguarding the
interests of shareholders in case of such replacement.
(2) The rules of the contractual fund must contain:
1. the name of the contractual fund;
2. information about the person that organizes or manages the contractual fund;
3. the investments sub-funds, if any, comprising a contractual fund and the investment
strategies according to which the assets of each of the investment sub-funds are invested, as
well as the particulars regarding the application of the investment policy of the contractual
fund for each of these sub-funds;
4. the main objectives and restrictions of the investment activity, as well as of the investment
policy;
5. the conditions and procedure for calculation of the net asset value, the issue value and the
redemption price of units;
6. methods of valuation of the assets and liabilities;
7. the rights attached to the units;
8. the remuneration of the management company, the fees withheld by the management
company for the units sale and redemption, and other fees, if such are envisaged, as well as
the methods of their calculation;
9. the rules of determining the remuneration of the depository;
10. the conditions and procedure for redemption of units and the conditions of the redemption
suspension;
11. the conditions and procedure for distribution of the income, or its reinvestment;
12. the conditions for replacement of the depository and the rules safeguarding the interests of
unit-holders in case of such replacement;
13. the conditions for replacement of the management company and the rules safeguarding the
interests of the unit-holders in case of such replacement.
Art. 14. (1) The issued by the Commission license to pursue activities of an investment
company, or authorization to organize and manage a contractual find shall be valid on the
territory of all Member States.
6 (2) The Commission shall not require a collective investment scheme to be managed only by a
management company established in the Republic of Bulgaria, as well as require a
management company established in another Member State to pursue its business through
delegation of activities on the territory of the Republic of Bulgaria.
Art. 15. (1) The Commission shall refuse to issue a license to pursue the business of
investment company, if:
1. the company’s articles of association do not comply with the law;
2. the subscribed capital does not meet the requirements of Art. 7, para 1;
3. the contract with the management company does not meet the requirements of this Law and
its implementing instruments;
4. the members of the board of directors fail to meet the requirements of Art.10;
5. persons who hold, directly or indirectly, 10 and more than 10 per cent of the votes at the
investment company’s general meeting, may prejudice the investments safety through their
activities or influence on decision-making;
6. persons who hold, directly or indirectly, 10 and more than 10 per cent of the votes at the
general meeting, have made contributions with borrowed funds;
7. the depository or the contract with the depository does not meet the requirements of the law
or its implementing regulations;
8. the prospectus or the key information document of the investment company does not meet
the requirements of this Law and its implementing instruments;
9. according the law or the articles of association of the investment company, it may not
market its shares on the territory of the Republic of Bulgaria;
10. investor interests are not guaranteed to a sufficient extent;
11. the management company was not granted authorization to pursue activities under
Directive 2009/65/ЕC of the European Parliament and of the Council of 13 July 2009 on the
coordination of laws, regulations and administrative provisions relating to undertakings for
collective investment in transferable securities (UCITS) (OJ, L 302/32 of 17 November
2009), hereinafter referred to as "Directive 2009/65/EC", in its home Member State.
(2) The Commission shall refuse to issue authorization to organize and manage a contractual
fund if:
1. the applicant does not meet the requirements of the Law;
2. the contractual fund rules do not comply with the requirements of the Law and its
implementing instruments;
3. the depository or the contract with the depository does not meet the requirements of the law
or its implementing regulations;
4. the prospectus and the key investor information document of the contractual fund do not
comply with the requirements of the law and its implementing instruments;
5. according the Law or its rules, the contractual fund may not market its units on the territory
of the Republic of Bulgaria;
6. investor interests are not guaranteed to a sufficient extent;
7. the management company was not granted authorization to pursue business in accordance
with Directive 2009/65/EC in its home Member State. (3) In the cases under para 1, Item 1 4, 7 and 8, respectively under para 2, Item 2, 3 and 4, the Commission may refuse to issue a
license, or authorization, only if the applicant has failed to remove the inconsistencies or to
submit the required documents within the time limit set by the Commission, which may not
be less than one month.
(4) The Commission’s refusal shall be reasoned in writing.
7 Art. 16. In the cases of refusal under Art. 15, the applicant may file a new request for the
issue of a license, or authorization, not earlier than 6 months after the coming into effect of
the decision of refusal.
Art. 17. (1) The Registry Agency shall enter the investment company in the trade register,
after it has been provided with the relevant license issued by the Commission.
(2) The investment company shall inform the Commission about the entry within a 7-day
period after it is made.
Art. 18. (1) Any change in the rules, or the articles of association of a collective investment
scheme, replacement of the depository and of the management company, change in the rules
of risk management, the rules of portfolio valuation and determination of the net asset value
and change in the contract for depositary services shall be admitted after approval by the
Deputy Chairperson.
(2) In order approval under para 1 to be issued, an application shall be filed in a standard
form, approved by the Deputy Chairperson. The Deputy Chairperson shall issue or refuse to
issue the approval under para 1 within a 14-day period of receiving the application with the
enclosures thereto, and where additional information and documents have been required – of
their receiving.
(3) On the basis of the submitted documents the Deputy Chairperson shall establish to what
extent the requirements for the issued of the requested approval have been complied with. If
the presented data and documents are incomplete or irregular or additional information is
need, the Deputy Chairperson shall send a notification and set a term for removal of the found
deficiencies and irregularities, or for submission of additional information and documents.
(4) If the notification under para 3 is not accepted at the indicated by the applicant address for
correspondence, the term for removal of deficiencies and irregularities, respectively for
presentation of additional information, shall start running from the posting of the notification
at a specially designated for the purpose place in the Commission’s building.
This circumstance shall be verified by a protocol drawn up by officials appointed by order of
the Deputy Chairperson.
(5) The Deputy Chairperson shall refuse to issue approval under para 1, if the requirements of
the Law or its implementing instruments have not been complied with, or the investor
interests are not guaranteed. The refusal shall be reasoned in writing.
(6) The applicant shall be informed in writing of the decision made within a threeday period.
(7) The Registry Agency shall enter the amendment to the investment company’s articles of
association after it is provided with the approval of the Deputy Chairperson.
Art. 19. (1) The Commission shall withdraw the issued license where the investment
company:
1. does not start to pursue the relevant business within 12 months after the license issuing,
expressly renounces the issued license or has not been executing business for more than 6
months;
2. in the course of 6 consecutive months, the average monthly net asset value is less than
BGN 500 000;
3. has submitted false particulars, which served as a ground to issue the license;
4. ceases to meet the conditions, on which the license is issued;
5. does not meet the requirements for liquidity, as laid down in an ordinance;
6. grossly or systematically violates the provisions of this Law and its implementing
instruments.
8 7. has not designated a new management company, or has not transformed itself in the cases
according to 157, para 1, Item 2.
(2) The Commission shall withdraw authorization issued to organize and manage a
contractual fund:
1. if in the course of one year after the authorization granting, the balance sheet net asset value
of the contractual fund does not reach BGN 500 000;
2. in the cases under para 1, Item 1 - 5 and 7;
3. if that is necessary for protection of investor interests.
Art. 20. The Commission shall publish the acting laws, regulations and administrative
provisions, relating to the constitution and functioning of the collective investment scheme on
its website in the Bulgarian and English language and upon amendment shall update them in
due time.
Chapter Three
PUBLIC OFFERING AND REDEMPTION OF UNITS
OF A COLLECTIVE INVESTMENT SCHEME
Art. 21. (1) A collective investment scheme must continuously offer its units to the investors
at their issue price, based on the net asset value, and at the request of any unit holders redeem
them at price based on the net asset value, under conditions and procedure, determined by this
Law, its implementing instruments, respectively in the contractual fund rules, except for the
case under Art. 22, para 1, 3 and 5.
(2) The issue price and the redemption price shall be calculated by the depository or by the
management company under the supervision of the depository.
(3) The issue price and the redemption price shall be calculated at least twice a week in equal
intervals of time.
(4) If so provided for in the articles of association, or respectively in the rules of the collective
investment scheme, the issue price may be higher than the net asset value per unit with the
amount of the cost of issuance. The maximum amount of the costs related to the issue shall be
determined in the statute, respectively in the rules of the collective investment scheme.
(5) If so provided for in the articles of association, or respectively in the rules of the collective
investment scheme, the redemption price may be lower than the net asset value per unit with
the amount of the cost of redemption. The maximum amount of the costs related to the
redemption shall be determined in the statute, respectively in the rules of the collective
investment scheme.
(6) The obligation of redemption shall be performed within 10 days of filing the request in
writing and at a price, based on the redemption price for the nearest day following the day on
which the request is made.
(7) All orders to buy units in a collective investment scheme and all orders for redemption of
its units, received between two issue price and redemption price quotations, shall be executed
at the same price.
(8) A collective investment scheme shall issue, sell and redeem its units through the
management company on the basis of a written contract with the customer under the terms
and conditions and following the procedure set forth in a regulation" shall be inserted.
9 (9) The management company shall provide for filing into the national registration system,
maintained by Central Depository AD, information about the newly issued and redeemed
units, as well as about the persons, who purchased units and whose units were redeemed.
Art. 22. (1) A collective investment scheme may temporarily suspend the redemption of its
units under the conditions and procedure provided for in its articles of association,
respectively in the rules, but only in exceptional cases, where circumstances so require and
where suspension is justified having regard to the interests of the unit-holders, including in the
following cases:
1. when entering into transactions on a regulated market, on which a substantial portion of the
collective investment scheme’s assets are admitted or dealt in, is suspended, discontinued or
subject to restrictions;
2. where the collective investment scheme’s assets or liabilities cannot be valued accurately or
it may not dispose of them without prejudice to the interests of unit-holders;
3. when a decision is taken for dissolution or transformation through merger or acquisition of
the collective investment scheme under the conditions and procedure of Chapter Fourteen.
(2) In the cases under para 1, the collective investment scheme shall communicate the
decision made to the Commission and the relevant competent authorities of all Member
States, in which it offers its units, by the end of the business day, or respectively shall notify
of the resumption of redemption by the end of the business day preceding such resumption.
(3) Upon taking a decision under 1, the collective investment scheme must also discontinue
without delay the issuing of units for the period of temporary suspension of the redemption.
(4) The collective investment scheme, or respectively the management company must notify
the unit-holders in the cases under para 1 of the decision made to suspend the redemption, as
well as upon a subsequent decision for its resumption. The collective investment scheme, or
respectively the management company, shall post the decisions for suspension of the
redemption or for its resumption on its website, and where its units are admitted to trading on
a regulated market, it must also inform the market in the timelimit according to para 2.
(5) The Commission takes decision for suspension of the redemption, in case that the interests
of unit-holders or the market require it.
Art. 23. (1) The rules for the valuation of the net asset value of the collective investment
scheme, as well as the rules for calculating the issue price and redemption price shall be laid
down in the articles of association, or in the rules of the collective investment scheme.
(2) The requirements to the rules of determining the net asset value, the issue price and
redemption price of a collective investment scheme shall be laid down in an ordinance.
(3) The distribution or reinvestment of the realized income of a collective investment scheme
shall be effected in accordance with the articles of association, or the rules of the collective
investment scheme.
Art. 24. (1) A collective investment scheme shall have no right to issue units, whose issue
price is not paid in full.
(2) The restriction according to para 1 shall not apply in the cases of distribution of bonus
units under conditions and procedure, provided in the articles of association, or in the rules of
the collective investment scheme.
Chapter Three "a"
EXCHANGE-TRADED FUNDS
10 Art.24a. (1) A collective investment scheme may request that its issued shares or units be
admitted to trading on a regulated market under Article 73 of the Markets in Financial
Instruments Act or on a multilateral trading facility under § 1, Item 19 of the Additional
Provisions of the Markets in Financial Instruments Act, respectively to be traded on such a
market if the following requirements are met:
1. the shares or units are traded on the respective market for the duration of the full trading
session of the market;
2. a contract for the shares or units is signed with at least one market maker, ensuring the
upholding of a market price of the shares or units which does not differ significantly from the
net asset value, respectively from the indicative net asset value.
(2) A collective investment scheme which meets the requirements of Paragraph 1 shall
include the designation "exchange-traded fund” in its name, in its statute, respectively in its
rules, the prospectus, the document containing key investor information, as well as in its
marketing messages.
(3) A collective investment scheme which does not meet the requirements of Paragraph 1
cannot use the designations under Paragraph 2, or any other words of similar meaning in the
Bulgarian or foreign languages, in its name, in its statute, respectively in its rules, the
prospectus, the document containing key investor information, as well as in its marketing
messages..
Art. 24b. In the event that the acquisition of shares or units of an exchange-traded fund upon
their issue is only restricted to institutional investors, the management company shall declare
acceptance of the issue of shares or units of the collective investment scheme for trading on a
regulated market under Article 73 of the Markets in Financial Instruments Act within 30 days
of the start of the offering of such shares or units. If within two months of the start of the
offering under Sentence 1, the shares or units are not admitted to trading on a regulated
market, the restrictions regarding the investors who can purchase shares or units shall not
apply.
Art. 24c. (1) The redemption of shares or units of an exchange-traded fund may be restricted
to a certain category of investors and/or to a certain minimum number of shares or units.
(2) In the cases under Paragraph 1, if there is a significant deviation from the trading price of
the shares or units of an exchange-traded fund, including in case of market disruption or the
absence of a market maker, the restrictions regarding the redemption under Paragraph 1 shall
not apply. Upon the occurrence of a circumstance under which the redemption restrictions do
not apply, the management company of the exchange-traded fund shall immediately notify the
regulated market or the operator of the multilateral trading facility on which the shares or
units are traded about such a circumstance and about the option of each investor to declare
redemption.
(3) The costs paid by the investors for a redemption under Paragraph 2 shall not be in an
amount which prevents or significantly obstructs the realisation of the redemption under
Paragraph 2.
11 Art. 24d. Additional requirements regarding exchange-traded funds shall be determined with
a regulation.
Chapter Four
GENERAL REQUIREMENTS
Art. 25. (1) The depositary as well as the members of its management and supervisory bodies
may not be the same person or a related person with the management company, with the
members of its management or supervisory bodies or with the persons under para 10 or with
another person performing managerial functions in the investment company, as well as with
persons who control the investment company.
(2) In carrying out its duties, the depository shall act independently and
solely in the interest of the unit-holders.
Art. 26. (1) The contract with the management company may be terminated by the investment
company by a three-month prior notice after approval by the Deputy Chairperson of the
replacement of the management company.
(2) In case of breaking of the contract under para 1 by the investment company due to nonfulfillment of the obligations of the management company, the latter shall immediately cease
the management of the investment company’s activities. Until the conclusion of a contract
with another management company, or until the transformation of the investment company by
merger or acquisition, the management body of the investment company shall as an exception
carry out management actions for a period not longer than three months.
(3) In cases of withdrawal of a license to pursue business, winding-up or declaring insolvent
of a management company, which manages a contractual fund, the management company
shall cease the fund’s management and shall immediately deliver to the fund’s the depository
the whole available with it information and documentation in relation to the fund’s
management. Until the conclusion of a contract with another management company or until
the fund’s transformation by merger or acquisition, the depository shall, as an exception, carry
our management functions for a period not longer than three months.
(4) The contract with the depository may be terminated by the investment company, or
respectively by the management company, for the contractual fund’s account with a threemonth prior notice after approval by the Deputy Chairperson of the replacement of the
depository.
Art. 27. (1) The investment company, as well as the management company and the
depository, when acting on behalf of a collective investment scheme, may not borrow loans,
except in the cases under para 2 and 3.
(2) A collective investment scheme may acquire foreign currency by means of a ‘back-toback’ loan on conditions as laid down in an ordinance.
(3) The Deputy Chairperson may allow the collective investment scheme to use a loan up to
10 per cent of its assets, if the following conditions are met simultaneously:
1. the loan to be for a term not longer than three months and to be needed for cover of the
liabilities for redemption of the scheme’s units;
2. the conditions of the loan agreement not to be more unfavorable than the usual for the
market and the articles of association or the rules of the collective investment scheme to allow
conclusion of such agreement.
12 (4) The Deputy Chairperson shall issue or refuse to issue the authorization under para 3
according the procedure of Art. 18, para 2 - 6.
(5) The actions performed in violation of para 1 shall be void in regard to the unitholders.
Art. 28. (1)An investment company, as well as a management company and the depository,
when acting on behalf of the collective investment scheme shall not grant loans, or act as
guarantors on behalf of third parties.
(2) The actions performed in violation of para 1, shall be void in regard to the unit-holders.
(3) Notwithstanding the restrictions under para 1, the persons referred to in para 1 may
acquire transferable securities, money market instruments or other financial instruments under
Art. 38, para 1, Item 5, 7, 8 and 9, in the cases when they value is not fully paid.
Art. 29. An investment company, as well as a management company and the depository,
when acting on behalf of the collective investment scheme, may not conclude a contract for
uncovered sale of transferable securities, money market instruments or other financial
instruments referred to in Art. 38, para 1, Item 5, 7, 8 and 9.
Art. 30. (1) The remuneration and the expenditure, which a management company is
empowered to charge to a collective investment scheme, as well as the methods of calculation
of such remuneration shall be determined under the conditions and procedure, as provided in
this Law, its implementing instruments or in the articles of association, or the rules of the
collective investment scheme.
(2) The management company may not collect fees, which are not envisaged or are higher
than the amount of the fees envisaged in the articles of association of the investment
company, or respectively in the rules of the contractual fund.
Art. 31. An investment company may not exercise control over the management company.
Art. 32. The investment company and the management company shall adopt rules about the
personal transactions of the members of the board of directors of the investment company, or
the members of management or supervisory bodies of the management company, which are to
guarantee that there will be no personal transactions concluded or investments maintained by
these persons, allowing them jointly or severally to exercise significant influence over an
issuer, or which would lead to conflict of interests, or are a result of abuse of information,
which they have acquired in connection with their professional activity within the meaning of
the Law on Measures Against Market Abuse with Financial Instruments.
Art. 33. Other requirements to the activity, the asset and liability structure and the liquidity of
a collective investment scheme, aimed at protection of investor interest, including the
maintenance and keeping of records by the collective investment scheme, the annual and halfyearly reports and their distribution, the method and procedure for valuation of the collective
investment scheme’s assets and liabilities, the disclosure of information, the content of the
marketing communications in relation to units of the collective investment scheme, the
activity of sale of units, the content of the contract of the investment company with the
management company and the depository and the content of the contract of the management
company with the depository shall be laid down in an ordinance.
Chapter Five
OBLIGATIONS OF THE DEPOSITORY
13 Art. 34. (1) The dematerialized financial instruments, held by the collective investment
scheme, shall be entered in a depositary institution on the sub-account of the depository, and
its assets shall be kept at the depository. In case that the depository is an investment
intermediary, the monetary funds shall be kept in accordance with the provisions of Article
34, Paragraphs 2 – 4 of the Markets in Financial Instruments Act. The depository shall effect
all payments on behalf of the collective investment scheme.
(2) The depositary’s liability according to Art. 37 shall not be affected by the fact that it has
entrusted to a third party all or some of its assets for safe-keeping.
(3) The depository shall:
1. ensure the issue, sale, redemption and cancellation of the units of the collective investment
scheme in accordance with the law and the articles of association, respectively the rules;
2. oversee compliance with the law and the rules of the collective investment scheme in
calculation of the value of units;
3. dispose of the collective investment scheme’s assets entrusted to it [the depository] only on
order of the management company, unless such order is contrary to the law, the articles of
association, respectively the rules of the collective investment scheme or the contract for
depositary services;
4. ensure that all considerations relating to transactions involving portfolio assets are remitted
in favor of the collective investment scheme within the usual time limits;
5. ensure the collection and use of the collective investment scheme’s income in conformity
with the law and the articles of association, respectively the rules;
6. report regularly to the collective investment scheme on the assets entrusted and the
operations carried out.
Art. 35. (1) A depository may be a bank, included in a list approved by the Deputy
Chairperson, which meets the following requirements:
1. to have been granted a license by the Bulgarian National Bank to pursue banking activity,
or to be a bank from a Member State, which carries out banking activity into the territory of
the Republic of Bulgaria through a branch;
2. to have obtained authorization for execution of transactions with financial instruments;
3. to have obtained authorization to pursue activities as a depositary or custodian institution in
accordance with Art. 2, para 2, Item 4 of the Law on Credit Institutions;
4. whose license, activities, transactions or operations have not been restricted to an extent
that will impede or render impossible the execution of the duties envisaged in this Law in the
contract for depositary services;
5. in relation to which no measures under Art. 103, para 2, Item 14, 19, 20 or 21 of the Law
on Credit Institutions were imposed during the last 12 months, or which has not been
sanctioned for violation of the provisions of this Law;
6. which has staff and information provision for effective execution of its depositary functions
and obligations in compliance with the requirements of this Law and its implementing
instruments.
(2) An investment intermediary included in a list approved by the Deputy Chairperson may
also operate as a depositary if it meets the following requirements:
1. it has a license issued by the Commission, which includes at least the carrying out of
transactions in financial instruments and of additional services under Article 5, Paragraph 3,
14 Item 1 of the Markets in Financial Instruments Act or it is an investment intermediary from a
Member State which carries out these activities in the Republic of Bulgaria through a branch;
2. it has equity in the amount of at least BGN 1,500,000 and it meets the capital adequacy
requirements for investment intermediaries;
3. its license, activity, transactions or operations are not limited to an extent which would
impede or render impossible the fulfilment of the obligations set forth in this Law or in the
contract for depository services;
4. over the last 12 months it has not been sanctioned with coercive administrative measures
relating to the activities of persons under Article 11 of the Markets in Financial Instruments
Act, no receiver has been appointed for it and it has not been sanctioned for a violation of the
provisions of this Law or for a gross violation or systematic violations of the Markets in
Financial Instruments Act;
5. it has the personnel and information security necessary for the effective performance of its
depositary functions and obligations under the provisions of this Law and its implementing
regulations.
(3) For inclusion in the list under Paragraphs 1 and 2, the depository shall submit an
application form approved by the Deputy Chairperson. The depository shall be deleted from
the list when it ceases to meet any of the requirements under Paragraphs 1 or 2.
(4) The Bulgarian National Bank shall inform the Commission in due time of any imposed
measure or sanction, which limits the license, the transactions or the operations of the
depositary to an extent that will impede or render impossible the execution of the envisaged in
this Law or the contract for depositary services obligations.
Art. 36. (1) The depository shall render an account of the assets of the collective investment
scheme segregated from its own assets and from the other customer assets. The depository
shall not be liable for its own obligations towards its creditors with the collective investment
scheme’s assets.
(2) If the depository is declared insolvent, the assets in collective investment schemes held by
it shall not be included in the bankruptcy estate. The receiver or trustee of the depositary shall,
not later than 5 business days from the substitution of the depository, transfer the assets of the
collective investment scheme to the new depository in accordance with the application filed
by the management company.
(3) The depository shall assist the collective investment scheme in obtaining information and
participation in general meetings of the issuers in whose financial instruments the collective
investment scheme has invested and shall assume other obligations related to the entrusted
assets according to the concluded contract. The remuneration of the depositary may not
exceed the customary one for the services provided.
(4) On request, the depository shall provide to the Commission the whole information it has
obtained while discharging its duties.
(5) Where a collective investment scheme established in the Republic of Bulgaria has a
contract concluded with a management company established in another home Member State,
the depository shall sign a written agreement with the management company, defining the
information needed to allow it to perform its functions under this Law and its implementing
15 instruments. The content of the written agreement between the depository and the
management company is to be specified in an ordinance.
Art. 37. (1) A depository shall be liable to the management company and the unit-holders of
the collective investment scheme for any damages suffered by them as a result of its failure to
perform its obligations, including of incomplete, inaccurate and untimely performance, when
it is due to reasons for which the depository is responsible.
(2) The unit-holders may claim liability from the depository, directly or indirectly, through the
management company in accordance with the nature of the legal relationship between the
depository, the management company and the unit-holders.
Chapter Six
OBLIGATIONS CONCERNING THE INVESTMENT POLICY OF
A COLLECTIVE INVESTMENT SCHEME
Art. 38. (1) The investments of collective investment schemes may consist only of the
following:
1. transferable securities and money market instruments admitted to or dealt in on a regulated
market according to Art. 73 of the Markets in Financial Instruments Act;
2. transferable securities and money market instruments dealt in on a regulated market other
than that under Art. 73 of the Markets in Financial Instruments Act, in the Republic of
Bulgaria or another Member State, which operates regularly and is recognized and open to the
public, as well as securities and money market instruments, issued by the Republic of
Bulgaria or another Member State;
3. transferable securities and money market instruments admitted to be dealt in on an official
market of a stock exchange or dealt in on another regulated market, which operates regularly
and is recognized and open to the public, which are included in a list approved by the Deputy
Chairperson, or are provided in the articles of incorporation, respectively in the rules of the
collective investment scheme;
4. recently issued transferable securities, the conditions of the issue of which include the
assuming of an obligation that an application will be made for admission, and within a period
not longer than one year of their issuing, to be admitted to trading on an official market of a
stock exchange or another regulated market, which operates regularly and is recognized and
open to the public, included in a list approved by the Deputy Chairperson or provided in the
articles of association, respectively the rules of the collective investment scheme;
5. units of collective investment schemes and/ or other collective investment undertakings,
which meet the conditions of Art. 4, para 1, irrespective of whether established in a Member
State, provided that:
a) such other collective investment undertakings comply with the following conditions:
aa) they are authorized to pursue business under a law, which provides that they are subject to
supervision, considered by the Deputy Chairperson to be equivalent to the supervision laid
down in Community law and that the cooperation between the supervisory authorities is
sufficiently ensured;
bb) the level of protection of unit-holders therein, including the rules of asset segregation,
borrowing, lending of transferable securities and money market instruments, as well as
uncovered sales of securities and money market instruments, are equivalent to the rules and
protection of the unit-holders in collective investment schemes;
16 cc) they disclose periodically information, drawing up and publishing annual and half-yearly
reports to enable an assessment to be made of the assets, liabilities, income and the executed
operations over the reporting period, and
b) no more than 10 per cent of the assets of the collective investment schemes or of the other
collective investment undertakings, whose acquisition is contemplated, can according to their
instruments of incorporation or rules, be invested in aggregate in units of other collective
investment schemes or in other collective investment undertakings;
6. deposits with credit institutions, which are payable on demand or have the right to be
withdrawn at any time, and maturing in no more than 12 months; the credit institutions in a
third country must comply with rules and be subject to supervision, which the Deputy
Chairperson considers to be equivalent to those laid down in Community law;
7. financial derivative instruments, including equivalent cash-settled instruments, dealt in on
regulated markets under Item 1 - 3;
8. financial derivative instruments, dealt in on over-the-counter (OTC) markets, provided that:
a) their underlying assets consist of instruments covered by para 1, financial indices, interest
rates, currencies or foreign exchange rates, in which the collective investment scheme may
invest according to its investment policy, as stated in the articles of association or the rules;
b) the counterparty to the transaction with these financial derivative instruments is an
institution subject to prudential supervision, and meets requirements approved by the Deputy
Chairperson;
c) are subject of reliable and verifiable valuation on a daily basis and can be sold, liquidated
or closed by an offsetting transaction at any time at their fair value at the initiative of the
collective investment scheme;
9. money market instruments other than those dealt in on a regulated market and stated in § 1,
Item 6 of the Additional Provisions, if supervision is exercised over the issue or issuer of such
instruments for the purpose of protecting investors or the savings, and they meet the following
conditions:
a) they are issued or guaranteed by central, regional or local authorities in the Republic of
Bulgaria or in another Member State, by the Bulgarian National Bank, by a central bank of
another Member State, by the European Central Bank, by the European Union or the
European Investment Bank, by a third country, or in the case of a Federal State, by one of the
members of the federation, or by a public international body to which at least one Member
State belongs;
b) they are issued by an issuer, whose issue of securities is dealt in on a regulated market
pursuant to Item 1 - 3;
c) issued or guaranteed by an establishment subject to prudential supervision, in accordance
with criteria defined by Community law, or by an establishment, which is subject to and
complies with rules, adopted by the relevant competent authority, which are at least as
stringent as those laid down by Community law;
d) issued by issuers other than those under letters "a", "b" and "c", meeting criteria, approved
by the Deputy Chairperson, guaranteeing that:
aa) investments in such instruments are subject to investor protection, equivalent to the
protection to which the investments under letters "a", "b" and "c" are subject;
bb) the issuer is a company whose capital and reserves amount to at least the BGN
equivalence of EURO 10 000 000, which presents and publishes its annual accounts in
accordance with Fourth Council Directive of 25 July 1978, adopted on the ground of Article
54, § 3, letter "g" of the Treaty on the annual accounts of certain types of companies
(78/660/EEC) or with Regulation (EC) № 1606/2002 of the European Parliament and of the
Council of 19 July 2002 on the application of international accounting standards, and is an
17 entity, which is financing a group of companies which includes one or several companies
admitted to trading on a regulated market, or is an entity which is financing securitization
vehicles which benefit from a banking liquidity line.
(2) Collective investment schemes shall not invest more than 10% of their assets in
transferable securities or money market instruments other than those stated in para 1.
(3) Collective investment schemes shall not acquire precious metals or
certificates representing them.
(4) Collective investment schemes may hold ancillary liquid assets, the requirements to which
shall be laid down in an ordinance.
Art. 39. Additional requirements to the conditions, which the securities, the money market
instruments and the other assets under Art. 38 must meet, shall be laid down in an ordinance.
Art. 40. (1) A management company shall adopt and apply risk management rules with the
purpose of continuous monitoring, control and measuring at any time the risk of any position
and its contribution to the overall risk profile of each managed by it collective investment
scheme.
(2) Where the collective investment scheme invests in financial derivative instruments, it shall
employ rules for accurate and independent assessment of the value of the OTC derivatives.
Art. 41. The management company shall present regularly to the Commission information in
regard to the types of financial derivative instruments, in which it invests, the main underlying
risks, the quantitative limits and the methods which are chosen to estimate the risks associated
with transactions in derivative instruments regarding each managed collective investment
scheme.
Art. 42. (1) The collective investment scheme may employ techniques and instruments,
relating to transferable securities and money market instruments, for the purpose of efficient
investment portfolio management, if so provided in the articles of association, or respectively
in the rules of the collective investment as well as in its prospectus. The types of techniques
and instruments as well as the conditions of their employment shall be laid down in an
ordinance.
(2) Where the techniques and instruments according to para 1 lead to use of derivative
instruments, in regard to their use shall apply the conditions and limits laid down in this Law
and its implementing instruments.
(3) The employment of the techniques and instruments under para 1 may not cause any
change in the investment objectives and limits, or heightening of the risk profile of the
collective investment schemes, as stated in their instruments of incorporation, prospectus or
rules, approved by the Commission.
(4) The techniques and instruments under para 1 shall not be considered to be transferable
securities.
Art. 43. (1) The global exposure of the collective investment scheme relating to financial
derivative instruments may not exceed its net asset value.
(2) A collective investment scheme may invest in financial derivative instruments, if that is
expressly envisaged in its investment policy, while complying with the provisions of Art. 45,
Paragraph 8, 10 and 11, provided that the exposure to the underlying assets does not exceed in
aggregate the investment limits under Art. 45.
18 (3) When a collective investment scheme invests in index-based financial derivative
instruments, these instruments shall not be combined for the purposes of the investment limits
laid down in Art. 45.
(4) When transferable securities or money market instruments embed a derivative instrument,
the exposure of the collective investment scheme to such derivative instrument shall be taken
into account when calculating the global exposure pursuant to para 1.
(5) The exposure in financial derivative instrument shall be computed, when taking into
account the current value of the underlying assets, the risk of the counterparty to the
transaction with the financial derivative instrument, the future market fluctuations, as well as
the period of time needed to close the position.
Art. 44. The criteria for assessing the adequacy of the risk management process under Art. 40,
para 1, employed by the investment company, as well as by the management company about
each managed collective investment scheme, the detailed rules regarding the accurate and
independent assessment of the value of OTC derivatives, the detailed rules and time-limits for
communicating to the Commission regarding the content of the information stated in Art. 41,
the procedure of provision of this information to the Commission by the management
company, as well as the additional requirements to the contents of the risk management rules
shall be laid down in an ordinance.
Art. 45. (1) A collective investment scheme shall invest no more than 5 per cent of its assets
in transferable securities or money market instruments issued by the same body.
(2) A collective investment scheme shall invest no more than 20 per cent of its assets in
deposits made with the same body under Art. 38, para 1, Item 6.
(3) The risk exposure of a collective investment scheme to a counterparty in an OTC financial
derivative instruments transaction shall not exceed either of the following thresholds: 1. ten
percent of the assets when the counterparty is a credit institution under Art. 38, para 1, Item 6,
or
2. five percent of its assets – in other cases. (4) A collective investment scheme may invest up
to 10 per cent of its assets in transferable securities or money market instruments issued by
the same body, only provided that the total value of the investments in the bodies, in each of
which it invests more than 5 per cent of its assets, shall not exceed 40 per cent of the assets of
the collective investment scheme. The limitation of sentence one shall not apply to deposits
made with credit institutions subject to prudential supervision, as well as to transactions in
OTC financial derivative instruments with such institutions.
(5) Notwithstanding the limits under para 1 – 3, the total value of the investments of a
collective investment scheme in transferable securities or money market instruments issued by
a single body, deposits made with that body, as well as the exposure with that body arising as
a result of transactions in OTC financial derivative instruments, may not exceed 20 per cent of
its assets.
(6) A collective investment scheme may invest up to 35 per cent of its assets in transferable
securities and money market instruments, issued by the same body, if the transferable
securities and money market instruments are issued or guaranteed by the Republic of
Bulgaria, by another Member State, by their regional or local authorities, by a third country or
by a public international body to which at least one Member State belongs.
(7) The transferable securities and money market instruments under para 6 shall not be taken
into account for the purpose of the limit referred to in para 4.
(8) The investments limits under para 1 - 6 shall not be combined. The total value of the
investments of a collective investment scheme in transferable securities or money market
19 instruments issued by the same body, the deposits with that body, as well as the exposure to
the same body arisen as a result of transactions with financial derivative instruments
according to para 1 - 6, may not exceed 35 per cent of its assets.
(9) A collective investment scheme may invest up to 25 percent of its assets in bonds issued
by a credit institution domiciled in a Member State which is subject to special supervision in
order to protect the bondholders, including to the requirement that the funds raised through
the bond issue have to be invested in assets which ensure coverage for claims relating to the
bonds during the whole period of the issue and which are to be used with priority for payment
of the obligations to the bondholders in case that issuer becomes insolvent. The total amount
of the investments under Sentence 1, exceeding the limit under Paragraph 1 for exposures to a
single issuer, cannot exceed 80 percent of the assets of the collective investment scheme.
Bonds issued by credit institutions domiciled in a Member State which meet the requirements
of Sentence 1 shall be disclosed on the website of the European Commission. The
Commission shall notify the European Commission of the categories of bonds and issuers
which meet the requirements of Sentence 1 under Bulgarian legislation.
(10) Companies which are included in the same group for the purposes of drawing up
consolidated accounts in accordance with recognized accounting standards shall be regarded
as a single body when applying the limit under Paragraph 1 – 9.
(11) The total value of the investments in transferable securities or money market instruments
issued by the companies within the same group may not exceed 20 per cent of the value of the
assets of a collective investment scheme.
Art. 46. (1) Besides the limits, provided in Art. 49, a collective investment scheme may invest
in shares or debt securities issued by the same body, to a maximum of 20 per cent of its assets,
if according the articles of association, respectively the rules of the collective investment
scheme, the investment policy envisages replication of the composition of a stock or bond
index, recognized by the Deputy Chairperson as acceptable according the following criteria:
1. the composition of the index is sufficiently diversified;
2. the index represents an adequate benchmark for the market to which it refers,
and
3. it is published in an appropriate manner.
(2) Additional requirements to the composition of the index, the benchmark and the
publishing of information about the index shall be laid down in an ordinance.
Art. 47. (1) While observing the principle of risk spreading, a collective investment scheme
may exceed the limit according to Art. 45, para 6 and invest up to100 per cent of its assets in
transferable securities and money market instruments issued or guaranteed by the Republic of
Bulgaria or by another Member State, by one or more regional or local authorities, by third
countries or public international bodies to which one or more Member States belong, only
provided that by judgment of the Deputy Chairperson the unit-holders in the collective
investment scheme that has been granted such authorization have protection of their rights,
equivalent to that of the unit-holders in the collective investment scheme complying with the
limits laid down in Art. 45.
(2) The collective investment scheme must envisage this possibility in its articles of
association, respectively its rules, stating exhaustively the Member States, regional or local
authorities or the public international bodies, issuing or guaranteeing securities and money
market instruments in which they intend to invest more than 35 per cent of their assets.
(3) The information according to para 2 must be contained in the prospectus, in the key
investor information and in all marketing materials.
20 (4) In the cases referred to in para 1, the collective investment scheme shall hold securities
from at least 6 different issues, where the value of the investment in each of them must not be
more than 30 per cent of its assets.
Art. 48. (1) A collective investment scheme may invest no more than 10 per cent of its assets
in units of a single collective investment undertaking under Art. 38, para 1, Item 5,
irrespective of whether or not with a registered office in a Member State.
(2) The investments made, in aggregate, in units of collective investment undertakings other
than a collective investment scheme, may not exceed 30 per cent of the assets of the collective
investment scheme.
(3) Where a collective investment scheme invests in units of other collective investment
schemes or collective investment undertakings which are managed, directly or by delegation,
by its management company or by any other company, with which its management company
is linked by common management or control, or by a substantial direct or indirect holding, its
management company or the other company shall not have right to charge fees for the sale
and redemption of the units of the collective investment scheme.
(4) A collective investment scheme that invests a substantial proportion of its assets in other
collective investment schemes or in other collective investment undertakings shall disclose in
its prospectus the maximum level of the management fees that may be charged both to the
collective investment scheme itself, and to the other collective investment schemes or
collective investment undertakings in which it intends to invest. The information about the
maximum percent of the fees charged according to sentence one to the investing collective
scheme and the other undertakings in which it invests shall be provided in its annual report.
Art. 49. (1) A management company acting for the account of managed by it collective
investment schemes or other collective investment undertakings, may not acquire any shares
carrying voting rights which would enable it to exercise significant influence over the
management of an issuer.
(2) A collective investment scheme may acquire no more than:
1. ten percent of the non-voting shares of a single issuing body;
2. ten percent of the bonds or other debt securities of a single issuing body;
3. twenty five per cent of the units of a single collective scheme or other collective investment
undertaking, which complies with the requirements of Art. 4, para 1;
4. ten percent of the money market instruments of a single issuing body.
(3) The limits of para 2, Item 2, 3 and 4 shall not apply when at the time of acquisition of the
indicated instruments, the collective investment scheme cannot calculate the gross amount of
the debt securities, of the money market instruments, or the net amount of the securities in
issue.
Art. 50. (1) The limits laid down in this Chapter shall not apply when the collective
investment scheme exercises subscription rights, attaching to transferable securities or money
market instruments which are part of its assets.
(2) When observing the principle of risk spreading, the collective investment schemes
recently authorized to pursue business may not to apply Art. 45 - 48 within a period of 6
months following the authorization obtaining.
(3) In case of mergers and acquisitions of collective investment schemes, if the Commission is
a competent authority for the receiving collective investment scheme, such collective
investment scheme can not apply the limits according to Art. 45 - 48, not deviating
21 substantially from them within 6 months following the date of entry of the merger or
acquisition in the relevant register.
Article 50a. When a collective investment scheme consists of individual investment subfunds, the requirements and restrictions under this Chapter shall apply individually for each of
the investment sub-funds.
Art. 51. If the investment limits of this Chapter are violated for reasons beyond the control of
the collective investment scheme, or as a result of the exercise of subscription rights, such
collective investment scheme shall with priority, but not later than two months after the
violation occurrence, bring by sales transactions its assets in compliance with the investment
limitations, taking due account of the interests of the unit-holders.
Art. 52. In the cases under Art. 51 the collective investment scheme must within a 7-day
period of the violation commitment notify the Commission, providing information on the
reasons for its occurrence and on the measures undertaken for its elimination. Information
about the measures undertaken under Sentence 1 shall not be submitted if the violation has
been remedied by the time of the submission of the notification.
Chapter Seven
OBLIGATIONS CONCERNING INFORMATION TO BE PROVIDED TO
INVESTORS
Art. 53. (1) The public offering of units of a collective investment scheme shall be admitted if
a prospectus is published in a manner and with the content as laid down in this Law and its
implementing instruments.
(2) The prospectus may only be published if the Commission has issued a license to pursue
the business of an investment company, or respectively authorization to organize and manage
a contractual fund.
Article 53a. The admission of the shares or units of a collective investment scheme to trading
on a regulated market under Article 73 of the Markets in Financial Instruments Act or on a
multilateral trading facility under § 1, Item 19 of the Additional Provisions of the Markets in
Financial Instruments Act shall be based on a prospectus.
Art. 54. (1) The prospectus shall include the information necessary for investors to make an
informed judgment of the proposed investment, including the risks attached thereto. The
prospectus shall also contain information on the risk profile of the collective investment
scheme, presented in a clear and easily understandable way, independent of the instruments in
which it invests.
(2) The prospectus of a collective investment scheme which consists of individual investment
sub-funds shall include information about the investment sub-funds, the investment strategies
according to which the assets of each investment sub-fund are to be invested, as well as the
particulars of the implementation of the investment policy of the collective investment
scheme for each of these sub-funds.
(3) The prospectus shall contain information on the categories of assets, in which the
collective investment scheme may invest, respectively, the particulars regarding the
22 investments of each investment sub-fund if the collective investment scheme consists of
individual investment sub-funds including:
1. whether it is authorized to execute transactions with financial derivative instruments
according the articles of association, or the rules of the collective investment scheme; whether
these transactions may be carried out for the purpose of risk hedging or with the aim of
meeting the investment goals of the collective investment scheme;
2. the possible outcome of the use of financial derivative instruments on the risk profile of the
collective investment scheme.
(4) Where a collective investment scheme invests principally in categories of assets, other
than transferable securities or money market instruments or replicates a stock or debt
securities index, in accordance with Art. 46, the prospectus and the marketing
communications shall include a prominent statement of this circumstance in a manner
drawing the investor attention.
(5) Where the net asset value of a collective investment scheme is likely to be subject to
volatility due to the portfolio composition or the portfolio management techniques, the
prospectus and the marketing communications shall include a prominent statement of this
circumstance in a manner drawing the investor attention.
(6) Upon request of investors, the management company shall also provide supplementary
information on the quantitative limits that apply in the risk management of the collective
investment scheme, on the methods chosen for compliance with such limits and on the recent
changes of the risks and yield of the main categories of instruments.
(7) The prospectus under Article 53a shall also include:
1. the policy regarding the transparency of the portfolio, indicating where to obtain
information on the portfolio, including where the indicative net asset value is announced;
2. information whether the exchange-traded fund is actively managed and, if actively
managed, information on how its investment policy is to be implemented, including in
relation to exceeding the performance of a given index;
3. a statement regarding the necessity for the transactions to be concluded on the secondary
market through a third party (an investment intermediary) and the possibility that the current
market price may not correspond to the net asset value - in the case of redemption restrictions,
including restrictions for a certain category of investors and/or for a certain minimum number
of shares or units;
4. information regarding the actions that the investors need to carry out in the cases under
Article 24c Paragraph 2, and the potential costs.
(8) The minimum requirements to the content of the prospectus shall be laid down in an ordi
nance.
Art. 55. The articles of association, or respectively the rules of the collective investment
scheme shall be an integral part of the prospectus and shall be annexed thereto. They will not
be annexed to the prospectus, in case that investors are provided with information about the
place where the same are accessible in each Member State in which the units of the collective
investment scheme are marketed, or upon the investors’ request may be sent to them.
Art. 56. (1) Upon any change of the essential elements included in the prospectuses of the
collective investment scheme, within a 14-day period of the occurrence of such change the
prospectus shall be updated and submitted to the Commission.
(2) In the event that any deficiencies or irregularities are established in the submitted updated
prospectus, the Deputy Chairperson shall forward a notification and set a term for their
removal. Article 265, para 3 shall apply accordingly.
23 Art. 57. (1) To the prospectus of the collective investment scheme shall be enclosed a key
investor information document. If the collective investment scheme consists of individual subfunds, a separate document with key investor information shall be prepared for each sub-fund.
(2) The key investor information shall provide the essential characteristics of the collective
investment scheme concerned, so that the investors are able to understand the nature and the
risks of the investment product that is offered to them, and consequently to take investment
decisions on an informed basis.
(3) Key investor information shall contain the following essential elements:
1. data about the collective investment scheme;
2. a short description of the investment objectives and investment policy of the collective
investment scheme;
3. past-performance presentation, or performance forecasts, where relevant;
4. costs and charges;
5. risk profile and investment reward, including warnings in relation to the risks associated
with investments in the relevant collective investment scheme.
(4) The key investor information document shall be in form and content according to
Commission Regulation (EU) № 583/2010 of 1 July 2010 implementing Directive
2009/65/EC of the European Parliament and of the Council as regards key investor
information and conditions to be met when providing key investor information or the
prospectus in a durable medium other than paper or by means of a website (OJ, 1L76/1 of 10
July 2010), hereinafter referred to as "Regulation (EU) № 583/2010".
(5) The key investor information shall clearly specify where and how additional information
relating to the proposed information can be obtained, including the place and time of
obtaining the prospectus, the annual and half-yearly report, on request, and the language in
which such information is available to investors.
(6) The key information to the prospectus under Article 53a shall also include the information
under Article 54, Paragraph 7, Items 1 – 3.
(7) Key investor information shall be presented in a concise manner and without use of
specialized terminology. A key investor information document shall be drawn up in a
common format, allowing comparisons, and shall be presented in a way comprehensible to
retail investors without the need of any reference to other documents.
(8) Key investor information shall be used without alterations or supplements in all Member
State where the collective investment scheme markets its units.
(9) Key investor information shall constitute pre-contractual information, which is fair, clear
and not misleading and consistent with the relevant parts of the prospectus.
(10) Key investor information shall contain clear warning that civil liability may not be
incurred solely on the basis of it, unless the information is misleading, inaccurate or
inconsistent with the relevant parts of the prospectus.
Art. 58. (1) A key investor information document shall be updated forthwith upon any
amendments to the essential elements thereof and shall be provided to the Commission and
the investors.
(2) The up-to-date version of the document shall be published on the website of the
management and of the investment company.
Art. 59. (1) A management company, respectively a collective investment scheme, and any
other person to whom functions and action under Art. 106 have been delegated, when offering
units of a collective investment scheme, shall provide free of charge the key investor
24 information document to any person subscribing units within a reasonable time before
conclusion of the transaction.
(2) Where the management company, or the collective investment scheme, does not market
the units of the collective investment scheme directly or through another person to whom
functions and actions have been delegated according to Art. 106, the management company,
or the collective investment scheme must provide, upon request, the key investor information
to persons that offer a product, based on investment in the units of the collective investment
scheme, or advising investors in relation to such product.
(3) Persons that offer a product based on investment in the units of the collective investment
scheme, or advise investors in relation to such product, shall provide key investor information
to their clients.
Art. 60. (1) An investment company and the management company of a contractual fund
shall submit to the Commission:
1. an annual report within a period of 90 days after the ending of the financial year;
2. a half-yearly report covering the first 6 months of the financial year within a period of 30
days after the end of the reporting period;
3. other information as laid down in an ordinance.
(2) The requirements to the content of the reports and the information under para 1, the
procedure, time-limits and manner of its submission to the Commission as well as of its
public dissemination shall be laid down in an ordinance.
(3) The Commission shall publish the reports received under para 1, Item 1 and 2 through the
Register kept by it pursuant to Art. 30, para 1 of the Financial Supervision Commission Act.
(4) The annual financial statements of the collective investment scheme shall be certified by a
registered auditor.
(5) The results of the audit conducted by the auditor of the annual financial statements shall
be stated in a separate report, which constitutes a part of the annual financial statement.
Art. 61. (1) An auditor engaged in conducting of an obligatory audit in a collective
investment scheme or another undertaking contributing towards the scheme’s business
activity, shall inform the Commission immediately of any circumstance or decision in relation
to the collective investment scheme or such undertaking, having become known to him in the
course of the audit, which may result in:
1. substantial violation of the laws, regulations or the administrative provisions, regulating the
requirements for the issuing of authorization to pursue business, the carrying out of the
activity of the collective investment scheme or of the undertaking contributing towards its
business activity;
2. impeding the continuous functioning of the business of the collective investment scheme or
of the undertaking contributing towards its business activity;
3. refusal to certify the financial statements or statement of qualifications.
(2) The auditor of para 1 shall also inform the Commission of any circumstance or decision
that has become known to him in the course of the audit, which may lead to the consequences
under para 1, Item 1, in a undertaking which is a related person through control to the
collective investment scheme or to the undertaking contributing towards its business activity.
(3) In the cases under para 1 and 2 the restrictions for disclosure of information, as laid down
in a sub-statutory act or a contract, shall not apply.
25 Art. 62. The management company shall, on investor request and free of charge, provide the
prospectus, key investor information document and the latest published annual and half-yearly
reports of a managed by it collective investment scheme.
Art. 63. (1) The prospectus and the key investor information document are provided to the
investors on a durable medium or on the website of the management and the investment
company. On request, the management company shall deliver to the investors a paper copy of
thereof free of charge.
(2) When providing the prospectus and the key investor information document in a durable
medium other than paper or on a website, the conditions of Art. 38 of Regulation (ЕU) №
583/2010 must be met.
(3) The annual and half-yearly reports shall be available to investors in the manner specified
in the prospectus and in the key investor information document. At request, a paper copy
thereof shall be delivered to the investors free of charge.
Article 64. (1) The management company of a collective investment scheme shall disclose to
the Commission and announce in an appropriate manner, as set out in the prospectus, the issue
price and the redemption price of its units upon each determination, by the end of the business
day following the day of their calculation.
(2) The management company of a collective investment scheme shall disclose to the
Commission a summary of the issue prices and redemption prices of its units twice a month for the period from the first to the fifteenth day of the month and for the period from the
sixteenth day to the end of the month. This obligation shall be fulfilled within three business
days as of the end of the respective reporting period. The format and content of the
information on the issue price and the redemption price of the units of the collective
investment scheme shall be determined with a regulation.
Art. 65. (1) All marketing communications to investors shall be clearly identified as such,
they shall be fair, clear and not misleading. Any marketing communication comprising a
solicitation to purchase units of a collective investment scheme cannot contain false or
misleading information, as well as such that contradicts the information contained in the
prospectus and key investor information document.
(2) All marketing communications in relation to the marketing of units of a collective
investment scheme shall contain:
1. information about the place, time, manner and language, in which the prospectus and the
key investor information document may be obtained or where they are publicly accessible;
2. information that the value of the units and the yield thereof may decrease, that no profits
are guaranteed and that there is a risk for the investors not to recover the full amount of the
invested funds.
(3) The marketing messages of exchange-traded funds shall also include the information
under Article 54, Paragraph 7, Items 1 – 3.
(4) Other information and additional requirements to the marketing communications shall be
laid down in an ordinance.
Art. 66. The Commission may request from a collective investment scheme established in
another home Member State, and which has a concluded management contract with a
management company established in the Republic of Bulgaria, the prospectuses and any
26 amendment thereto, as well as the annual and half-yearly report of that collective investment
scheme.
Chapter Eight
STRUCTURE OF TYPE MASTER – FEEDER
COLELCTIVE INVESTMENT SCHEME
Section I
Scope and approval
Art. 67. (1) A feeder collective investment scheme is a collective investment scheme, which
has obtained approval from the Commission to invest, by way of derogation from the
provisions of Art. 4, para 1, Item 1, Art. 38, 45, 48 and Art. 49, para 2, Item 3, at least 85 per
cent of its assets in units of another collective investment scheme or its investment subfund,
hereinafter referred to as "Master collective investment scheme".
(2) A feeder collective investment scheme may hold up to 15 per cent of its assets in one or
more of the following assets:
1. ancillary liquid assets in accordance with Art. 38, para 4;
2. financial derivative instruments, which may be used only for risk hedging purposes and
which comply with the provisions of Art. 38, para 1, Item 7 and 8, Art. 42 and 43.
(3) In order to guarantee that the global exposure related to the derivative instruments, in
which the collective investment scheme has invested its funds, does not exceed the aggregate
net asset value of its portfolio according to Art. 43, the feeder collective investment scheme
shall calculate its global exposure by combining its own direct risk exposure under para 2,
Item 1 with the actual exposure to financial derivative instruments of the master collective
investment scheme in proportion to the amount of its investment in the master collective
investment scheme or the maximum global exposure of the master collective investment
scheme to financial derivative instruments, provided for in its articles of association, or its
rules, in proportion to the amount of its investment into the master collective investment
scheme.
Art. 68. (1) A master collective investment scheme is a collective investment scheme or its
investment subfund, which simultaneously:
1. has at least on feeder collective investment scheme among its unit-holders;
2. is not a feeder collective investment scheme;
3. does not hold units of a feeder collective investment scheme.
(2) In respect to a master collective investment scheme shall apply the following derogations:
1. if a master collective investment scheme has at least two feeder collective investment
schemes, holding its units, the provisions of Art. 4, para 1, Item 1 and Art. 11, Item 1
regarding the raising of cash through public offering shall not apply, giving the master
collective investment scheme the choice whether to raise capital from other investors;
2. if a master collective investment scheme does not raise capital from the public in another
Member State, but has one or more feeder collective investment schemes established in
another home Member State, Section II of Chapter Thirteen shall not apply.
Art. 69. (1) The Commission shall approve the investment of a feeder collective investment
scheme into a master collective investment scheme established in the Republic of Bulgaria or
in another Member State under the procedure of Art. 12. In the cases of conversion under Art.
27 79 of a collective investment scheme into feeder one, the Commission shall preliminarily
approve the investment of the collective investment scheme in a master collective investment
scheme established in the Republic of Bulgaria or in another Member State.
(2) The Commission shall inform the feeder collective investment scheme within 15 working
days following the submission of the complete set of documents, whether or not its
investment under para 1, sentence two, in the master collective investment scheme is
approved.
(3) For the granting of approval under para 1, the feeder collective investment scheme shall
provide to the Commission:
1. the rules or instruments of incorporation of the feeder and of the master collective
investment scheme;
2. the prospectus and the key investor information document of the feeder and of the master
collective investment scheme; 3. the agreement between the feeder and master collective
investment scheme
or the internal conduct of business rules under Art. 71, para 3;
4. where applicable, the information referred to in Art. 79, designated for the unit-holders;
5. an information-sharing agreement between the depositaries of the feeder and master
collective investment scheme, in the cases when they are different, according to Art. 75;
6. an information-sharing agreement between the auditors of the feeder and of the master
collective investment scheme, in the cases when they are different, according to Art. 77.
(4) The Commission shall issue an approval in the event that the feeder collective investment
scheme, the depository, its auditor, as well as the master collective investment scheme comply
with the requirements of this Chapter, and where the master collective investment scheme is
established in another Member State – when these entities comply with the requirements of
Section VIII of Directive 2009/65/EC.
(5) Where the master collective investment scheme is established in another Member State,
the feeder collective investment scheme shall provide to the Commission an attestation by the
competent authority of the master collective investment scheme’s home Member State, that
the latter or its respective investment sub-fund, are a master collective investment scheme.
(6) The documents of para 5 shall be provided by the feeder collective investment scheme in
the Bulgarian language.
Art. 70. On request of a feeder collective investment scheme established in another Member
State, intending to invest in a master collective investment scheme established in the Republic
of Bulgaria, the Commission shall prepare an attestation to the competent authority of the
home Member State of the feeder collective investment scheme that the master collective
investment scheme meets the conditions under Art. 68, para 1, Item 2 and 3.
Section II
Common provisions
Art. 71. (1) The master collective investment scheme shall provide the feeder collective
investment scheme with all documents and the whole information necessary for the feeder
collective investment scheme to meet the requirements laid down in this Law and its
implementing instruments. The provision of information shall be made according an
agreement between the feeder and the master collective investment scheme.
28 (2) The feeder collective investment scheme has no right to invest in excess of the limit under
Art. 48, para 1 in units of a master collective investment scheme until the agreement under
para 1 has become effective. The agreement shall be provided free of charge in the Bulgarian
language to all unit-holders.
(3) In the cases when the master and feeder collective investment scheme are managed by the
same management company, the agreement under para 1 may be replaced by internal conduct
of business rules, through which compliance with the requirements of para 1 is ensured.
(4) The content of the agreement according to para 1, respectively the internal rules referred
to in para 3 shall be laid down in an ordinance.
Art. 72. (1) With the purpose of preventing the possibility of arbitrage opportunities from
arising and avoiding the applying of strategies with choice of markettiming in relation to the
units, the feeder and master collective investment scheme shall take appropriate measures to
coordinate the timing of calculation of the net asset value of the units held by them and its
publishing.
(2) A feeder collective investment scheme is entitled, notwithstanding the provisions of Art.
21 and 22, to suspend the issue or redemption of its units within the same period of time, for
which the master collective investment scheme suspends the issue or redemption of its units.
Art. 73. (1) The feeder collective investment scheme is liquidated in case of liquidation of the
master collective investment scheme, unless the Commission approves the investment of at
least 85 per cent of the assets of the feeder collective investment scheme in units of another
master collective investment scheme, or amendment of the articles of association of the feeder
collective investment scheme, or its rules, in order to enable it to convert into a collective
investment scheme, other than feeder.
(2) A master collective investment scheme may be liquidated not earlier than three months
after it has informed all its unit-holders of the decision for liquidation, and if the feeder
collective investment scheme is established in another Member State, also the competent
authorities of the feeder collective investment scheme’ home Member State.
(3) Ancillary requirements to the procedure under para 1 shall be laid down in an ordinance.
Art. 74. (1) In case of conversion of a master collective scheme, the feeder collective
investment scheme shall be liquidated, unless the Commission grants one of the following
approvals to the feeder collective investment scheme:
1. to continue to be a feeder collective investment scheme of the master collective investment
scheme or another collective investment scheme resulting from conversion of the master
collective investment scheme;
2. to invest at least 85 per cent of its assets in units of another master collective investment
scheme, not resulting from the conversion;
3. to amend its articles of association, or the rules, in order to be able to convert into a
collective investment scheme, other than a feeder collective investment scheme.
(2) No conversion shall become effective, unless the master collective investment scheme has
provided all of its unit-holders and the competent authorities of its feeder collective
investment schemes’ home Member States with the information indicated in Art. 151 or
comparable with it. The information of sentence one shall be provided not later than 60 days
before the date on which the conversion becomes effective.
(3) Unless the Commission has granted approval under para 1, Item 1, the master collective
investment scheme must on request repurchase or redeem all units of the feeder collective
investment scheme before the date on which the conversion becomes effective.
29 (4) Ancillary requirements to the procedure under para 1 shall be laid down in an Ordinance
Section III
Depositories and auditors
Art. 75. (1) In cases when the feeder and the master collective investment schemes have
different depositaries, these depositary banks must enter into an information-sharing
agreement, which is to ensure the fulfillment of their duties. The content of the agreement
shall be laid down in an ordinance.
(2) The feeder collective investment scheme shall not invest in units of the master collective
investment scheme until the agreement under para 1 has become effective.
(3) The depositories of the master and feeder collective investment scheme, complying with
the provisions laid down in this Section, shall be considered not to be in breach of any rules
that restrict the disclosure of information or relate to data protection, where such rules are
provided for in a contract or another law. The compliance with the provisions of this Section
shall not give rise to any liability on the part of the depository or any person acting on its
behalf.
(4) The feeder collective investment scheme, or its management company, shall be in charge
of providing to the depository any information about the master collective investment scheme,
which is required for the full discharge of the duties of the depository.
Art. 76. The depository of the master collective investment scheme shall immediately inform
the Commission, the feeder collective investment scheme, or respectively its management
company and the depository of the feeder collective investment scheme about any
irregularities established by it with regard to the master collective investment scheme, which
it deems to have a negative effect on the feeder collective investment scheme.
Art. 77. (1) In the cases when the feeder and the master collective investment scheme have
different registered auditors, these auditors shall enter into an informationsharing agreement
in order to ensure the fulfillment of their duties, including the arrangements taken to comply
with the requirements of para 3 and 4. The content of the agreement shall be laid down in an
ordinance.
(2) The feeder collective investment scheme shall not invest in units of the master collective
investment scheme until the agreement under para 1 has become effective.
(3) In its audit report, the auditor of the feeder collective investment scheme shall take into
account the audit report of the master collective investment scheme. Where the financial year
of the feeder collective investment scheme ends at time different from the financial year of the
master collective investment scheme, the auditor of the master collective investment scheme
shall draw up a report as of the closing date of the feeder collective investment scheme.
(4) The auditor of the feeder collective investment scheme shall include in its report
information on any irregularities established in the audit report of the master collective
investment scheme and on their impact on the activity of the feeder collective investment
scheme.
(5) Where the auditors of the master and of the feeder collective investment scheme comply
with the requirements laid down in this Section, it shall be accepted that they are not in breach
of any rules that restrict the disclosure of information, or rules that relate to data protection,
where such rules are provided for in a contract or another law. In the event of compliance
30 with this Section, the restrictions on disclosure of information provided for in another law, in
a sub-statutory act or a contract shall not apply.
Section IV
Provision of information and marketing communications
Art. 78. (1) In addition to the information under Art. 54, the prospectus of the feeder
collective investment scheme shall contain:
1. information that the collective investment scheme is a feeder of a particular master
collective investment scheme and in its capacity of such permanently invests 85 per cent or
more of its assets in units of that master collective investment scheme;
2. the investment objective and policy, including information on the risk profile and whether
the performance of the feeder and the master collective investment scheme are identical and if
not, to what extent and for which reason, including a description of the investments under Art.
67, para 2;
3. a brief description of the master collective investment scheme, its organizational structure,
investment objective and policy, including the risk profile and information of the way in
which its prospectus may be obtained;
4. a summary of the agreement between the feeder and the master collective investment
scheme or the internal conduct of business rules pursuant to Art. 71, para 3;
5. the manner of obtaining additional information by the unit-holders on the master collective
investment scheme and the agreement between the feeder and the master collective
investment scheme, or the internal conduct of business rules pursuant to Art. 71, para 3;
6. a description of all remunerations or costs subject to reimbursement, payable by the feeder
collective investment scheme in connection with its investment in the master collective
investment scheme, as well as the aggregate charges of the feeder and of the master collective
investment scheme;
7. a description of the applicable tax legislation towards the feeder collective investment
scheme in connection with its investment in the master collective investment scheme.
(2) In addition to the content, provided for in Art. 60, para 2, the annual report of the feeder
collective investment scheme shall also include a statement on the aggregate amount of the
charges of the feeder and the master collective investment scheme. The annual and half-yearly
reports of the feeder collective investment scheme shall indicate how the annual and the halfyearly report of the master collective investment scheme can be obtained.
(3) The feeder collective investment scheme shall submit to the Commission in addition to the
information under Art. 56, para 1, Art. 58, para 2 and Art. 60, para 1, the prospectus and the
key investor information document and any amendment thereto, the annual and half-yearly
reports of the master collective investment scheme, when it is established in another Member
State.
(4) A feeder collective investment scheme shall always disclose in any marketing
communication that it permanently invests 85 per cent or more of its assets in units of the
master collective investment scheme.
(5) A feeder collective investment scheme shall provide to investors, on request, free of
charge a paper copy of the prospectus and the annual and half-yearly report of the master
collective investment scheme.
31 Section V
Conversion of a collective investment scheme into a feeder collective investment
scheme and change of master collective investment scheme
Art. 79. (1) Where a collective investment scheme intends to begin to pursue activities as a
feeder collective investment scheme, as well as in case that a feeder collective investment
scheme intends to change the master collective scheme, in which it has invested, it shall
provide to its unit-holders:
1. information that the Commission has approved the investment of the feeder collective
investment scheme in units of such master collective investment scheme;
2. the key investor information document under Art. 57 of the feeder and master collective
investment scheme;
3. the date on which the feeder collective investment scheme starts to invest in the master
collective investment scheme, or if it has already invested therein, the date when its
investment will exceed the limit according to Art 48, para 1;
4. information that the unit-holders have the right to request within 30 days, considered as of
the moment of the information provision, the redemption of the units held by them without
any charges other than those due to the collective investment scheme for the redemption.
(2) The information of para 1 shall be provided at least 30 days before the date referred to in
para 1, Item 3.
Art. 80. (1) Where the feeder collective investment scheme has sent a notification to the
Commission according to Art. 136, the information under Art. 79 shall be provided in
Bulgarian language. The feeder collective investment scheme shall be responsible for
producing the translation, which must reflect faithfully and fully the content of the original.
(2) The feeder collective investment scheme has no right to invest into units of a master
collective investment scheme in violation of Art. 48, para 1 before the period under Art. 79,
para 2 has elapsed.
Section VI
Obligations and competent authorities
Art. 81. (1) The feeder collective investment scheme shall monitor effectively the activity of
the master collective investment scheme. In fulfillment of that obligation, the feeder collective
investment scheme may use information and documents received from the master investment
scheme, its management company, depository and auditor, unless there is reason to doubt
their accuracy and authenticity.
(2) Where, in connection with an investment in units of the master collective investment
scheme, a fee, commission or other monetary benefit is received by the feeder collective
investment scheme, by its management company, or any other person acting on behalf of and
for the account of the feeder collective investment scheme or its management company, the
fee, commission or other monetary benefit shall be paid into the assets of the feeder collective
investment scheme.
32 Art. 82. (1) Where the master collective investment scheme is established in the Republic of
Bulgaria, it shall immediately inform the Commission of each feeder collective investment
scheme established in another Member State, investing in its units.
(2) In the cases under para 1 the Commission shall immediately inform the competent
authorities of the feeder collective investment scheme’s home Member State.
Art. 83. (1) The master collective investment scheme shall not charge the feeder collective
investment scheme fees for issue or redemption of their units.
(2) The master collective investment scheme shall ensure the timely access of the feeder
collective investment scheme, or its management company, the Commission or the relevant
competent authority when the feeder collective investment scheme is established in another
home Member State, of the depository and the auditor of the feeder collective investment
scheme to all information that is required in accordance with the applicable legislation, the
fund rules or the instruments of incorporation.
Art. 84. (1) Where the feeder collective investment scheme and the master collective
investment scheme are established in the Republic of Bulgaria, the Commission shall
immediately inform the feeder collective investment scheme, or its management company, of
any decision, measure, finding of discrepancy or non-compliance with the requirements of
this Chapter and of any information received under Art. 61, para 1 and 2 in relation to the
master collective investment scheme, its management company, depository or auditor.
(2) In the cases under para 1, when the feeder collective investment scheme is established in
another Member State, the Commission shall notify the relevant authority.
Art. 85. Where the feeder collective investment scheme is established in the Republic of
Bulgaria and the Commission receives a notification from the competent authorities of the
master collective investment scheme’s home Member State of any decision, measure or
finding of discrepancy or non-compliance with the requirements in Art. 58 - 67 of Directive
2009/65/ЕC, or information reported pursuant to Art. 106, paragraph 1 of Directive
2009/65/EC with regard to the master collective investment scheme, its depository, auditor or
management company, the Commission shall immediately notify the feeder collective
investment scheme of the received information.
Title Two
MANAGEMENT COMPANY
Chapter Nine
CONDITIONS FOR TAKING UP BUSINESS
Art. 86. (1) Management company is a joint stock company with a head office in the
Republic of Bulgaria, that has been granted a license under the conditions and the procedure
of this Law, whose business consists in management of the activity of collective investment
schemes, including:
1. investment management;
2. administration of units, including legal services and accounting services in relation to asset
management, requests for information of investors, assets valuation and calculation of the
price of units, control over compliance with the legal requirements, maintenance of the book
of unit-holders, in the cases of engaging in activities of management of a collective
33 investment scheme established in another Member State, dividend distribution and other
payments, issue, sale and redemption of units, execution of contracts, keeping records;
3. marketing services.
(2) A management company may also provide the following additional services:
1. management of the activities of national investment funds;
2. management of a portfolio in accordance with a contract entered into with the client,
including a portfolio of a collective investment scheme, where such portfolio includes
financial instruments, at its own discretion without any special instructions by the client;
3. investment advice concerning financial instruments;
4. safekeeping and administration of units of collective investment schemes. (3) In regard to a
management company, providing services under para 2, shall apply respectively Art. 4, para
2, Art. 24, para 1 - 3, 7 and 8, Art. 27, para 4 - 7, Art. 28, 29, Art. 32, para 6, Art. 33 and 34 of
the Markets in Financial Instruments Act.
(4) The license under para 1 may include right to pursue the services according to para 2. The
license may not be issued only for provision of the services under para 2, as well as for
provision of the services under Paragraph 2, Items 3 and 4, without the provisions of the
services under Paragraph 2, Item 2 to have been authorized.
(5) The license granted to a management company shall be valid for all Member States.
(6) A management company may not engage in activities other than the activities for which it
is authorized pursuant to para 1 and 2.
(7) A management company may not offer the units of a collective investment undertaking
under Part Three in other Member States.
(8) A management company shall issue only dematerialized shares entitling to one vote.
Art. 87. (1)When performing the activities under Art. 4, para 1, related to the public offering
of units of a collective investment scheme, as well as to their redemption, the management
company acts on behalf and for the account of the managed collective investment scheme.
(2) The activity under Article 86, Paragraph 1, Item 1 and Paragraph 2, Item 1 shall be carried
out by means of investment decisions and orders, which shall be executed by authorised
investment intermediaries in compliance with the statutory requirements, with the exception
of the initial public offerings or the transactions in securities and money market instruments
under Article 38, Paragraph 1, Item 9, Letter "a" and Paragraph 2, when the subscription of
the securities, respectively transactions in securities and money market instruments, may be
carried out by the management company.
Art. 88. The Commission may issue a license to pursue the business of a management
company on the territory of the Republic of Bulgaria through a branch to a legal entity from a
third country, provided that the entity is entitled under its national legislation to carry out such
activity and the authority, supervising the capital market in the country where the entity is
registered, exercises supervision over it on a consolidated basis. The entity from a third
country shall have the rights and obligations of a local management company, unless
otherwise provided for by law.
Art. 89. In cases when the license under Art. 86, para 1 covers the right to perform the
services pursuant to Art. 86, para 2, Item 2 and the management company holds cash and/ or
financial instruments of such clients, and for that reason liabilities of the company may arise
towards them, the management company shall make cash contributions to the Investor
Compensation Fund under Art. 77m, para 2 of the Law on Public Offering of Securities. The
34 provisions of Chapter Five, Division IV of the Law on Public Offering of Securities shall
apply accordingly.
Art. 90. (1) The management company must have an initial capital of at least the BGN
equivalence of EUR 125 000.
(2) A management company must at any time maintain own funds, exceeding or equal to the
amount under para 1 and 3.
(3) If the management company manages the activities of collective investment schemes and
other collective investment undertakings, whose assets individually or in aggregate exceed the
BG equivalence of EUR 250 000 000, the management company must increase the amount of
its own funds by not less than 0,02 per cent of the sum, being the difference between their
book asset value and the BGN equivalence of EUR 250 000 000. Sentence one shall not apply
when the capital of the management company reaches the BGN equivalence of EUR 10 000
000.
(4) In the calculation of the aggregate asset amount of the assets of the collective investment
schemes and other collective investment undertakings under para 3 shall not be included the
assets, which the management company manages by delegation.
(5) At least 25 per cent of the capital under para 1 should be available upon filing the
application for granting license to pursue the business of a management company, and the rest
– within a 14-days period of receiving a written notification by the Commission that it will
issue a license after the availability of the full amount of capital is proved.
(6) Irrespective of the requirement of para 2, the own funds of the management company must
at no time be less than a quarter of its total fixed costs for the preceding financial year.
(7) In case of a substantial change in the volume of the management company’s activity
during the current year, compared to the previous year, the Deputy Chairperson may correct
the amount required under para 1.
(8) In respect to a management company, which has not carried out activity in the whole
previous financial year, considered from the day of obtaining a license, the amount of
the own funds shall be determined on the basis of the forecast total fixed costs laid down in
the programme of activity, unless the Deputy Chairperson has required adjustment of costs in
the programme of activity.
(9) The management company shall determine the total fixed costs under para 6 on the basis
of the annual financial statement, certified by a registered auditor.
(10) A management company shall meet capital requirements and maintain minimum liquid
funds, as laid down in an ordinance.
Art. 91. Upon violation of the requirements for capital adequacy and liquidity, as laid down
in an ordinance, the management company shall notify the Deputy Chairperson within a 7-day
period of committing the violation, indicating the reasons for the violation and proposing
specific measures, as a result of which the violation is to be eliminated within one month after
its commitment.
Art. 92. (1) The management company shall submit at the Commission an annual report
within a 90-day term after the end of the financial year, with content as specified in an
ordinance.
(2) The management company shall submit at the Commission by the 10th day of the month,
following the quarter, a balance sheet and income statement as of the last date of each quarter,
as well as a quarterly report on its capital adequacy and liquidity with content, as laid down in
an ordinance.
35 (3) In case of any established deficiencies or other inconsistencies with the requirements of
the law, including with the International Financial Reporting Standards (IFRS), admitted in
the reports on capital adequacy and liquidity, as well as in the financial statements, registers
and other accounting documents, the Deputy Chairperson shall forward a notification and set
a term, within which the management company must remove them. Article 265, para 3 shall
apply accordingly.
Art. 93. (1) A persons who has been elected a member of a management company’s
management body must:
1. have a higher education and professional experience required to manage the business of the
management company;
2. not have been sentenced for an intentional crime prosecuted on indictment, unless
rehabilitated;
3. not have been a member of a management or supervisory body, or unlimited liability
partner in a company, for which a bankruptcy procedure has been initiated, or in a company
wound-up due to bankruptcy, if unsatisfied creditors have remained;
4. not have been declared bankrupt or be involved in a pending bankruptcy proceedings;
5. not be the spouse or relative in the direct or collateral line up to the third degree inclusive,
or by affinity up to the third degree to another member of the company’s management or
supervisory body and not cohabit on a conjugal basis with such a member;
6. not have been deprived of the right to occupy positions involving financial responsibilities.
7. not have been, during the year before the act of the competent authority, a member of the
management or supervisory body of a company whose license for conducting activities
subject to licensing by the Commission, or by the Bulgarian National Bank, or by the
respective authority of another country has been revoked, except where the license has been
revoked at the request of the company and where the act revoking the license has been duly
cancelled;
8. not have had imposed administrative penalties in the last three years for a gross violation of
this Law, the Public Offering of Securities Act, the Market Abuse with Financial Instruments
Act, the Special-Purpose Investment Vehicles Act, the Markets in Financial Instruments Act
or their implementing regulations, or of the respective legislation of another country;
9. not have been imposed administrative penalties in the last three years for violations,
qualified as systematic violations, of this Law, the Public Offering of Securities Act, the
Market Abuse with Financial Instruments Act, the Special-Purpose Investment Vehicles Act,
the Markets in Financial Instruments Act or their implementing regulations, or of the
respective legislation of another country;
10. has not been released from a position in a management or supervisory body of a company
under this Law, under the Public Offering of Securities Act, the Markets in Financial
Instruments Act or the Special-Purpose Investment Vehicles Act, or the respective legislation
of another country on the basis of an imposed coercive administrative measure, except where
the act of the Commission has been duly cancelled.
(2) The persons who effectively conduct the business of a management company must be of
good repute and be experienced in relation to the type of collective investment schemes,
managed by the management company, and meet the requirements of para 1. The
management company shall be managed jointly by at least two persons, meeting the
requirements of sentence one.
(3) A person elected as a member of a supervisory body of a management company must
meet the requirements of para 1, Item 2 - 10.
36 (4) The requirements of para 1, 2 and 3 shall also apply respectively to the natural persons
who represent legal persons – members of the management and supervisory bodies of a
management company.
(5) The requirements of para 1 shall also apply to any other persons who may, independently
or jointly with another person, enter into transactions for the account of the management
company.
(6) The circumstances according to para 1 shall be certified: 1. under Item 1 – by a document
for professional qualification;
2. under Item 2 – by a certificate of conviction, or equivalent document;
3. under Items 3 – 10– by a written statement.
"(7) The persons under Paragraphs 1, 3 and 5 shall be subject to approval by the Deputy
Chairperson before their entry into the trade register, and persons under Paragraph 4 - before
their appointment as representatives of the legal entities - members of the management and
supervisory bodies of the management company. The Deputy Chairperson shall issue a
decision within 15 days of the submission of the application, accompanied by documents
certifying compliance with the specified requirements for these persons. The Deputy
Chairperson shall refuse to grant approval if any of the persons does not meet the
requirements of this Law or if with their activity or influence on the decision-making process
such persons may endanger the company or its operations.
(8) Professional experience as set forth in Paragraph 1, Item 1 shall mean that the person has
worked for no less than:
1. one year in non-banking financial undertakings or in banks, provided that this person's
duties were related to the core business of these companies, or
2. three years in state institutions or other public entities whose main functions include
management and control of state or international public financial assets or management,
control and investment of monies in funds established with a statutory instrument.
(9) The Commission shall impose the coercive administrative measure under Article 264,
Paragraph 1, Item 5 when a person under Paragraphs 1 – 5 ceases to meet the requirements of
Paragraphs 1 or 2.
Art. 94. (1) The management company shall notify the Commission within three business
days of the election of a new member of the company’s management or supervisory body or
the authorization of another person, who is to effectively manage the company or enter,
independently or jointly with another person, into transactions on the company’s behalf, and
shall enclose the data and other required under Art. 93 documents about the person.
(2) The persons under Art. 93 shall inform the Commission of any change in the declared by
them circumstances within three business days of the change.
(3) If a person under para 1 or 2 does not meet the requirements of Art. 93, the Deputy
Chairperson may obligate the management company according to the provisions of Art. 264,
to dismiss such person from office or to elect another person as a member of the relevant
management or supervisory body of the company.
Chapter Ten
ISSUANCE AND WITHDRAWAL OF A
37 LICENSE
Art. 95. (1) The license to pursue business of a management company shall be issued by the
Commission.
(2) For the purposes of the issuing of a license under para 1, an application in a standard form
approved by the Deputy Chairperson shall be filed, to which shall be enclosed:
1. the articles of association and the other instruments of incorporation;
2. particulars about the subscribed and paid-in capital;
3. particulars and other required documents about the persons under Art. 93, respectively
about the natural persons who represent legal entities, members of the management and
supervisory bodies of the applicant, or other persons authorized to manage and represent the
applicant, as well as information about their professional qualification and experience;
4. the general conditions applicable to management contracts with the investment companies
and other investors;
5. programme of activity setting out, at least, description of the organizational structure of the
management company;
6. the rules of personal transactions in financial instruments of the members of the
management and supervisory bodies of the management company, of the investment adviser
working under a contract for the management company, the management company’s
employees and related persons;
7. information about the persons who possess, directly or indirectly, a qualifying holding in
the applicant company or may control it, as well as about the number of the votes held by
them;
8. a written statement about the actual owners and the origin of the funds, with which
contributions against the subscribed shares were made, including whether these are loan
funds, and about the taxes paid by those persons over the preceding 5 years, in a standard
form approved by the Deputy Chairperson;
9. data on the persons with whom the management company is a related person;
10. other documents and information, as specified in an ordinance.
(3) The Commission shall pronounce on the application after consulting with the competent
authorities of the relevant Member States, if the applicant:
1. is a subsidiary of another management company, an investment intermediary, a credit
institution or an insurance company, that has obtained authorization to pursue business from
the competent authorities of another Member State;
2. is a subsidiary of the parent undertaking of another management company, an investment
intermediary, a credit institution or an insurance company, that has obtained authorization to
pursue business from the competent authorities of another Member State;
3. is controlled by the same natural or legal persons as control another management company,
an investment company, a credit institution or an insurance company that has obtained
authorization to pursue business from the competent authorities of another Member State.
(4) The Commission shall pronounce a decision in accordance with Art. 12, para 3 - 7.
(5) Upon the issue of a license, the management company is entered in the register kept by the
Commission under Art. 30, para 1 of the Financial Supervision Commission Act.
Art. 96. (1) In the cases where the management company wishes to perform services under
Art. 86, para 2, which are not covered by its license, it has to file with the Commission an
application in a standard form approved by the Deputy Chairperson, for extension of the
38 scope of its license, to which shall enclose the documents referred to in Art. 95, para 2, Item
1, 2, 4 and 5, as well as other information and documents, as specified in an ordinance.
(2) The Commission may refuse extension of the scope of the issued license, if it decides that
the submitted by the applicant documents do not meet the provisions of this Law and its
implementing instruments.
(3) The Commission shall pronounce a decision in accordance with Art. 12, para 3 - 7.
Art. 97. (1) The Commission shall refuse to issue a license where:
1. the capital of the applicant does not meet the requirements of Art. 90, para 1;
2. any of the persons under Art. 93 cannot occupy the position due to statutory prohibition or
for not meeting the requirements of this Law;
3. a person who holds, directly or indirectly, a qualifying holding or may control the applicant
with its activities or its influence on decision-making, may prejudice the safety of the
company and its operations;
4. the general conditions under Art. 95, para 2, Item 4 do not guarantee to a sufficient extent
the interests of the investment company and the other investors
5. the applicant has submitted false data or documents with wrong content;
6. the persons who hold, directly or indirectly, a qualifying holding in the applicant company,
have made contributions through loan funds;
7. the applicant is a related person with one or more natural or legal persons and that
relatedness could create obstacles for the effective exercise of the supervisory functions of the
Commission or the Deputy Chairperson;
8. in its judgment, the activity which the applicant intends to pursue, does not guarantee the
reliability and financial stability it needs;
9. in its judgment, the amount of the assets of the persons, possessing a qualifying holding in
the management company and/ or in the activities carried out by them, in its scale and
financial results, does not correspond to that declared for the purpose of acquiring a
shareholding in the applicant, and arouses doubt as to the reliability and fitness of those
people, in case of need, to render capital support to the applicant;
10. the origin of the funds with which the persons possessing a qualifying holding in the
management company have made contributions is not clear and legitimate;
11. obstacles exist for the effective exercise of the supervisory functions of the Commission
or the Deputy Chairperson, arising from or related to the application of a statutory or
administrative act of a third country, regulating the activities of one or more persons with
whom the applicant is related person;
12. the applicant does not meet the other requirements, laid down in the Law or its
implementing instruments.
(2) In the cases under para 1, Item 1, 2, 4, 6 and 12 the Commission may definitively refuse to
issue a license only if the applicant has failed to remove the inconsistencies and to submit the
required documents within the time-limit set by the Commission, which may not be shorter
than one month.
(3) Besides in the cases under para 1, the Commission may refuse to issue a license for
pursuing the business of a management company on the territory on the Republic of Bulgaria
through a branch to a legal entity from a third country, if the Commission decides that the
supervision exercised over the management company on a consolidated basis by the relevant
competent authority in the country where its registered office is located, does not conform to
the requirements provided in this Law.
(4) The Commission may refuse to issue a license if the actual owners of a shareholder with a
qualifying holding cannot be identified.
39 (5) The Commission’s refusal to issue a license shall be reasoned in writing.
(6) In the cases of refusal, the applicant may file a new application for the issue of a license
not earlier than six months after the coming into effect of the decision of refusal.
Art. 98. (1) No one shall have right to pursue the business of a management company without
having preliminarily been granted a license by the Commission.
(2) A person who does not possess a license to pursue the business of a management company
in accordance with the requirements of this Law, may not use in its business name,
advertising or other activities words in Bulgarian or in a foreign language denoting the
carrying out of acts relating to management of a collective investment scheme.
Art. 99. The Registry Agency shall enter in the trade register the company with subject of
activity – the activity under Art. 86, after it is provided with the license issued by the
Commission.
Art. 100. (1) The Commission shall withdraw the issued license if:
1.The management company does not start to pursue the business under Art. 86, para 1 within
12 months of the license issuing, expressly renounces the issued license or has ceased the
activity according to Art. 86, para 1 more than 6 months;
2. the management company has made false statements which have served as a ground to
issue the license;
3. the management company no longer fulfils the conditions under which the license was
issued;
4. the management company ceases to comply with the requirements for capital adequacy or
liquidity, as laid down in an ordinance, and fails to propose within a 7-days period of
committing the infringement, measures for bringing it in line with those requirements or fails
to remedy the infringement within the term of Art. 91;
5. the financial situation of the management company is lastingly worsened and it cannot
discharge its duties;
6. the management company and/ or the persons under Art. 93 have not complied with the
imposed coercive administrative measure under Art. 264, para 1 or have committed or
suffered the commitment of violation of Art. 35, para 1 of the Markets in Financial
Instruments Act and Art. 11 of the Law on Measures Against Market Abuse with Financial
Instrument or another gross violation, or systematic infringements of this Law, the Law on
Public Offering of Securities, the Markets in Financial Instruments Act, the Law on Measures
Against Market Abuse with Financial Instruments and their implementing instruments.
(2) Prior to withdrawal of the license of a management company established in the Republic
of Bulgaria, which manages a collective investment scheme established in another home
Member State, the Commission shall consult with the competent authorities of that Member
State.
(3) The Commission shall notify in writing the company within a 7-day period of taking the
decision for withdrawal of the license.
(4) The management company may alter its subject of activity provided only that it explicitly
renounces the license issued to it, and that there is no ground for compulsory withdrawal of
the license.
(5) After the decision to withdraw the license has come into effect, the Commission shall
forthwith send it to Registry Agency for entry into the trade register and for appointment of a
liquidator, or to the court – for instituting bankruptcy proceedings, and shall take the
necessary measures to inform the public.
40 Art. 101. (1) A management company shall have no right to pursue activities under Art. 86
after withdrawal of the license issued to it, as well as after a court decision for instituting
bankruptcy proceedings. In regard to the management company shall apply respectively Art.
23 of the Markets in Financial Instruments Act.
(2) A management company, which has provided the services under Article 86, Paragraph 2,
Items 2 and 3, within a 14-day period of coming to know the decision of the Commission for
withdrawal of the license, shall prepare and submit to the Commission a plan for settlement of
its relations with clients. The liquidator or the person representing the company shall oversee
the fulfillment of the plan for settlement of the relations with the management company’s
clients and shall provide to the Deputy Chairperson documents, proving the settlement of
those relations.
(3) The deletion of the company from the trade register is admissible only after settlement of
the relations of the management company with its clients, of which the Deputy Chairperson
shall inform the Registry Agency.
Art. 102. (1) A management company may be dissolved only with approval of the
Commission.
(2) A management company may be transformed only with approval by the Commission,
provided that all involved in the transformation companies are management.
(3) The conditions and procedure for the issue of the authorization for dissolution and
transformation shall be laid down in an ordinance.
Chapter Eleven
REQUIREMENTS TO THE ACTIVITIES OF A MANAGEMENT
COMPANY
Art. 103. (1) A management company shall pursue the investment policy with a view to
achieving the investment objectives of the managed collective investment scheme, as well as
observe the investment limits, provided for in this Law, its implementing instruments, the
articles of association of the investment company, respectively the rules of the collective
investment scheme.
(2) A management company shall comply with the rules of portfolio valuation and
determination of the net asset value of the collective investment scheme, where the
performance of these actions have been assigned to it.
Art. 104. (1) Management companies, authorized to manage a collective investment scheme
shall at all times with regard to the activity of management of such scheme:
1. maintain sound administrative and accounting organization and technical equipment
allowing to ensure autonomous management of the collective investment schemes’ portfolios;
2. have control and safeguard arrangements in the field of electronic data processing, and
adequate internal control mechanisms, including, in particular, rules for personal transactions
by the management and supervisory bodies of the management company, by the employees of
the management company and related persons, as well as rules of investing the own funds of
the management company;
3. prepare rules of safekeeping of the information and record keeping, which are to ensure
reconstruction of each transaction, executed for the account of the managed by them
41 collective investment schemes, at least according the history of the transaction, its value, the
parties to it, its nature, the time and place of conclusion, as well as whether it is concluded in
compliance with the articles of association, respectively the rules of the collective investment
scheme and the acting at the time of the transaction’s conclusion statutory requirements;
4. guarantee that the assets of the managed collective investment schemes are invested in
accordance with the articles of association, respectively the instruments of incorporation of
those schemes and with the provisions of this Law and its implementing instruments;
5. are organized and structured in such a way as to minimize the risk of prejudicing the
interests of the collective investment schemes, which they manage, or of the clients’ interests
by conflicts of interest between the management company and its clients, between two of its
clients, between one of the clients and a collective investment scheme, managed by the
company, or between two managed by it collective investment schemes.
(2) The management companies, which have a license to provide the services under Article
86, Paragraph 2, Item 2, may not invest all or a part of the client’s portfolio in units of
collective investment schemes or national investment funds they manage, unless they receive
prior approval from the client.
(3) Additional requirements in relation to the fulfillment of the provisions of para 1 and 2
shall be specified in an ordinance.
Art. 105. (1) A management company shall:
1. act loyally and fairly in the best interest of the collective investment schemes it manages
and the integrity of the market;
2. act with due skills, care and diligence, in the best interest of the collective investment
scheme it manages and the integrity of the market;
3. has and employ effectively the resources and procedures that are necessary for the proper
performance of their activities;
4. avoid conflict of interest and, when they cannot be avoided, ensure that the collective
investment schemes it manages are treated fairly;
5. comply with all regulatory requirements in the performance of its activities, in the best
interest of the investors and the integrity of the market.
(2) The additional requirements in relation to the fulfillment of the duties under para 1,
including the actions that the management company must undertake to identify, prevent,
manage and/ or disclose conflicts of interest, as well as to establish appropriate criteria for
determining the types of conflicts of interest, whose existence may harm the interests of the
collective investment schemes it manages, shall be laid down in an ordinance.
Art. 106. (1) A management company may conclude a contract, whereby to delegate to a
third party functions and actions under Article 86, Paragraphs 1 and 2, Items 1 and 4, while
complying with the following requirements:
1. the management company must inform the Commission latest by the end of the business
day following the conclusion of a contract with a third party, about the conclusion and the
substantial conditions of the contract;
2. the conclusion of a contract with a third party must not impede the effective exercising of
the supervisory functions of the Commission or the Deputy Chairperson, as well as prevent
the management of the collective investment scheme in the best interests of investors;
3. the management company shall not enter into a contract with a third party, whose interests
may come into a conflict with the interests of the management company or of the collective
investment scheme or the national investment fund, the activities of which it manages;
42 4. the contract with the third party must contain provisions, allowing the persons, who manage
the company, to exercise at any time effective supervision over the activity of the third party
in connection with the concluded contract, including to receive periodically and/ or on request
information from that party;
5. the contract with the third party must contain provisions enabling the persons who manage
the company to give at any time further instructions to the counterparty to the contract and to
terminate it unilaterally without prior notice when this is in the investor interest;
6. the third party must have the required technical and organizational capabilities and
qualified officials, in order to perform the delegated functions and actions;
7. the option to delegate functions and actions must be expressly provided for in the
prospectus of the collective investment scheme or the national investment fund;
8. the delegation of functions cannot be to an extent to which the management company can
no longer be considered as such in terms of the respective collective investment scheme or
national investment fund or in a manner involving only the functions of reception and
transmission of information.
(2) The Commission shall provide without delay the information under para 1, Item 1 to the
competent authorities of the home Member State of the collective investment scheme, for
whose units sale and redemption functions and actions have been delegated.
(3) When the delegation of functions and actions under Paragraph 1 refers to the management
of the investments, it shall be subject to the following additional requirements:
1. the delegation shall be performed in accordance with the criteria for allocation of the
investments from time to time imposed by the management company;
2, the third party to whom functions are delegated shall be licensed or registered for the
purpose of asset management and shall be subject to supervision for compliance with the
requirements for this activity;
3. the cooperation between the Commission and the body supervising the third party shall be
secured when delegating investment management functions to a party from a third country.
(4) Delegation of the functions under Paragraph 3 shall be allowed only after a preliminary
approval has been granted for such a delegation by the Deputy Chairperson. The application
for the issuance of approval shall enclose the concluded contract and such data and documents
certifying compliance with the requirements of Paragraph 1 and justifying the choice of the
particular third party, as are to be set forth in a regulation. The Deputy Chairperson shall issue
a decision following the procedure set forth in Article 18, Paragraphs 2 - 6.
(5) The delegation of functions and actions under para 1 shall not relieve the management
company, respectively the depositary from the responsibilities under the management
contract, or the contract for depositary services.
(6) Additional requirements in relation to the delegation of functions according to para 1 apart
from those under Paragraph 3 shall be laid down in an ordinance.
Art. 107. In regard to the management company shall apply respectively Art. 9, 11а, 26 -26e,
Art. 27, para 2, Art. 35, 39, 40, 42 and Art. 111, para 4 and 7 of the Markets in Financial
Instruments Act.
Art. 108. Other requirements towards the activities of the management companies, including
to the general conditions of Art. 95, para 2, Item 4, to the rules of Art. 95, para 2, Item 6 and
43 to the natural persons working under a contract for the management company, as well as for
the capital adequacy and liquidity shall be laid down in an ordinance.
Title Three
PURSUING BUSINESS BY A MANAGEMENT COMPANY AND OFFERING OF
UNITS OF A COLLECTIVE INVESTMENT SCHEME
WITHIN THE EUROPEAN UNION
Chapter Twelve
PURSUING BUSINESS BY A MANAGEMENT COMPANY ESTABLISHED IN THE
REPUBLIC OF BULGARIA WITHIN THE TERRITORY OF ANOTHER MEMBER
STATE. PURSUING BUSINESS IN THE REPUBLIC OF BULGARIA BY A
MANAGEMENT COMPANY ESTABLISHED IN ANOTHER HOME MEMBER
STATE
Section I
Pursuing business by a management company established in the Republic of Bulgaria on
the territory of another Member State
Art. 109. (1) A management company which intends to establish a branch in a host Member
State, must preliminarily notify the Commission of it. All branches established by the
management company in one host Member State shall be considered to be one branch.
(2) The notification referred to in para 1 shall contain:
1. indication of the host Member State, in which the management company plans to establish
a branch;
2. a programme of operations, including information about the type and volume of the
activities and the services, which the management company will perform in the host Member
State, as well as the organizational structure of the branch, including the risk management
rules of the management company, and a description of the procedures and arrangements put
in place to deal properly with investor complaints and for removal of the restrictions on
investors exercising their rights by the host Member State
3. the address in the host Member State at which documents may be obtained;
4. the names of the persons responsible for the management of the branch.
(3) The Commission shall provide to the relevant competent authority of the host Member
State the information under para 2 within one month of receiving it, and where additional
information and documents have been requested – within one month of their receiving, as
well as details of the acting in the country investor compensation system, in which the
management company participates. The Commission shall immediately inform the
management company of the provision of the information under sentence one.
(4) The Commission may refuse within the term under para 3 to provide the information
under para 2 to the relevant competent authority of the host Member State by a reasoned
decision, if the administrative structure or the financial situation of the management company
do not guarantee the investor interests. The management company is notified in writing of the
decision made within a three-day term. The decision of refusal is subject to appeal before the
Supreme Administrative Court.
(5) The Commission shall inform the European Commission and the European Securities and
Markets Authority, established by Regulation (EU) № 1095/2010 of the European Parliament
and of the Council of 24 November 2010, establishing a European Supervisory Authority
(European Securities and Markets Authority), amending Decision № 716/2009/ЕC and
44 repealing Commission Decision 2009/77/ЕC (OJ, L 331/84 of 15 December 2010), about the
number and nature of the cases, in which it pronounced a refusal under para 4.
(6) Where a management company wishes to pursue the activity of collective portfolio
management of a collective investment scheme in the host Member State, the Commission
shall enclose with the documentation sent to the competent authorities of the management
company’s host Member State an attestation that the management company has been
authorized pursuant to the provisions of this Law, a description of the scope of the
management company’s authorization and details of any restrictions on the types of collective
investment schemes, which the management company is authorized to manage.
(7) A management company may establish a branch and start business on the territory of the
host Member State after receiving a communication from the relevant competent authority of
the host Member State, or on expiry of two months after the notification according to para 3,
if it has not received within that term any communication from the relevant competent
authority of the host Member State.
(8) The management company that has set up a branch on the territory of the host Member
State shall give written notice to the Commission, as well as to the relevant competent
authority of the host Member State of any change of the particulars and documents under para
2 at least one month before implementing the change. Paragraphs 4 and 7 shall apply
accordingly.
(9) The Commission shall update the information contained in the attestation under para 6 and
inform the competent authorities of the management company’s host Member State of any
change in the scope of the management company’s authorization or in the details of any
restriction on the types of collective investment schemes, which the management company is
authorized to manage.
(10) On the territory of the host Member State, the management company shall comply with
the applicable rules of that Member State, corresponding to the rules of Art. 105.
Art. 110. (1) A management company, which intends to pursue business in a host Member
State under the freedom to provide services, without opening a branch on its territory must
preliminarily inform the Commission of it.
(2) The notification under para 1 shall contain:
1. indication of the host Member State, in which the management company plans to establish
a branch;
2. a programme of operations, including information about the type and volume of the
activities and the services, which the management company will perform in the host Member
State, the risk management rules of the management company, as well as a description of the
procedures and arrangements put in place to deal properly with investor complaints and for
removal of the restrictions on investors exercising their rights by the host Member State
(3) Where a management company wishes to pursue the activity of collective portfolio
management of a collective investment company on the territory of the host Member State,
the Commission shall enclose with the documents under para 2 an attestation that the
management company has been authorized pursuant to the provisions of this Law, a
description of the scope of the management company’s authorization and details of any
restrictions on the types of collective investment schemes, which the management company is
authorized to manage.
(4) The Commission shall provide the information under para 2 to the relevant competent
authority of the host Member State within one month of receiving it, as well as details of the
acting in the country investor compensation system, in which the management company
45 participates. The Commission shall immediately inform the management company of the
provision of the information under sentence one.
(5) The management company may start business on the territory of the host Member State,
upon being informed of the provision of the information under para 4 by the Commission.
(6) In the event that the management company delegates the sale and redemption of units of
the managed by it collective investment scheme to a third party on the territory of the host
Member State, it shall notify the Commission of it beforehand.
(7) The management company shall comply with the rules under Art. 105.
(8) The management company shall give written notice to the Commission, as well as to the
relevant competent authority of the host Member State of any amendment in the programme
under para 2, Item 2 at least one month before implementing the change.
(9) The Commission shall update the information contained in the attestation under para 3 and
inform the competent authorities of the management company’s host Member State of any
change in the scope of the management company’s authorization or in the details of any
restriction on the types of collective investment schemes, which the management company is
authorized to manage.
Art. 111. Where a management company wishes to market, without establishing a branch, the
units of a collective investment scheme it manages in a Member State, other than the
collective investment scheme’s home Member State, without pursuing any other activities or
services, Chapter Thirteen shall apply.
Section II
Pursuing business in the Republic of Bulgaria by a Management Company established
in another Member State
Art. 112. A management company established in another Member State, that has obtained a
license to pursue activity as a management company under Directive 2009/65/EC from the
relevant competent authority of that State, may pursue the activity for which it has been
granted a license on the territory of the Republic of Bulgaria, either by a branch or under the
freedom to provide services. All branches established by the management company in the
Republic of Bulgaria shall be considered to be one branch.
Art. 113. (1) Within two months of receiving the information with the content of Art. 109,
para 2 and the attestation with the content of Art. 109, para 6 about a management company
from another Member State, which intends to set up a branch on the territory of the Republic
of Bulgaria, the Commission shall undertake actions to prepare for the exercising of
supervision over the management company within its competence.
(2) The management company from another Member State may establish a branch and start
business on the territory of the Republic of Bulgaria on receipt of a communication by the
Commission, or on the expiry of the period provided for in para 1, if it does not receive any
such communication.
(3) The management company from another Member State that has established a branch and
carries out activity in accordance with para 2, shall notify the Commission of any change in
the particulars and documents under Art. 109, para 2 at least one month before implementing
the change.
46 (4) The Commission shall consider the information contained in the attestation submitted by
the relevant competent authority to be actual, until it is informed by the relevant competent
authority of change in the particulars stated in the attestation.
(5) The management company from another Member State that pursues business through a
branch on the territory of the Republic of Bulgaria shall comply with the rules under Art. 105.
Art. 114. (1) A management company established in another home Member State, which
proposes to pursue business in the Republic of Bulgaria under the freedom to provide
services, without opening a branch on its territory, may start business after the Commission
receives information from the relevant competent authority about the programme of
operations of the management company in the country.
(2) The information referred to in para 1 must also contain details of any compensation
scheme, designated to protect investors, in which the management company participates.
(3) Where a management company from another Member State wishes to pursue activity of
portfolio management, the relevant competent authority of the Member State shall enclose
with the programme of operations, an attestation that the management company has been
authorized pursuant to Directive 2009/65/ЕО, a description of the scope of the authorization
and details of any restrictions on the types of collective investment schemes that the
management company is authorized to manage.
(4) The management company from another Member State shall notify the Commission of
any change in the particulars and documents under para 1 at least one month before
implementing the change.
(5) The Commission shall consider the information contained in the attestation submitted by
the relevant competent authority to be actual, until it is informed by the relevant competent
authority of change in the particulars stated in the attestation, including of any change in the
scope of the management company’s authorization or in the details of any restriction on the
types of collective investment schemes that the management company is authorized to
manage.
(6) The management company from another Member State that pursues business on the
territory of the Republic of Bulgaria under the freedom to provide services shall comply with
the rules under Art. 105.
Section III
Applicable law in pursuing business on the territory of another Member State by the
establishment of a branch or under the freedom to provide services by a management
company established in the Republic of Bulgaria
Art. 115. The Commission shall exercise supervision over the management companies, to
which a license has been issued, regardless of whether they pursue activity in another Member
State through a branch or under the freedom to provide services, without prejudice to the
envisaged in Directive 2009/65/ЕC provisions, which confer responsibility to the competent
authorities of a management company’s host Member State.
Art. 116. (1) A management company established in the Republic of Bulgaria, which pursues
the activity of portfolio management in another Member State by the establishment of a
branch or under the freedom to provide services, shall comply with the provisions of this Law
which relate to the organization of the management company, including delegation
47 arrangements, risk-management procedures, prudential rules and supervision rules, the
requirements under Art. 104 and the requirements for the management company’s disclosure
of information.
(2) The Commission shall supervise over compliance with the rules of para 1.
Art. 117. (1) The management company shall comply with the rules of the collective
investment scheme’s home Member State in relation to the constitution and functioning of the
collective investment scheme, and in particular the rules applicable to:
1. the setting up and authorization of the collective investment scheme;
2. the issuance and redemption of units;
3. investment policy and limits, including calculation of total exposure and leverage;
4. restrictions on borrowing and lending and uncovered sales;
5. the valuation of assets and the accounting of the collective investment
scheme;
6. the calculation of the issue and redemption price, removal of errors made in the calculation
of the net asset value and related investor compensation;
7. the distribution or reinvestment of the income;
8. the disclosure requirements for the collective investment scheme, including the prospectus,
key investor information and financial statements;
9. the marketing regime of the units of the collective investment scheme;
10. relationship with unit-holders;
11. the transformation of the collective investment scheme;
12. the liquidation of the collective investment scheme;
13. the content of the unit-holders register, where applicable;
14. the licensing and supervision fees regarding the collective investment schemes, and
15. the exercise of unit-holders’ voting rights and other unit-holders’ rights in relation to Item
1 - 13. (2) The management company shall comply with the obligations set out in the rules or
in the articles of association and in the prospectus of the collective investment scheme, or in
its instruments of incorporation, and the obligations set out in the prospectus, which are
consistent with the applicable law of the home Member State of the collective investment
scheme.
(3) The management company shall take the necessary decisions and be responsible for the
adoption and implementation of all arrangements and organizational decisions, which are
required to ensure compliance with the rules relating to the constitution and functioning of the
collective investment scheme and with the obligations set out in its rules or in the articles of
association and in the prospectus, or in the instruments of incorporation of the company, as
well as with the obligations specified in the prospectus.
(4) The Commission shall be responsible for exercising supervision over the adequacy of the
arrangements and organization of the management company, so that they be in a position to
comply with the obligations and the rules, related to the constitution and functioning of all
collective investment schemes it manages.
Section IV
Applicable law in pursuing business in the Republic of Bulgaria by establishment of a
branch or under the freedom to provide services by a management company established
in another Member State
48 Art. 118. A management company established in another Member State, which pursues the
activity of portfolio management within the territory of the Republic of Bulgaria by
establishing a branch or under the freedom to provide services shall comply with the rules of
the home Member State relating to the organization of the management company, including
delegation arrangements, risk-management procedures, prudential rules and supervision rules,
the requirements under Art. 104 and the management company’s reporting requirements.
Art. 119. (1) The management company shall comply with the provisions of Art. 117, para 1
concerning the constitution and functioning of the collective investment scheme.
(2) The management company shall comply with the obligations set out in the rules or in the
articles of association and in the prospectus of the collective investment scheme, or in its
instruments of incorporation, and the obligations set out in the prospectus, which are
consistent with the provisions of this Law.
(3) The Commission shall exercise supervision over compliance with the requirements of para
1 and 2.
(4) The management company shall take the necessary decisions and bear responsibility for
the adoption and implementation of all arrangements and organizational decisions, which are
required to ensure compliance with the rules relating to the constitution and functioning of the
collective investment scheme and with the obligations set out in its rules or in the articles of
association or in the instruments of incorporation of the company, as well as with the
obligations laid down in the prospectus.
Section V
Management of a collective investment scheme established in the Republic of Bulgaria
by a management company established in another Member State
Art. 120. (1) A management company which has been authorized to pursue activity on the
territory of the Republic of Bulgaria in accordance with Chapter Ten and which wishes to
manage a collective investment scheme established in the Republic of Bulgaria, shall file with
the Commission an application in a standard form approved by the Deputy Chairperson, to
which shall be enclosed the following documents:
1. a contract with the depository having a head office in the Republic of Bulgaria or a branch
in the Republic of Bulgaria;
2. information on the delegation arrangement with regard to the functions of investment
management and administration under Art. 86, para 1;
3. attestation by the competent authorities of the management company’s home Member State
in accordance with Art. 113, para 1 and Art. 114, para 3.
(2) If the management company already manages another collective investment scheme of the
same type in the Republic of Bulgaria, it shall submit a reference to the documents already
filed under para 1, relevant to the new collective investment scheme.
(3) With the purpose of ensuring compliance with the rules applicable in regard to the
management company, carrying out the activity under para 1, the compliance with which is
under the Commission’s responsibility, the Commission may ask the competent authorities of
the management company’s home Member State to provide it, within 10 working days of
forwarding the request, with clarification or information regarding the documents referred to
in para 1 and the attestation referred to in Art. 1, Item 3 as to whether the type of a collective
49 investment scheme for which authorization is requested falls within the scope of the
management company’s authorization.
(4) The Commissions shall pronounce a decision according the provisions of Art. 12, para 3 5.
(5) The management company shall notify the Commission of any subsequent material
modification in the documents of para 1.
Art. 121. (1) The Commission may refuse the application of the management company, if it:
1. does not comply with the applicable rules under Art. 119;
2. is not authorized by the competent authorities of its home Member State to manage the type
of a collective investment scheme for which authorization is requested;
3. has not provided the documents according to Art. 120, para 1.
(2) Before refusing an application, the Commission shall consult the competent authorities of
the management company’s home Member State.
Section VI
Management of a collective investment scheme established in another Member State
by a management company established in the Republic of Bulgaria
Art. 122. (1) The management company shall take measures in accordance with this Law and
its implementing instruments to ensure possibilities for effecting payments in favor of the
holders of units, their redemption and provision of information to investors.
(2) The management company must have in place appropriate procedures and measures to
ensure proper dealing of investor complaints, and that there are no restrictions on investors to
exercise their rights. Those measures shall allow investors to file complaints in the official
language or one of the official languages of their Member State.
(3) The management company shall also establish appropriate procedures and arrangements to
make information available at the request of the public and the Commission.
Art. 123. The Commission, within 10 working days of receiving request from a Member
State’s competent authority, with which a management company established in the Republic
of Bulgaria has filed an application to manage a collective investment scheme established in
that State, shall provide to the competent authority clarification or information regarding the
documents enclosed to the application and the attestation prepared by the Commission under
Art.109, para. 6 as to whether the type of a collective investment scheme which the company
wishes to manage falls within the scope of the types of collective investment schemes which
the management company is authorized to manage pursuant to the license issued by the
Commission.
Section VII
Supervisory activity in the case of a management company which pursues business on a
cross border basis by establishing a branch or under the freedom to provide services
50 Art. 124. (1) The Commission may require, for strategic purposes, any management company
established in another Member State, carrying out activity through a branch, to provide
periodically information on the activities pursued in the Republic of Bulgaria.
(2) The Commission may require from the management company established in another
Member State, pursuing business in the territory of the Republic of Bulgaria through the
establishment of a branch or under the freedom to provide services, to provide to it the
information necessary for monitoring compliance with the applicable rules, over which the
Commission exercises supervision.
(3) A management company established in another Member State which manages a collective
investment scheme with a home Member State - the Republic of Bulgaria, shall ensure that
the procedures and arrangements, set out in Art. 122, enable the Commission to obtain the
information under para 2 directly from the management company.
(4) Where the Commission ascertains that a management company established in another
Member State that pursues business through a branch or under the freedom to provide
services on the territory of the Republic of Bulgaria is in breach of some of the rules, the
compliance with which is under the Commission’s responsibility, it shall require the relevant
management company to put an end to that breach and shall inform the competent authorities
of the management company’s home Member State.
(5) Where the management company under para 4 refuses to provide the Commission with the
required information, or fails to take the necessary actions to put an end of the established
breach, the Commission shall inform of that the competent authorities of the management
company’s home Member State.
(6) If, despite the measures taken by the competent authorities for provision of the requested
information, or for putting an end to the breach, about which the Commission has been
notified in due time, or because such measures prove to be inadequate or are not available in
the relevant Member State, the management company continues to refuse to provide the
information requested by the Commission according to para 2, or to infringe this Law and its
implementing instruments, the Commission, after informing the competent authorities of the
management company’s home Member State, may apply appropriate measures to prevent or
penalize further irregularities and, insofar as necessary, to prevent that management company
from realizing any further operations on the territory of the Republic of Bulgaria.
(7) Where the service provided on the territory of the Republic of Bulgaria is the management
of a collective investment scheme, the Commission may require the management company to
cease the management of that collective investment scheme.
(8) Before applying the procedure envisaged in para 5 and 6, the Commission may, in
emergencies, impose any precautionary measure necessary to protect the interest of investors
and the other persons for whom services are provided, informing of it the European
Commission, the European Securities and Markets Authority and the competent authorities of
the other Member States concerned in shortest possible time. At request of the European
Commission, the Commission shall abolish or amend the measure.
Art. 125. On request, the Commission shall consult the competent authorities of the
management company’s home Member State before withdrawing the authorization or the
license of the management company and shall take appropriate measures to safeguard investor
interests. These measures may include decisions which are to prevent the execution of any
further transactions by the management company on the territory of the Republic of Bulgaria.
Art. 126. (1) When a management company established in the Republic of Bulgaria is in
breach of the rules, the compliance with which is under the responsibility of the competent
51 authorities of the host Member State, and despite the request made by those authorities does
not put an end to the breach, after being inform of that by the competent authorities of the host
Member State, the Commission shall take within shortest possible time all appropriate
measures to ensure that the management company concerned provides the information
requested by the host Member State, or put an end to the breach. The Commission shall
inform the competent authority of the host Member State of the measures taken.
(2) The Commission, with the assistance of the relevant state bodies, shall ensure that within
the territory of the Republic of Bulgaria it is possible to serve on the management companies
the acts for measures undertaken against them by the competent authorities of the host
Member State.
Art. 127. The Commission shall communicate to the European Commission the number and
nature of the cases, in which it has refused authorization pursuant to Art. 109, para 4, denied
an application under Art. 121, para 1 or has taken measures pursuant to Art. 124, para 6 and 7.
Chapter Thirteen
MARKETING OF UNITS OF A COLLECTIVE INVESTMENT SCHEME
ESTABLISHED IN ANOTHER MEMBER STATE ON THE TERRITORY OF THE
REPUBLIC OF BULGARIA. MARKETING OF UNITS OF A COLLECTIVE
INVESTMENT SCHEME ESTABLISHED IN THE REPUBLIC OF BULGARIA ON
THE TERRITORY OF ANOTHER MEMBER STATE
Section I.
Marketing of units of a collective investment scheme established in another Member
State on the territory of the Republic of Bulgaria
Art. 128. (1) A collective investment scheme established in another Member State may
market its units on the territory of the Republic of Bulgaria after the competent authority of
that Member State notifies the Commission thereof.
(2) The notification shall be made by transmission of the prepared by the collective
investment scheme notification letter, accompanied with an attestation issued by the
competent authority of the collective investment scheme’s home Member State, certifying
that the scheme fulfills the requirements, laid down in Directive 2009/65/EC.
(3) The notification letter shall include information on arrangements made for marketing the
units of the collective investment scheme into the territory of the Republic of Bulgaria,
including, where relevant, arrangements for marketing of the respective share classes, and in
the cases under Art. 111 – also information that the units are marketed by the company
managing the scheme, and enclosed thereto shall be:
1. the instruments of incorporation of the collective investment scheme, the prospectus, the
latest annual and half-yearly report in the Bulgarian or English language, translated in
accordance with Art. 131, para. 2;
2. the key investor information document in the Bulgarian language, translated in accordance
with Art. 131, para 2. (4) The Commission may not require any additional documents,
certificates or information, other than those indicated in para 2 and 3.
(5) The notification letter and the attestation are provided in the English language, unless
there is agreement between the Republic of Bulgaria and the collective investment scheme’s
home Member State these documents to be provided in the official languages of both States.
(6) The rules of marketing within the territory of the Republic of Bulgaria of units of a
collective investment scheme established in another Member State, laid down in this Section,
52 shall also apply in the marketing of units of individual investment subfunds of a collective
investment scheme.
Art. 129. The Commission shall ensure an access in English language through its official
website to updated information on the laws, regulations and administrative provisions, which
are outside the field governed by Directive 2009/65/EC, applicable to marketing in the
territory of the Republic of Bulgaria of the units of a collective investment scheme established
in another Member State.
Art. 130. A collective investment scheme established in another Member State, which
markets its units within the territory of the Republic of Bulgaria, shall take the necessary
measures to ensure the carrying out of redemption, payments in favor of unitholders and
making available information in pursuance of the laws, regulations and administrative
provisions in the Republic of Bulgaria.
Art. 131. (1) A collective investment scheme established in another Member State shall
provide to investors in the Republic of Bulgaria all the information and documents that are
accessible for the investors in its home Member State, in a way in which they are submitted
pursuant to this Law and its implementing instruments.
(2) The key investor information document shall be provided to investors in the Republic of
Bulgaria in the Bulgarian language, and any other information may be provided at the choice
of the collective investment scheme in Bulgarian or English language. The translation of the
key investor information document and of any other information must reflect accurately and
completely the content of the original.
(3) The requirements for provision of the information and documents according this Article
shall also be applicable to any subsequent change and updating therein.
Art. 132. (1) A collective investment scheme established in another Member State shall
publish in an appropriate way information on the issue price and redemption price of its units
within the territory of the Republic of Bulgaria with frequency, specified in the laws,
regulations and administrative provisions in the home Member State.
(2) The collective investment scheme shall notify the Commission of the frequency and the
way in which it publishes the information under para 1.
Art. 133. A collective investment scheme established in another Home Member State in
pursuing activities within the territory of the Republic of Bulgaria may use the same reference
to the legal form ("investment company" or "contractual (mutual) fund"), as it uses in its
home Member State.
Art. 134. (1) The supervision over compliance with the requirements of Art. 130 - 132, as
well as with the laws, regulations and administrative provisions, falling outside of the field
governed by Directive 2009/65/ЕC and applicable to the activities of a collective investment
scheme established in another Member State, within the territory of the Republic of Bulgaria,
shall be exercised by the Commission.
(2) Where there are sufficient available data, evidencing violation of the obligations of a
collective investment scheme established in another Member State, arising from the
provisions of Directive 2009/65/ЕC, the supervision over which is not within the
Commission’s competence, the Commission shall notify of it the competent authority of the
scheme’s home Member State.
53 (3) In the event that the measures taken by the competent authority of the home Member State
are inadequate, inappropriate or untimely, due to which any subsequent marketing of units of
the collective investment scheme jeopardizes or damages the investor interests in the Republic
of Bulgaria, the Commission may undertake one of the following actions: 1. after notifying
the competent authority of the collective investment scheme’s home Member State, to apply
appropriate measures for protection of the investor interests, including to cease the marketing
of the scheme’s units within the territory of the Republic of Bulgaria; the Commission shall
immediately inform the European Commission of the imposed measures;
2. to refer the case to the European Securities and Markets Authority.
Art. 135. In case when the competent authority of the home Member State of a collective
investment scheme pursuing business within the territory of the Republic of Bulgaria notifies
the Commission about a decision taken to withdraw authorization or impose measures for
ceasing the issuance or the repurchase or redemption of the units of the collective investment
scheme which is managed by a management company established in the Republic of Bulgaria,
the Commission may apply the measures according to Art. 264 and 49 impose an
administrative sanction pursuant to Art. 273 in regard to the management company for
infringement of the provisions of this Law and its implementing instruments in relation to the
management company’s activities.
Section II
Marketing of units of a collective investment scheme established in the Republic of
Bulgaria within the territory of another Member State
Art. 136. (1) A collective investment scheme for which the Republic of Bulgaria is a home
Member State and which proposes to market its units in the territory of another Member State,
shall preliminarily send a notification letter to the Commission, which shall contain
information on the arrangements made for marketing the units in the host Member State,
including, where relevant, the measures for marketing of the respective share classes, and in
the cases of Art. 111 – also indication that the units are marketed by the company that
manages the scheme.
(2) With the notification letter shall be enclosed:
1. the articles of association, or the rules of the collective investment scheme, the prospectus,
the latest annual and half-yearly report, translated in accordance with Art. 137, para 3;
2. the key investor information document translated in accordance with Art. 137, para 3.
(3) If the submitted data and documents are incomplete or irregular, the Commission shall
send a communication of that to the collective investment scheme.
(4)Within 10 working days of receipt of the notifications letter and the enclosed with it
documents, the Commission shall transmit them to the competent authority of the Member
State in which the collective investment scheme proposes to market its units. The
Commission shall enclose with them an attestation that the collective investment scheme
fulfils the requirements, laid down in Directive 2009/65/EC.
(5) The notification letter and the attestation are prepared in the English language, unless there
is agreement between the Republic of Bulgaria and the host Member State these documents to
be prepared in the official languages of both States.
(6) The Commission shall immediately notify the collective investment scheme about the
transmission of the documents under para 4. The collective investment scheme may begin to
market its units in the host Member State as from the date of receiving the notification.
54 (7) In case of updating of the documents pursuant to para 2 and the translations thereof, the
collective investment scheme shall immediately notify the competent authority of the host
Member State according the procedure envisaged by the Law and shall inform it where those
documents can be obtained electronically.
(8) In the event of a change in the information from the notification letter under para 1, the
collective investment scheme shall give written notice of it to the competent authority of the
host Member State before implementing the change.
Art. 137. (1) A collective investment scheme for which the Republic of Bulgaria is a home
Member State and which markets its units in the territory of another Member State, shall
provide to the investors within the territory of that State all the information and documents,
which it provides to the investors in the Republic of Bulgaria pursuant to Chapter Seven.
(2) The information and documents according to para 1 shall be provided to investors in a
way, specified in the laws, regulations and administrative provisions of the host Member
State.
(3) The key investor information document is provided in the official language or one of the
official languages of the host Member State, or in a language approved by the competent
authorities of that State. Any information, other than the key investor information document,
may be provided at the collective investment scheme’s choice in one of the manners indicated
in sentence one, or in the English language. The translation must reflect accurately and
completely the content of the original document.
(4) The requirements for submission of the information and documents under this Article shall
be applicable to any amendment and updating therein.
Art. 138. A collective investment scheme for which the Republic of Bulgaria is a home
Member State and which markets its units within the territory of another Member State, shall
publish in that Member State the issue price and the redemption price of its units with
frequency, as specified in this Law and its implementing instruments.
Art. 139. The supervision over the activity of a collective investment scheme for which the
Republic of Bulgaria is a home Member State and which markets its units within the territory
of another Member State shall be exercised by the Commission in accordance with the
provisions set out in Art. 116 and 117, except for the supervision over compliance with the
corresponding to Art. 130 - 132 requirements in the host Member State legislation, as well as
with the laws, regulations and administrative provisions in the host Member State, which fall
outside of the field governed by Directive 2009/65/EC, that shall be exercised by the
supervisory authority of the host Member State.
Art. 140. (1) Upon taking a decision for withdrawal of the license, or the authorization to
pursue business as a collective investment scheme, for the application of a coercive
administrative measure of ceasing the units redemption or some other coercive administrative
measure, or for the imposition of an administrative penalty, the Commission shall
communicate its decision without any delay to the competent authorities of the host Member
State, and in the cases when its management company is established in another Member State
– to the competent authorities of that State, as well.
(2) In the case of para 1, the Commission may apply coercive administrative measures or
impose an administrative penalty on the management company only if the company infringes
provisions, the compliance with which is under the supervision of the Commission, and not of
the management company’s home Member State competent authority.
55 Chapter Fourteen
TRANSFORMATION AND DISSOLUTION
Section I
Types of transformation
Art. 141. (1) A collective investment scheme for which the Republic of Bulgaria is a home
Member State may transform itself only through merger and acquisition subject to
authorization by the Commission, when all other participating in the transformation collective
investment schemes are established in the Republic of Bulgaria.
(2) A collective investment scheme for which the Republic of Bulgaria is a home Member
State may transform only by merger and acquisition after authorization given by the
Commission, when the collective investment scheme is transforming and the transformation
involves collective investment schemes established in other Member States.
(3) Transformation through merger and acquisition of collective investment schemes
according the provisions of para 2 shall also exist in merger and acquisition of separate
investment subfunds of one or several collective investment schemes.
(4) A collective investment scheme for which the Republic of Bulgaria is a home Member
State may participate in the transformation under Art. 142, para 3, when it is not transforming
and such form of transformation is allowed according the legislation of the home Member
State of the transforming collective investment schemes and authorization for their
transformation has been obtained from the competent authority of that Member State.
(5) An investment company for which the Republic of Bulgaria is a home Member State may
also transform by change in its legal form into a contractual fund after an authorization by the
Commission under conditions and procedure as laid down in an ordinance.
Art. 142. (1) In transformation by acquisition, one or more collective investment schemes or
respective investment subfunds thereof (transforming collective investment schemes) are
dissolved without going into liquidation and transfer all of their assets and liabilities to
another existing collective investment scheme and its respective subfunds (receiving
collective investment scheme) in exchange for provision of units of the receiving collective
investment scheme to the unit-holders of the transforming collective investment schemes, and
if applicable – a cash payment in amount not exceeding 10 per cent of the value of the units
thus provided, determined on the basis of the net asset value
(2) In transformation by merger, two or more collective investment schemes or the respective
subfunds thereof (transforming collective investment schemes) are dissolved without going
into liquidation and transfer all of their assets and liabilities to another formed by them
collective investment scheme and to the relevant subfunds thereof (newly constituted
collective investment scheme) in exchange for provision of units of the newly formed
collective investment scheme to the unit-holders of the merging collective investment
schemes, and if applicable – a cash payment in amount not exceeding 10 per cent of the value
of the units thus provided, determined on the basis of the net asset value.
(3) In the cases pursuant to Art. 141, para 4, one or more collective investment schemes or the
respective subfunds thereof (transforming collective investment schemes) continue to exist
until all liabilities have been discharged and transfer their net assets to another investment
subfund of the same collective investment scheme, to existing collective investment scheme
or to another formed by them collective investment scheme (receiving or newly formed
collective investment scheme).
56 Art. 143. (1) The decision for transformation of an investment company shall be made by the
general meeting of the company.
(2) The articles of association of the investment company may not envisage higher majority
for taking a decision for transformation of the company from that established under Art. 230
of the Commercial Law.
(3) The decision for transformation of a contractual fund shall be taken by the management
body of the company managing the fund.
Art. 144. (1) For the issuance of an authorization by the Commission pursuant to Art. 141,
para 1, an application shall be filed in a standard form approved by the Deputy Chairperson.
(2) The Commission shall pronounce a decision on the application within 20 business days of
its receiving, and where additional information and documents have been required – within 10
business days of their receiving.
(3) On the basis of the submitted documents the Commission shall establish to what extent the
requirements for the issuance of the requested authorization have been complied with. If the
presented information and documents are incomplete or irregular, or further information is
needed or evidence for the data correctness, the Commission shall send a notification and set
a term for removal of the established deficiencies and irregularities, or for submission of
additional information and documents.
(4) If the notification under para 3 is not accepted at the indicated by the applicant address for
correspondence, the term for their submission shall start running from the notification’s
posting at a specially designated for the purpose place in the Commission’s building. This
circumstance shall be verified by a protocol drawn up by officials appointed by order of the
Commission’s Chairman.
(5) The Commission shall refuse to issue an authorization if the provisions of the law and its
implementing instruments have not been complied with or investor interests have not been
protected. The applicant is notified in writing of the decision made within a threeday term.
(6) The documents which shall be enclosed to the application, the conditions and procedure
for transformation according to para 1 shall be laid down in an ordinance.
(7) With the issuance of an authorization for transformation through merger of contractual
funds whereby the newly-established contractual fund is to be domiciled in the Republic of
Bulgaria, as well as for transformation of an investment into a contractual fund, the
Commission shall grant authorization to the respective management company to organise and
manage the newly-established contractual fund as of the date of its establishment.
Section II
Issuing an authorization for transformation of a collective investment scheme
established in the Republic of Bulgaria when the transformation involves collective
investment scheme established in other Member States
Art. 145. (1) For the issuance of an authorization under Art. 141, para 2, the transforming
collective investment scheme for which the Republic of Bulgaria is a home Member State
shall file with the Commission an application in a standard form approved by the Deputy
Chairperson, enclosing therewith:
1. a plan of the proposed transformation approved by the transforming collective investment
scheme, and in the cases of transformation by acquisition – also by the receiving collective
investment scheme;
57 2. up-to-date prospectuses and key investor information document of the receiving or newlyconstituted scheme established in another Member State;
3. a statement by each of the depositaries of the transforming and the receiving collective
investment scheme that they have verified compliance of the particulars set out in para 2, Item
1 , 6 and 7 with the requirements of the applicable legislation and the rules of the contractual
fund (unit trust) or with the instruments of incorporation of the investment company;
4. the information on the transformation which the transforming collective investment scheme
and the receiving, respectively newly-constituted collective investment scheme will provide to
their respective unit-holders.
(2) The plan of transformation pursuant to para 1, Item 1 shall contain at least the following
information:
1. an identification of the type of transformation and of the collective investment
schemes involved therein;
2. the background to and rationale of the proposed transformation;
3. the expected impact of the proposed transformation on the unit-holders of the transforming
collective investment schemes, and in the cases of transformation by acquisition - also of the
receiving collective investment scheme;
4. the criteria adopted for valuation of the assets and, where applicable – also of the liabilities
on the date for calculating the exchange ratio, indicated in Art. 154;
5. the calculation method for the exchange ratio;
6. the planned effective date of the transformation;
7. the rules under which the transfer of assets and exchange of units shall be made;
8. in the cases of transformation by merger – the rules or instruments of incorporation of the
newly constituted collective investment scheme. (3) The collective investment schemes
involved in the transformation may also include further information in the contents of the plan
of transformation.
(4) The documents and information under para 1 shall be provided in the Bulgarian language
and in the official language or one of the official languages of the home Member State of the
receiving or newly-constituted collective investment scheme, or in a language approved by
their competent authorities.
(5) When the Commission decides that the documents and the information provided according
the provisions of para 1 are incomplete, it shall forward a notification to the applicant and set
a term for removal of the established deficiencies and irregularities, or for submission of
additional information and documents within 10 business days of receiving the application.
Article 144, para 4 shall apply accordingly.
Art. 146. (1) When the Commission decides that the documents and information pursuant to
Art. 145 have been submitted complete or after their supplementing pursuant to Art. 145, para
5, the Commission shall immediately transmit a copy of them to the competent authorities of
the home Member States of the receiving or newly-constituted collective investment scheme.
(2) When reviewing the documents and the information under Art. 145, the Commission shall
consider the potential impact of the transformation on unit-holders of the transforming
collective investment scheme, to assess whether appropriate information is provided to them.
(3) If the Commission considers it necessary, it may require in writing more clear provision of
the information to the unit-holders of the transforming collective investment schemes.
(4) In case when the Commission is notified by the competent authorities of the home
Member States of the receiving or the newly-constituted collective investment scheme that in
their judgment the information which will be provided to the unit-holders of that scheme, is
not appropriate and its modification is required, the Commission shall pronounce a decision
58 after receiving notification from those competent authorities as to whether they are satisfied
with the modified information.
Art. 147. (1) The Commission shall issue an authorization for completion of the
transformation if:
1. the proposed transformation complies with the requirements of Art. 145, 146, 149 and 150;
2. the receiving or the newly-constituted collective investment scheme has given notification
to market its units in all Member States where the transforming companies have given
notification or are authorized to market their units in accordance with Art. 136;
3. the Commission and the competent authorities of the home Member State of the receiving
or the newly-constituted collective investment scheme consider that appropriate information
on the transformation is provided to the unit-holders, or no information has been received in
the Commission according to Art. 146, para 4, that the competent authorities of the home
Member State of the receiving or newly-constituted collective scheme consider the
information on the transformation which will be provided to the unit-holders to be
inappropriate.
(2) The Commission shall inform the transforming collective investment scheme within 20
working days of receiving the complete set of documents in accordance with Art. 145 about
its decision to authorize or not to authorize the transformation completion.
(3) The Commission shall inform of its decision the competent authorities of the home
Member State of the receiving or the newly-formed collective investment scheme.
Art. 148. (1) Where in the cases of transformation, in which a receiving or a newlyconstituted collective investment scheme is a scheme for which the Republic of Bulgaria is a
home Member State, the Commission shall receive from the competent authorities of the
home Member State of the transforming scheme a copy of the information, conforming to that
under Art. 145, para 1, in the review of that information the Commission shall consider the
potential impact of the transformation on unit-holders in the collective investment scheme for
which the Republic of Bulgaria is a home Member State, to assess whether appropriate
information on the transformation is being provided to unit-holders.
(2) If considering it necessary, within 15 days of receiving a copy of the information,
conforming to that under Art. 145, para 1, the Commission may require, in writing, from the
collective investment scheme for which the Republic of Bulgaria is a home Member State, to
modify the information to be provided to unit-holders.
(3) In the cases under para 2, the Commission shall inform of it the competent authorities of
the transforming scheme’s home Member State, and within 20 business days of receiving the
provided to it copy of the documents and information conforming to those under Art. 145,
para 1, the Commission shall notify them whether it is satisfied with the modified
information, designated for the unit-holders of the receiving or newly-constituted collective
investment scheme.
Section III
Control over the transformation by the depository and an independent auditor,
informing unit-holders and other their rights related to the transformation
Art. 149. The depository of a collective investment scheme which is involved in
transformation, shall verify the conformity of the particulars from the contents of the
59 transformation plan according to Art. 145, para 2, Item 1, 6 and 7 with the requirements of the
law, of the rules or the articles of association and the other instruments of incorporation of
that collective investment scheme.
Art. 150. (1) The transforming collective investment scheme for which the Republic of
Bulgaria is a home Member State, shall submit to the Commission along with the documents
under Art. 145, para 1 a report prepared by an independent auditor, stating the result of the
audit of:
1. the criteria adopted for valuation of assets and, where applicable – also of the liabilities, on
the date of calculating the exchange ratio, as referred to in Art. 154;
2. the cash payment per unit, where such is envisaged;
3. the calculation method of the exchange ratio as well as the actual exchange ratio
determined at the date of calculating the exchange ratio according to Art. 154. (2) A copy of
the report of the independent auditor shall be made available free of charge, on request, to the
unit-holders both of the transforming collective investment scheme, and the other involved in
the transformation schemes and to the supervisory authorities.
(3) For the purposes of the audit under para 1 and independent auditor may also be the
independent auditor that certified the financial statements of the transforming or of the
receiving collective investment scheme.
Art. 151. (1) The involved in the transformation collective investment schemes for which the
Republic of Bulgaria is a home Member State shall provide appropriate and accurate
information to the unit-holders, such as to enable them to make an informed judgment of the
impact of the transformation on their investments and to exercise their rights pursuant to Art.
152, containing:
1. the background to and the rationale for the proposed transformation;
2. the possible impact of the transformation on unit-holders, including but not limited to any
material differences in respect to the investment policy and strategy, costs, expected result,
periodic reporting, possible dilution in performance and, where relevant, a prominent warning
to investors that their tax treatment may be changed following the merger;
3. any specific rights of unit-holders in relation to the proposed transformation, including but
not limited to the right to obtain additional information, the right to obtain a copy of the report
of the independent auditor on request, the right to request redemption or, where applicable,
the conversion of the units held by them without charge in accordance with Art. 152 and the
deadline for exercising that right;
4. procedural issues and the planned effective date of the transformation;
5. a copy of the key investor information document of the receiving, or respectively the
newly-constituted collective investment scheme. (2) The information under para 1 shall be
provided to the unit-holders after the issuing of an authorization to complete the
transformation by the Commission in the cases under Art. 141, para 1 and 2 or after the
issuance of an authorization by the relevant competent authority from another Member State
in the cases under Art. 148.
(3) The submission of the information under para 1 shall be made latest 30 days before the
deadline of filing a request for redemption or, if applicable, for transformation without any
charges according to Art. 152.
(4) When the involved in a transformation collective investment scheme for which the
Republic of Bulgaria is a home Member State, has given notification according to Art. 136, it
shall provide the information of para 1 in the official language or one of the official languages
of the receiving Member State, or in a language approved by its competent authorities. The
60 translation of the information pursuant to para 1 into the language according to sentence one
must reflect accurately and fully the content of the original and the responsibility for its
producing lies with the collective investment scheme.
(5) Additional requirements to the content, form and method of provision of the information
under para 1 shall be laid down in an ordinance.
Art. 152. (1) The unit-holders in involved in transformation collective investment scheme for
which the Republic of Bulgaria is a home Member State have the right to request redemption
of their units or, where possible, to convert their units into units in another collective
investment scheme with similar investment purposes, managed by the same management
company or by any other company with which the management company is linked by
common management or control, or by a substantial direct or indirect holding, without owing
for that any charged other than those, related only to meeting disinvestment costs, with the
purpose of releasing funds to satisfy the requests for redemption or conversion of units.
(2) The right of the unit-holder under para 1 shall become effective from the moment they
have been informed of the transformation pursuant to Art. 151, and shall cease to exist 5
working days before the date of calculating the exchange ratio under Art. 154.
(3) The Commission may require from the collective investment scheme to allow on its
request the temporary suspension of the sale, or the redemption of units in the cases when
such suspension is in the interest of unit-holders.
Art. 153. Any legal, advisory or administrative costs arisen in connection with the preparation
and the completion of the transformation shall not be charged to the involved in the
transformation collective investment schemes and to the their unit-holders.
Section IV
Entry into effect of transformation
Art. 154. (1) For transformation which does not involve collective investment schemes
established in other Member States as well as for transformation which involves also
collective investment schemes from other Member States and the receiving or the newly
constituted collective investment scheme is established in the Republic of Bulgaria, the date
on which the transformation takes effect shall be the date of entry of the transformation into
the Trade Register, when the company established in the Republic of Bulgaria involved in the
transformation is an investment company, respectively the date of entry in the Register under
Art. 30, para 1 of the Financial Supervision Act when all involved in the transformation
collective investment schemes established in the Republic of Bulgaria are contractual funds,
or some other, indicated in the plan of transformation effective date of the transformation. The
date of calculating the exchange ratio may not be earlier than 5 working days before the
effective date of transformation, and the date for determining the net asset value in the cases
when unit-holders are entitled to a cash payment, shall be the effective date of transformation.
(2) For transformation, where the merging collective investment scheme is established in the
Republic of Bulgaria, and the receiving collective investment scheme is established in another
Member State, the date on which the transformation takes effect, the date for calculating the
exchange ratio as well as the date for determining the net asset value in the cases when unitholders are entitled to a cash payment, shall be determined according the legislation of the
home Member State of the receiving collective investment scheme.
61 (3) For transformation pursuant to para 1, the entry into effect of the transformation shall be
made public by the receiving collective investment scheme by a procedure laid down in an
ordinance, and shall be notified to the Commission and the relevant competent authorities of
the home Member States of the other involved in the transformation collective investment
schemes.
(4) After a transformation has taken effect pursuant to para 1, it may not be declared null and
void.
Art. 155. (1) The transformation of collective investment schemes through acquisition shall
have the following consequences:
1. all the assets and liabilities of the transforming collective investment scheme are transferred
to the receiving collective investment scheme;
2. the unit-holders of the transforming collective investment scheme become unit-holders of
the receiving collective investment scheme, and for the achievement of an equivalent
exchange ratio, they are entitled to cash payments in amount not exceeding 10 per cent of the
net asset value of their units in the transforming collective investment scheme;
3. the transforming collective investment scheme ceases to exist on the entry into effect of the
transformation.
(2) The transformation of collective investment schemes through merger shall have the
following consequences:
1. all assets and liabilities of the transforming collective investment schemes are transferred to
the newly constituted collective investment scheme;
2. the unit-holders of the transforming collective investment schemes become unit-holders of
the newly constituted collective investment scheme, and for the achievement of an equivalent
exchange ratio, they are entitled to cash payments in amount not exceeding 10 per cent of the
net asset value of their units in the transforming collective investment scheme;
3. the merging collective investment schemes cease to exist on the entry into effect of the
transformation.
(3) The transformation of collective investment schemes under Art. 142, para 3 shall have the
following consequences:
1. the net assets of the transforming collective investment scheme are transferred to the
receiving collective investment scheme;
2. the unit-holders of the transforming collective investment scheme become unit-holders of
the receiving collective investment scheme;
3. the transforming collective investment scheme continues to exist until its liabilities have
been discharged.
Art. 156. The management company of the receiving collective investment scheme shall
inform immediately the depository of the receiving collective investment scheme about the
completion of transfer of assets and, where applicable, of liabilities.
Section V
Dissolution of a collective investment scheme
Art. 157. (1) Besides under the provisions of the Commercial Law, an investment company
shall be dissolved compulsorily:
1. upon withdrawal of the license;
62 2. when within a three-month period after withdrawal of the license, dissolution or declaring
bankrupt of the company managing it, the investment company has not designated a new
management company or has not transformed itself by merger or acquisition.
(2) Besides under the provisions of Art. 363, letters "a" and "b" of the Obligations and
Contracts Act, a contractual fund shall be dissolved compulsorily:
1. upon withdrawal of the authorization of the management company for organization and
management of a contractual fund;
2. when within a three-month period after withdrawal of the license, dissolution or declaring
bankrupt of the company managing it, the contractual fund has not designated a new
management company or has not transformed itself by merger or acquisition.
(3) After the coming into effect of the decision for withdrawal of the license of an investment
company, the Commission forwards it to the Registry Agency for entry into the Trade
Register and for the appointment of a liquidator.
(4) The Deputy Chairperson may order the conducting of inspections and apply coercive
administrative measures until deletion of the investment company from the Trade Register
and until the final settlement of relations with the unit-holders.
(5) The conditions and procedure for dissolution of an investment company and a contractual
fund shall be laid down in an ordinance.
Title Four
PROVISION OF INFORMATION TO THE EUROPEAN COMMISSION IN
RELATION TO THE ACTIVITIES OF MANAGEMENT COMPANIES IN THIRD
COUNTRIES. COOPERATION WITH THE COMPETENT AUTHORITIES OF THE
MEMBER STATES
Art. 158. (1) The Commission shall inform the European Commission of any substantial
difficulties that have arisen for the management companies for which the Republic of
Bulgaria is a home Member State, in their establishment or in performance of services and
activities in a third country.
(2) On request of the European Commission, the Commission shall limit or suspend for a
period up to three months the issuing of authorizations to pursue activities within the territory
of the Republic of Bulgaria by management companies from a third country as well as the
procedures in relation to the acquisition of direct or indirect holdings by a parent undertaking
which is regulated by the legislation of such third country. By decision of the Council of the
European Union this period may be extended.
(3) Paragraph 2 is not applied in regard to a subsidiary of a management company that has
been granted authorization to pursue business within the European Union, or a subsidiary of
such subsidiary.
(4) On request of the European Commission, in the cases when a third country does not
ensure to a management company from a Member State the pursuing of activities in market
conditions equal to those which the law of the European Union guarantees to the management
companies of that third country, or when a third country does not provide a regime of national
treatment for the pursuance of business within its territory by management companies from a
Member State, the Commission shall inform it of any:
1. filed application for the issue of a license to a management company which appears to be a
direct or indirect subsidiary of a parent undertaking regulated by the legislation of the third
country;
63 2. notification by a parent undertaking, which is regulated by the legislation of that third
country and proposes to acquire a holding in a management company for which the Republic
of Bulgaria is a home Member State, as a result of which the management company will
become a subsidiary of the parent undertaking.
(5) The notification under para 4 shall be discontinued after an agreement is reached between
the European Union and the third country for the provision by the third country of conditions
for carrying out of activities by management companies from the European Union, equivalent
to the conditions which the law of the European union guarantees to the management
companies from that third country, for provision of regime of national treatment or after the
expiration of the term pursuant to para 2.
Art. 159. (1) The Commission shall cooperate with the competent authorities of the other
Member States in the exercise of its supervisory powers under this Law and its implementing
instruments and whenever necessary shall render assistance to those authorities in the
exercising of their supervisory powers.
(2) In realization of the cooperation under para 1, the Commission shall use the powers
provided to it by law, and in the cases when the action subject of investigation by the
competent authorities of other Member States does not constitute an infringement of the
legislation in the Republic of Bulgaria.
Art. 160. The Commission shall immediately provide information to the competent authority
from another Member State, when such information is required for the discharging of its
duties under Directive 2009/65/EC.
Art. 161. (1) In the cases when the Commission has good reason to suspect that an entity over
the activity of which the Commission does not exercise supervisory powers, is committing or
has committed on the territory of another Member State an infringement of the provisions of
Directive 2009/65/ЕC, it shall inform so the competent supervisory authority of the relevant
Member State.
(2) Where the Commission has been notified by a competent authority of a Member State,
that an entity over the activity of which that authority does not exercise supervisory powers, is
committing or has committed into the territory of the Republic of Bulgaria an infringement of
the provisions of Directive 2009/65/EC, the Commission shall take appropriate actions and
shall inform the competent authority of the Member State of the outcome of them.
Art. 162. (1) In the exercise of its supervisory activity, including in the conducting of an onthe-spot verification or investigation on the territory of a Member State, the Commission may
request the cooperation of the relevant competent authority in that State.
(2) Where the Commission requests from the competent authority of a Member State the
carrying out of an on-the-spot verification or investigation on the territory of that State and the
competent authority decides to conduct the verification or the investigation itself, the
Commission may request that its own experts accompany the experts of the competent
authority carrying out the verification or investigation.
Art. 163. (1) When a request is made by a competent authority of a Member State for
carrying out an on-the-spot verification or investigation on the territory of the Republic of
Bulgaria, the Commission within its powers shall:
1. conduct the verification or investigation itself;
64 2. allow the competent authority of the other Member State to carry out the verification or
investigation;
3. allow auditors or experts to carry out the verification or investigation.
(2) In the cases under para 1, Item 1, on request by the competent authority of the other
Member State, officials of that competent authority accompany the Commission officials in
the carrying out of the verification or investigation. The control, however, over the conducting
of the verification or investigation shall be exercised by the competent authorities in the
Republic of Bulgaria.
(3) In the cases under para 1, Item 2 the Commission may request that its own officials
accompany the officials of the other Member State’s competent authority in carrying out of
the verification or investigation.
Art. 164. (1) The Commission may refuse to provide the information pursuant to Art. 160 or
the cooperation in carrying out an on-the-spot verification or investigation pursuant to Art.
163, where:
1. the carrying out of an on-the-spot verification or investigation and the provision of
information might adversely affect the sovereignty, security or public order in the Republic of
Bulgaria;
2. judicial proceedings have already been initiated before the judiciary in the Republic of
Bulgaria in respect of the same persons in relation to which cooperation has been requested;
3. there is an effectuated court judgment in the Republic of Bulgaria in respect of the same
actions and persons, in relation to which cooperation has been requested.
(2) In the cases of para 1 the Commission shall notify the authority requesting cooperation
and shall provide it with detailed information about the reasons for the denial.
Art. 165. The Commission may send a warning to the European Securities and Markets
Authority about the cases when a request of the Commission to exchange information
according to Art. 166 - 169, to carry out an investigation or on-the-spot verification according
to Art. 170 or a request its officials to accompany the officials of the competent authority of
other Member State in carrying out an investigation or on-the-spot verification has been
rejected or has not been acted upon within a reasonable time.
Art. 166. (1) Where a management company established in the Republic of Bulgaria pursues
activities through a branch or under the freedom to provide services on the territory of one or
more Member States, the Commission shall collaborate with the competent authorities of
those States. The Commission shall collaborate including also with the purpose to ensure the
collection by the competent authorities of the information referred to in Art. 124, para 2 and 3.
(2) Where a management company established in another Member State pursues activity
under the freedom to provide services or through a branch on the territory of the Republic of
Bulgaria and on the territory of one or more Member States, the Commission shall collaborate
with the competent authorities in those States.
(3) In the cases under para 1 and 2 the Commission may request from the competent
authorities of the Member States, and shall supply to them on request by them, all the
information concerning the management and ownership structure of the management
company that is likely to facilitate the exercising of its supervisory powers.
Art. 167. Where a management company established in another Member States pursues
activity on the territory of the Republic of Bulgaria, the Commission shall inform the
competent authorities of that State of the applied by the Commission in regard to the
65 company, in the cases pursuant to Art. 124, para 2 and 3, coercive administrative measures or
imposed administrative penalties.
Art. 168. When a management company established in the Republic of Bulgaria manages a
collective investment scheme established in other Member State, the Commission shall
without delay notify the competent authorities of that Member State of any infringement of
the provisions of this Law and its implementing instruments or if any other problems which it
has established in the management company’s activity and which may affect the ability of the
company to perform its duties in the management of the scheme.
Art. 169. Where the Republic of Bulgaria is a home Member State of a collective investment
scheme managed by a management company established in another Member State, the
Commission shall immediately inform the competent authority of that State of the problems it
has identified in the scheme’s operation and which may affect the ability of the management
company to perform its duties.
Art. 170. Where the Republic of Bulgaria is a host Member State for a management company
which pursues business within its territory through a branch, the Commission, after being
informed by the competent authority of that Member State shall cooperate with such authority
in the cases when it, itself or through intermediaries, carries out on-the-spot verification of the
information indicated in Art. 166 - 169.
TITLE ONE
NATIONAL INVESTMENT
FUNDS
Chapter Fifteen
GENERAL PROVISIONS
Article 171. (1) National investment funds are open-ended or close-ended national investment
companies domiciled in the Republic of Bulgaria or national contractual funds investing cash
raised through public offering in transferable securities or in other liquid financial assets,
following the principle of risk allocation. National investment funds are not collective
investment schemes and the requirements of Part Two shall only apply for them if this is
expressly provided for in this Title.
(2) Open-ended national investment funds redeem their shares or units at the request of their
shareholders, respectively unit holders, at a price based on the net asset value. Actions
undertaken to ensure that the exchange value of the shares or units does not diverge
significantly from the net asset value shall be regarded as equivalent to redemption.
(3) A national investment funds is closed-ended when it does not redeem its shares or units,
except for the redemption of shares of investment companies, under the terms and procedure
set forth in the Commerce Act.
(4) A national investment fund may be only a joint-stock company established at a
Constituency Meeting with a one-tier management system, with a single subject of activity investing in transferable securities and other liquid financial assets of cash raised through
66 public offering of shares. The investment company shall not have the right to carry out any
other economic activities, except when such are necessary for the performance of the activity
under Paragraph 1.
(5) A national contractual fund is a separate property for the purpose of collective investment
in transferable securities and other liquid financial assets of cash raised through public
offering of units. A contractual fund is regarded as established as of its entry in the register
under Article 30, Paragraph 1 of the Financial Supervision Commission Act. Chapter XV
"Company" of the Obligations and Contracts Act, with the exception of Article 359,
Paragraphs 2 and 3, Articles 360, 362, Article 363, Letters "c" and "d" and Article 364 shall
apply for contractual fund, to the extent that this Law or the rules of the contractual fund do
not stipulate otherwise.
(6) In order to carry out the activities under Paragraph 1 – 5, a license to carry out the
business as an investment company or a permit to organise and manage a national contractual
fund needs to be issued.
(7) A person who does not have the right to carry out the activities under Paragraphs 1 - 6
shall not have the right to use in its name, advertising or other activities the words "national
investment fund", "national investment company", "national contractual fund" or other
equivalent words and phrases in the Bulgarian or foreign languages which mean the
performance of such activities.
(8) National investment funds, respectively the companies which manage their activities, shall
be obliged to indicate in their prospectuses and in all advertising and other materials
distributed by them that they are not undertakings within the meaning of Directive
2009/65/EC, respectively that they are not collective investment schemes.
Article 172. (1) A national investment fund shall be organised and managed only by a
management company, and when the conditions of Article 197, Paragraphs 1 are fulfilled - by
a licensed alternative investment fund manager.
(2) When carrying out the activity of managing a national contractual fund, the management
company, respectively the alternative investment fund manager, shall act in his own name,
indicating that he is acting on behalf of the contractual fund.
(3) A closed-ended national investment company may decide not to assign its management to
a person under Paragraph 1 and to be managed by its Board of Directors. In the cases under
Sentence 1, the company shall sign a contract with a person entitled to provide investment
consultancy services under Article 12 of the Markets in Financial Instruments Act. When the
conditions of Article 197, Paragraph 1 are met, a closed-ended national investment company
shall submit an application for the issuance of a license to carry out the activity of managing
alternative investment funds.
(4) Where the activity of a national investment fund is managed by an alternative investment
fund manager, the relevant requirements of Title Two shall apply in addition to the
requirements of this Title.
67 Article 173. (1) The Statute of an open-ended national investment company shall contain, in
addition to the data required under the Commerce Act, the following:
1. the main objectives and constraints of the investment activity, as well as the investment
policy of the company;
2. the share of the investments by types of assets;
3. the rules for determining the remuneration of the members of the Board of Directors,
respectively of the management company under Article 172, Paragraph 1;
4. the distribution of the rights and obligations between the Board of Directors and the
management company under Article 172, Paragraph 1;
5. the duration of the closed period, if any;
6. the terms and conditions for calculating the net asset value, the issue price and the
redemption value of the shares and the dividend, if any;
7. the terms and conditions for the issue of shares, for redemption of shares and the
conditions for suspension of the redemption and for distribution of the dividend, when a
dividend has been allocated, or for its reinvestment;
8. the conditions for substitution of the depositary and the rules guaranteeing the interests of
shareholders in the event of such a substitution;
9. the conditions for substitution of the management company of Article 172, Paragraph 1
and the rules guaranteeing the interests of shareholders in the event of such a substitution.
(2) The statute of a closed-ended national investment company shall contain, in addition to
the data required under the Commerce Act, the data under Paragraph 1, Items 1 - 4, 8 and 9,
as well as the manner and procedure for dividend allocation.
(3) The conditions for participation in a national contractual fund, its organisation,
management and termination shall be determined by the rules of the contractual fund.
(4) The rules of an open-ended national contractual fund shall contain:
1. the name of the contractual fund;
2. data about the person organising or managing the contractual fund;
3. the main objectives and constraints of the investment activity, as well as of the investment
policy;
4. the terms and conditions for calculating the net asset value, the issue price and the
redemption value of the units;
5. valuation methods for the assets and liabilities;
68 6. the rights attached to the units;
7. the management fees charged by the management company under Article 172, Paragraph
1, the fees deducted by the management company for the sale and redemption of units, the
other fees, if any, as well as the methods for their calculation;
8. the rules for determining the remuneration of the depositary;
9. the terms and conditions for the issuance and redemption of units and the conditions for
suspension of the redemption;
10. the terms and conditions for allocation of the earnings or for their reinvestment;
11. the conditions for substitution of the depositary and the rules guaranteeing the interests of
the unit holders in the event of such a substitution;
12. the conditions for substitution of the management company under Article 172, Paragraph
1 and the rules to ensure the interests of the unit holders in the event of such a substitution.
(5) The rules of the national closed-ended contractual fund shall contain the information
under Paragraph 4, Items 1-3, 6, 8, 10-12, as well as:
1. the terms and conditions for calculating the net asset value and methods of valuation of the
assets and liabilities;
2. the management fees charged by the management company under Article 172, Paragraph
1, the other fees, if any, as well as the methods for their calculation;
3. the terms and procedures for allocation of earnings.
Article 174. (1) The subscribed capital of a closed-ended national investment company shall
not be less than BGN 250,000 and the company shall have at all times capital of at least the
same amount, with the structure and the ratio of the balance sheet assets and liabilities of the
company to be set forth in a regulation.
(2) The subscribed capital of an open-ended national investment company shall not be less
than BGN 100,000 and the company shall have at all times capital of at least the same
amount. The capital of an open-ended national investment company open-end shall always be
equal to the net value of its assets. The capital with which the company is incorporated shall
be entered into the trade register. The provisions of Articles 192-203 and Article 246 of the
Commerce Act shall not apply.
(3) The net asset value of a closed-ended national contractual fund shall not be less than BGN
250,000. The rules of the fund may set forth a higher amount of the net asset value. The
minimum amount under Sentence 1 shall be reached within one year of the establishment of
the fund, based on its initial or subsequent prospectus.
69 (4) The net asset value of an open-ended national contractual fund shall not be less than BGN
100,000 or such higher amount as set forth by its rules. This minimum shall be reached within
one year of the establishment of the fund.
(5) No less than 25 percent of the capital under Paragraph 1, respectively under Paragraph 2,
shall be paid in upon submission of the application for the issuance of a license to carry out
the business as an investment company, and the remainder shall be paid in within 14 days
after receipt of a written notice from the Commission that it will issue the license after the full
amount of capital is paid in.
Article 175. (1) A national investment company shall only issue dematerialized shares with
the right of one vote each. The company shall not issue bonds and other debt securities.
(2) Furthermore, upon the establishment of the company, the shares of an open-ended national
investment company shall be acquired at the issue price determined on the basis of the net
asset value. The provisions of Article 176, Paragraphs 2 and 3 and Articles 188-191 of the
Commerce Act shall not apply.
(3) A national contractual fund shall be regarded as the issuer of the units into which it is
divided. The units shall give the right to the respective part of the property of the fund,
including upon the fund's liquidation, redemption right and other rights set forth in this Law
and in the rules of the contractual fund. An open-ended national contractual fund may also
issue, based on its net asset value, partial units against a cash contribution of a certain size if a
whole number of units cannot be issued against the paid in amount.
Article 176. (1) The requirements of Article 10 shall apply for persons elected to the Board of
Directors of a national investment company, respectively for natural persons representing
legal persons - members of the governing body, as well as for any other persons who are
authorised to conclude transactions on behalf of the investment company severally or jointly
with another person.
(2) If the activities of a closed-ended national investment company are managed by its Board
of Directors, Article 93 and Article 94 respectively shall apply for the persons under
Paragraph 1.
Chapter Sixteen
GRANTING AND REVOKING OF LICENSES FOR NATIONAL INVESTMENT
COMPANIES AND AUTHORIZATIONS TO ORGANIZE AND MANAGE
NATIONAL CONTRACTUAL FUNDS
Article 177. (1) For the issuance of a license to carry out the activity of a national investment
company, an application to the Commission shall be submitted in a format determined by the
Deputy Chairperson, with the following attachments:
1. the statute;
2. data on the subscribed and paid-in capital;
70 3. data and other necessary documents relating to the members of the Board of Directors of
the investment company, respectively the natural persons representing legal persons members of the Board of Directors or relating to other persons authorized to manage and
represent it, as well as information about their professional qualifications and experience;
4. the contract with the management company, respectively with the alternative investment
fund manager, the contract with the person under Article 12 of the Markets in Financial
Instruments Act and the contract for depository services;
5. the names or company names and data on the persons who hold directly or indirectly 10
percent or more than 10 percent of the voting shares of the applicant or who may exercise
control over it, and the number of the votes held by them; the persons shall submit written
statements regarding the origin of the funds from which the contributions have been made
against the subscribed shares, including whether the funds are borrowed or not, and regarding
the taxes paid by them for the last five years, in a format approved by the Deputy
Chairperson;
6. the rules for valuation of the portfolio and for determination of the net asset value;
7. the prospectus of the national investment company and the document with key investor
information of the open-ended national investment company;
8. the risk management rules;
9. other documents and data, as specified in a regulation.
(2) For the issuance of an authorization to organize and manage a national contractual fund,
the management company or the alternative investment fund manager shall submit an
application to the Commission in a format approved by the Deputy Chairperson, with the
following attachments:
1. the rules under Article 173, Paragraph 3;
2. the resolution of the competent body of the management company or of the alternative
investment fund manager for the organization of a contractual fund;
3. the rules for valuation of the portfolio and for determination of the net asset value;
4. the contract for depository services;
5. the prospectus of the national contractual fund and the document with key investor
information of the open-ended national contractual fund;
6. the risk management rules;
7. other documents and data, as specified in a regulation.
71 (3) Based on the submitted documents, the Commission shall determine whether the
requirements for issuance of a license, respectively of an authorization, have been met. If the
submitted data and documents are incomplete or irregular or additional information or proof
of the accuracy of the data is needed, the Commission shall send a notice and set a term to
remedy the established deficiencies and irregularities or to provide additional information and
documents, which term cannot be shorter than one month and longer than two months.
(4) If the notice under Paragraph 3 is not accepted at the correspondence address provided by
the applicant, the term for their provision shall commence upon placement of the notice at a
place specifically designated for this purpose in the building of the Commission. This
circumstance shall be certified by means of a report drawn up by officials appointed with an
order of the Chairperson of the Commission.
(5) The Commission shall issue a decision on the application within two months of its
receipt, and when additional information and documents have been requested - within one
month of their receipt, respectively of the expiration of the term under Paragraph 3, Sentence
2. The applicant shall be notified of the decision in writing within 7 days.
(6) Simultaneously with the issuance of a license for a national investment company and a
authorization for a management company or an alternative investment fund manager to
organize and manage a national contractual fund, the Commission shall confirm the
prospectus of the national investment fund and document with the key investor information of
the open-ended national investment fund and shall enter the open-ended national investment
fund in the register kept by the Commission under Article 30, Paragraph 1 of the Financial
Supervision Commission Act.
(7) The Registry Agency shall enter the national investment company in the trade register
after the respective license issued by the Commission is submitted to it.
Article 178. (1) The Commission shall refuse to issue a license to carry out the activities of a
national investment company if:
1. the statute of the company is not in compliance with the law;
2. the subscribed capital does not meet the requirements of Article 174, Paragraphs 1 and 2;
3. the contract with the management company or the alternative investment fund manager
does not meet the requirements of this Law and its implementing regulations or the contract
with the person under Article 12 of the Markets in Financial Instruments Act is not submitted;
4. the members of the Board of Directors do not meet the requirements of Article 176;
5. the persons holding directly or indirectly 10 percent or more than 10 percent of the votes in
the General Meeting of the national investment company may endanger the security of
investments with their activities or their decision-making influence;
6. the persons holding directly or indirectly 10 percent or more than 10 percent of the votes in
the General Meeting have paid in contributions with borrowed funds;
72 7. the depository or the contract with the depository does not meet the requirements of the
law or its implementing regulations;
8. the prospectus and/or document with key investor information does not meet the
requirements of this Law and its implementing regulations;
9. according to the law or according to its statute, the investment company may not offer its
shares in the Republic of Bulgaria;
10. the interests of the investors are not sufficiently secured;
11. the management company, respectively the alternative investment fund manager is not
domiciled in the Republic of Bulgaria.
(2) The Commission shall refuse to issue an authorization to organize and manage a national
contractual fund if:
1. the applicant does not meet the requirements of the law;
2. the rules of the contractual fund do not meet the requirements of the law and its
implementing regulations;
3. the depository or the contract with the depository does not meet the requirements of the
law or its implementing regulations;
4. the prospectus and/or the document with key investor information does not meet the
requirements of the law and its implementing regulations;
5. according to the law or according to its rules, the contractual fund may not offer its units in
the Republic of Bulgaria;
6. the interests of the investors are not sufficiently secured;
7. the management company, respectively the alternative investment fund manager is not
domiciled in the Republic of Bulgaria.
(3) In the cases under Paragraph 1, Items 1 – 4, 7 and 8, respectively under Paragraph 2,
Items 2 – 4, the Commission may refuse to issue a license, respectively an authorization, only
if the applicant has failed to remedy the inconsistencies and to submit the required documents
within the term specified by the Commission, which term cannot be shorter than one month.
(4) The refusal of the Commission shall be justified in writing.
(5) The applicant may file a new application for the issuance of a license, respectively an
authorization, no earlier than 6 months as of the enforcement of the refusal.
Article 179. An amendment to the rules, respectively to the statute of a national investment
fund, a substitution of the depositary and of the management company, respectively of the
alternative investment fund manager, a substitution of an investment consultant with a
73 management company or an alternative investment fund manager and vice versa, an
amendment to the risk management rules, the rules for valuation of the portfolio and for
determining the net asset value and an amendment to the contract for depository services shall
be allowed after the approval of the Deputy Chairperson. Article 18, Paragraphs 2 – 7 shall
apply accordingly.
Article 180. (1) The Commission shall revoke the issued license if the national investment
company:
1. fails to commence to carry out the respective activities within 12 months of the issuance of
the license, expressly relinquishes the issued license or has not carried out its activity for more
than 12 months;
2. for 6 consecutive months, the average monthly net asset value is less than required amount
under Article 174, Paragraphs 1 or 2;
3. has submitted false information which has served as the basis for the issuance of the
license;
4. ceases to meet the conditions under which the license has been issued;
5. does not meet the liquidity requirements set forth in a regulation;
6. commits gross or systematic violations of the provisions of this Law or of its implementing
regulations.
(2) The Commission shall revoke the issued license to organize and manage a national
contractual fund:
1. if within one year of the receipt of the authorization, the net asset value according to the
balance sheet of the contractual fund fails to reach the required amount under Article 174;
2. in the cases under Paragraph 1, Items 1 - 5;
3. if necessary to protect the interests of the investors.
(3) After the enforcement of a decision to revoke its license to carry out the activities of a
closed-ended national investment company, the company may continue to exist as a jointstock company under the Commerce Act. The Commission shall forward the decision to the
Registry Agency in order for it to delete the company's activity as an investment company.
Article 181. (1) A national investment company cannot be transformed into another type of
commercial company and its subject of activity cannot be changed. The transformation of a
closed-ended national investment company into an open-ended national investment company
shall be effected only with the authorization of the Commission. The transformation of an
open-ended national investment company into a closed-ended national investment company
shall be effected if the option for such a transformation and procedure for compensation of
shareholders who have not accepted such a transformation are set forth in the statute of the
investment company. A contractual fund may be transformed only by means of merger,
74 consolidation, division or separation, the transformation involving contractual funds without a
change in their subject of activity.
(2) The transformation by means of merger, consolidation, division or separation, as well as
the termination of a national investment fund shall be subject to an authorization by the
Commission. Article 144 shall apply accordingly. The persons appointed as receivers or
trustees of an investment company, respectively as receivers of a contractual fund shall be
approved by the Commission. Article 23 of the Markets in Financial Instruments Act shall
apply accordingly.
(3) The transformation and termination shall be carried out under the terms and conditions
and following the procedure set forth in a regulation.
Chapter Seventeen
PUBLIC OFFERING, REDEMPTION AND ADMISSION TO TRADING
Article 182. (1) Public offering of shares of national investment funds is permitted after the
issue of an authorization to the national investment company, respectively an authorization for
the organization and management of the national investment fund and if a prospectus is
published.
(2) The prospectus of a closed-ended national investment fund shall be prepared and
published in accordance with Chapter Six of the Public Offering of Securities Act.
(3) The prospectus of an open-ended national investment fund shall be prepared and
published in the manner and with the content as established by a regulation. Key investor
information shall be enclosed with the prospectus and shall be an integral part thereof.
Articles 56, 58 and 63 shall apply accordingly.
(4) The marketing communications relating to the marketed shares or units of a national
investment fund shall be drawn up in compliance with Article 65, Paragraphs 1 and 2,
respectively.
(5) Units or shares of an open-ended national investment fund may be marketed only in the
territory of the Republic of Bulgaria. Units or shares of a closed-ended national investment
fund may be marketed in the territory of other Member States, in compliance with the
requirements set out in Chapter Six of the Public Offering of Securities Act.
Article 183. (1) An open-ended national investment fund shall be obliged to continuously
offer its shares or units to the investors at issue price based on the net asset value and at the
request of its shareholders to redeem them at a price based on the net value assets, under the
terms and conditions set out in this Law, in its implementing regulations and in the statute of
the company, except in the case of Paragraph 3. The issue price and the redemption price shall
75 be determined at least twice a month at regular intervals. Article 21, Paragraphs 2 – 7 shall
apply accordingly.
(2) An open-ended national investment fund may set out in its statute, respectively to have it
set out in the rules of a national contractual fund, a closed period which cannot be longer than
three years from its commencement. During the closed period, a national investment fund
shall not be obliged to redeem its shares or units.
(3) An open-ended national investment fund may temporarily suspend redemptions under the
terms and conditions set out in its statutes or rules, but only in exceptional cases, if
circumstances so require and if such a suspension is justified in view of the interests of the
shareholders, including the cases under Article 22, Paragraph 1. For the period of suspension
of the redemption, the issuance of shares or units shall also be suspended.
Article 184. (1) A closed-ended national investment fund shall apply for admission of its
shares or units to trading on a regulated market within 6 months of its entry into the register
under Article 30, Paragraph 1 of the Financial Supervision Commission.
(2) If the shares or units of a closed-ended national investment fund are not admitted to
trading on a regulated market within one year of its entry into the trade register, the fund shall
be terminated under terms and conditions set out in a regulation.
(3) Admission to trading of shares or units of an open-ended national investment fund may be
carried out in compliance with Chapter Three "a".
Chapter Eighteen
REQUIREMENTS TO THE ACTIVITY
Article 185. The rules of Article 34-37 respectively shall apply for the keeping of
dematerialized financial instruments and other assets held by a national investment fund.
Article 186. (1) National investment funds may invest in the following assets:
1. financial instruments, without limitation to their type;
2. certificates for precious metals;
3. bank deposits repayable on demand or with the right to be withdrawn at any time, provided
that the bank is domiciled in the Republic of Bulgaria or in another Member State, and if
domiciled in a third country - subject to prudential rules regarded by the Deputy Chairperson
as equivalent to those set forth in the legislation of the European Union.
(2) National investment funds may invest their assets without limitation in issues of financial
instruments issued or guaranteed by the Republic of Bulgaria and the other Member States, as
well as issued or guaranteed by third countries included in a list prepared by the Deputy
Chairperson.
76 Article 187. (1) National investment funds shall comply with the following investment
restrictions, specified as a percentage of their assets:
1. financial instruments issued by a single issuer admitted to trading or traded on a regulated
market:
a) up to 15 percent of the assets of an open-ended national investment fund;
b) up to 20 percent of the assets of a closed-ended national investment fund;
2. financial instruments issued by a single issuer offered to the public or for which there is an
obligation to apply for admission and which are admitted to trading or traded on a regulated
market or other organised market operating duly, recognised and open to the public - up to 15
percent of the assets of an open-ended national investment fund, respectively up to 25 percent
of the assets of a closed-ended national investment fund;
3. financial instruments issued by a single issuer not offered to the public or for which there
is no obligation to apply for admission to trading on a regulated market or other organised
market, operating regularly, recognised and open to the public - up to 15 percent of the assets
of a national investment fund, with the total value of the investments in such financial
instruments reaching up to 25 percent of the assets of a closed-ended national investment fund
and respectively up to 50 percent of the assets of a closed-ended national investment fund;
4. shares and units of collective investment undertakings which are not offered to the public a total of up to 15 percent of the assets of an open-ended national investment fund and up to
30 percent of the assets of a closed-ended national investment fund;
5. certificates for precious metals - a total of up to 15 percent of the assets of an open-ended
national investment fund and up to 30 percent of the assets of a closed-ended national
investment fund;
(2) National investment funds may exceed the restrictions for investments in a single issuer
under Paragraph 1, Item 1, subject to the following restrictions:
1. up to 30 percent of the assets of an open-ended national investment fund, provided that the
total value of the investments in issuers in each of which the fund invests more than 15
percent of its assets shall not exceed 50 percent of its assets;
2 up to 40 percent of the assets of a closed-ended national investment fund, provided that the
total value of the investments in issuers in each of which the fund invests more than 20
percent of its assets shall not exceed 60 percent of its assets.
(3) National investment fund shall not acquire more than:
1. fifteen percent of the non-voting shares issued by a single person;
2. fifteen percent of the bonds or other debt securities issued by a single person;
77 3. thirty percent of the units of a collective investment scheme authorised to carry out
activities under Directive 2009/65/EC and/or another collective investment scheme,
regardless of whether domiciled in a Member State or not, provided that the prospectus of
such a collective investment scheme stipulates that it cannot invest more than 10 percent of its
assets in units of other collective investment schemes, regardless of whether they are
authorised to carry out activities under Directive 2009/65/EC or not;
4. fifteen percent of the money market instruments issued by a single person.
(4) National investment funds may invest their assets in bank deposits in such ratios as are
defined in their statutes, respectively, in their rules.
(5) Where the management company or the alternative investment fund manager submits a
capital guarantee or an income guarantee to the unit holders of a national investment fund, it
may invest its assets without limitation in bank deposits, including in a single bank.
(6) In case of violations of the investment restrictions imposed to a national investment fund,
Articles 51 and 52 shall apply.
Article 188. (1) A national investment fund shall not use loans, except in the cases set forth
in Paragraphs 2 and 3.
(2) The Deputy Chairperson may authorise an open-ended national investment fund to take
out a loan of up to 20 percent of its assets if the loan is for a period no longer than 12 months
and it is required to cover the liabilities of the fund with regard to the redemption of its units.
Article 18, Paragraphs 2 – 6 shall apply accordingly.
(3) The Deputy Chairperson may authorise a closed-ended national investment fund to take
out a loan of up to 30 percent of its assets if the loan is for a period no longer than 12 months
and it is required to acquire assets. Article 18, Paragraphs 2 – 6 shall apply accordingly.
(4) Additional provisions may be set forth in a regulation.
Article 189. A national investment company, respectively the management company or the
alternative investment fund manager, when managing a national contractual fund shall adopt
rules for risk management in order to continually monitor and assess the risk of each position
and its impact on the risk profile of the entire portfolio at all times. Regarding the risk
management rules for national investment funds and the requirements for periodic notification
to the Commission, Articles 40 and 41 shall apply.
Article 190. A national investment company, respectively the management company or the
alternative investment fund manager, when managing a national contractual fund, shall adopt
rules regarding the personal transactions of the members of management and supervisory
body of the company which are to ensure that no personal transactions will be carried out or
investments of such these persons will be held, allowing them to jointly or severally exercise
significant influence over an issuer, or that could lead to a conflict of interest, or that could be
the result of misuse of information acquired in connection with their professional activities
within the meaning of the Market Abuse with Financial Instruments Act.
Article 191. (1) A closed-ended national investment fund shall disclose information pursuant
to Chapter Six "a" of the Public Offering of Securities Act.
78 (2) An open-ended national investment fund shall submit to the Commission and to the
public:
1. audited annual financial statements within 90 days of the end of the financial year;
2. a semi-annual report covering the first six months of the financial year within 30 days of
the end of the reporting period;
3. other information as set forth in a regulation.
Article 192. Other requirements to the activity, the structure of the assets and liabilities of
national investment funds aimed at protecting the interests of the investors, to their annual and
interim financial activity reports and their disclosure, the keeping and storage of the records,
the methods and procedures for valuation of the assets and the disclosure of information, the
content of marketing communications, the rules for personal transactions, the rules preventing
conflict of interest, the rules for risk management, the rules for portfolio valuation, the content
of the contracts with the management company or the alternative investment fund manager
and with the depositary shall be set forth in a regulation.
Article 193. (1) Any issues concerning closed-ended national investment funds, the
provisions of Chapters Eight and Eleven of the Public Offering of Securities Act shall apply.
(2) For national investment funds managed by alternative investment fund managers, the
requirements for alternative investment funds set forth in Title Two of this Part shall apply
when they are stricter than the requirements of this Title.
TITLE TWO
MANAGEMENT OF ALTERNATIVE
INVESTMENT FUNDS
Chapter Nineteen
GENERAL PROVISIONS
Article 194. (1) An alternative investment fund is a collective investment undertaking,
including its investment sub-funds, which is different than a collective investment scheme,
which invests funds that are raised by more than one person in accordance with a defined
investment policy and to the benefit of these persons, whereby the funds raised are invested
and the profitability is realised on the principle of risk and profitability allocation among the
investors only in proportion to the investments madeby them, without the establishment of
investment portfolios for the individual investors.
(2) For purposes of Paragraph 1 it shall be assumed that the funds are raised by more than
one person if:
1. the collective investment undertaking is not restricted, by its national legislation, its acts of
incorporation and other regulatory or contractual requirements, to raise funds from more than
one person, regardless of whether there actually is more than one investor;
79 2. the collective investment undertaking is restricted by its national legislation, its acts of
incorporation and other regulatory or contractual requirements, to raise funds from more than
one person, provided that its single investor invests funds raised from more than one person
with the purpose of investing such fund to the benefit of these persons.
(3) For purposes of Paragraph 1, it shall be assumed that a collective investment undertaking
has a defined investment policy if at least one of the following conditions is met:
1. the investment policy is determined no later than the time when the investment in
collective investment undertaking becomes irrevocable, not including subsequent redemption
or other disposals with the investment made;
2. the investment policy is set out in the acts of incorporation of the collective investment
undertaking or in another document to which its acts of incorporation refer;
3. the collective investment undertaking or the person managing it is obligated to comply
with the investment policy and this obligation is subject to an enforcement by the investors;
4. the investment policy establishes investment rules containing one or more of the following
criteria:
a) investments are restricted to certain categories of assets and/or certain categories of assets
are excluded from the eligible investments;
b) investments are consistent with certain strategies;
c) investments are restricted to certain geographic regions;
d) investments comply with certain leverage restrictions;
e) investments are made in accordance with a specified investment holding period, or
f) investment is subject to other restrictions with the purpose of risk allocation.
(4) In order to classify a collective investment undertaking as an alternative investment fund,
it is irrelevant:
1. whether it is open-ended or closed-ended;
2, whether it is organised as a contractual fund, a trust, an investment company or another
legal form;
3. whether it is registered, licensed or domiciled in a Member State or in a third country;
4. whether the performance of its activities is subject to registration or licensing;
5. the legal form of the person managing it.
(5) National investment funds under Title One shall be alternative investment funds.
80 Article 195. (1) An alternative investment fund manager may be a legal person with main
subject of activity the management of one or more alternative investment funds.
(2) A person managing an alternative investment fund may be:
1. an entity other than the managed alternative investment fund designated by the alternative
investment fund or by a person acting on its behalf;
2. the alternative investment fund, when its legal form allows that and when its governing
body has not appointed an external person as per Item 1.
(3) In order to carry out the activities under Paragraph 1, a person domiciled in the Republic
of Bulgaria shall obtain a license to carry out the activity of management of alternative
investment funds or a registration under Chapter Twenty.
(4) In order to carry out the activities under Paragraph 1, a person domiciled a third country
to which the Republic of Bulgaria is a Member State of reference and in order for such a
person to market alternative investment funds managed by it in the territory of Member
States, a license shall be obtained under provisions of Chapter Twenty, Section III.
Article 196. This Title shall not apply for:
1. holding companies;
2. institutions for occupational retirement provision established under the provisions of
Directive 2003/41/EC of the European Parliament and of the Council of 03 June 2003 on the
activities and supervision of institutions for occupational retirement provision, hereinafter
"Directive 2003/41/EC" and their management structures and investment managers, provided
that they do not manage alternative investment funds;
3. The European Central Bank, the European Investment Bank, the European Investment
Fund, the European development finance institutions and bilateral development banks, the
World Bank, the International Monetary Fund and other supranational institutions and
international organisations, when they manage alternative investment funds operating in the
public interest;
4. national central banks;
5. central, regional and local executive authorities and bodies or other institutions managing
funds supporting social security and pension systems;
6. schemes for employee participation or employees' savings schemes;
7. special purpose vehicles under the Special Purpose Investment Vehicles Act and other
undertakings whose sole purpose is to perform securitisation within the meaning of Article 1,
Paragraph 2 of Regulation (EC) No 24/2009 of the European Central Bank of 19 December
2008 concerning statistics on the assets and liabilities of financial vehicle corporations
engaged in securitisation transactions (OJ, L 15/1 of 20 January 2009), hereinafter referred to
81 as "Regulation (EC) No 24/2009", as well as other activities as appropriate to achieve this
purpose;
8. Alternative investment fund managers whose only investors are they, their parent
companies, their subsidiaries or other subsidiaries of the parent companies, provided that none
of these investors is an alternative investment fund.
Chapter Twenty
REQUIREMENTS TO THE ACTIVITIES OF ALTERNATIVE INVESTMENT FUND
MANAGERS
Section I
General Provisions
Article 197. (1) A person domiciled in the Republic of Bulgaria managing alternative
investment funds directly or indirectly shall hold a license to carry out the activity of
management of alternative investment funds issued in accordance with the provisions of
Section II, if such a person manages directly or indirectly alternative investment funds with
total asset value as determined in accordance with Delegated Regulation (EU) No 231/2013 of
the Commission of 19 December 2012 supplementing Directive 2011/61/EC of the European
Parliament and of the Council with regard to exemptions, general operating conditions,
depositaries, leverage, transparency and supervision (OJ, L 83/1 of March 22, 2013),
hereinafter referred to as "Delegated Regulation (EU) 231/2013" exceeding:
1. the equivalent of EUR 100,000,000, including any assets acquired through use of leverage;
2. the BGN equivalent of EUR 500,000,000 when the portfolios consist of alternative
investment funds which are not leveraged and where the right of redemption may not be
exercised for a period of 5 years as of the date of the initial investment in each of these
alternative investment funds.
(2) Indirect management within the meaning of Paragraph 1 shall be management through a
company with which the alternative investment fund manager is related by common
management controlled by the alternative investment fund manager or by a company in which
that person has a substantial direct or indirect holding.
(3) A person from a third country that manages alternative investment funds and/or markets
in the territory of the European Union alternative investment funds management by that
person and for which the Republic of Bulgaria is a Member State of reference shall obtain a
license issued in compliance with the provisions of Section III.
(4) A person managing, directly or indirectly under Paragraph 2, alternative investment funds
with assets exceeding the thresholds set forth in Paragraph 1 shall be registered in compliance
with the provisions of Section IV.
(5) A person under Paragraph 1 can only be a joint-stock company with dematerialized shares
each entitling to one vote. The management of the person under Sentence 1 shall be carried
out at its seat.
82 (6) A person not holding a license for management of alternative investment schemes and not
registered as such a person shall not use in its name, advertising or other activities words in
the Bulgarian or foreign languages denoting the performance of the activity of management
alternative investment funds.
(7) Investment intermediaries authorised under Directive 2004/39/EC of the European
Parliament and of the Council of 21 April 2004 on markets in financial instruments and
amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the
European Parliament and of the Council and repealing Council Directive 93/22/EEC,
hereinafter referred to as "Directive 2004/39/EC" and credit institutions authorised under
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on the
access to the activity of credit institutions and the prudential supervision of credit institutions
and investment firms and amending Directive 2002/87/EC and repealing Directive
2006/48/EC and Directive 2006/49/EC (OJ, L 176/338 of 27 June 2013), hereinafter referred
to as "Directive 2013/36/EU" may provide investment services as alternative investment
funds based on licenses issued to them. Persons under Sentence 1 may market shares and
units of alternative investment funds, provided that the requirements of this Title are met.
Article 198. (1) The license under Article 197, Paragraph 1 shall include the right to perform
the following alternative investment fund management activities:
1. portfolio management;
2. risk management.
`(2) The license under Paragraph 1 may include the following additional functions in the
cases of collective management of alternative investment funds:
1. administrative functions: legal and accounting services in connection with the management
of funds, responses to requests for information from investors, portfolio valuation and
determination of the value of the units or shares of the managed funds, monitoring of the
compliance with regulatory requirements, keeping the register of the holders of shares or units
in cases of management of alternative investment funds domiciled in another country,
distribution of dividends and other payments, issuance and redemption of units or shares,
performance of contracts, record-keeping;
2. marketing services in connection with the units or shares of the managed alternative
investment funds;
3. activities in connection with the assets of the managed alternative investment funds in
accordance with the management requirements: infrastructure management, real estate
management, capital structure consultancy, industrial strategy and related matters,
consultancy and services relating to mergers and acquisitions of companies, as well as other
services related to the management of alternative investment funds and the companies and
other assets in which the managed funds invest.
83 (3) An alternative investment fund under Article 195, Paragraph 2 Item 2 may not perform
any activity other than the activity for which it has obtained a license under Paragraphs 1 and
2.
(4) An alternative investment fund manager under Article 195, Paragraph 2, Item 1 may
perform the activity of management of collective investment schemes based on the license to
carry out the business of a management company under Title Two.
(5) The license under Paragraph 1 of a person domiciled in the Republic of Bulgaria
managing alternative investment funds under Article 195, Paragraph 2, Item 1 may also
include the performance of one or more additional services:
1. the management based on contract signed with the client a portfolio including financial
instruments, at its sole discretion;
2. investment advice regarding financial instruments;
3. keeping and administration of shares and units of collective investment undertakings;
4. reception and transmission of orders in relation to one or more financial instruments.
(6) An alternative investment fund manager under Article 195, Paragraph 2, Item 1 shall not
perform any activity other than the activity for which it has been authorised under Paragraphs
1, 2, 4 and 5.
(7) A license shall not be issued to include only one of the services under Paragraph 1 or only
for services under Paragraph 2 and/or Paragraph 5, without including services under
Paragraph 1. A license that includes the services under Paragraph 5 shall not be issued only
for one or more of the services under Items 2 – 4, without including services under Item 1.
(8) The issued license shall be valid for all Member States.
Article 199. (1) An alternative investment fund under Article 195, Paragraph 2 Item 2 shall
have initial capital of no less than the BGN equivalent of EUR 300,000.
(2) An alternative investment fund manager under Article 195, Paragraph 2 Item 1 shall have
initial capital of no less than the BGN equivalent of EUR 125,000.
(3) If the alternative investment fund manager manages the activities of alternative investment
funds with total assets exceeding the BGN equivalent of EUR 250,000,000, then such a
person shall increase amount of its equity by no less than 0.02 percent of the amount
constituting the difference between the balance sheet asset value of the managed funds and
the BGN equivalent of EUR 250,000,000. The requirement in Sentence 1 may be waived for
up to 50 percent of the additional equity if the person uses a guarantee for the same amount
issued by a credit institution or an insurer domiciled in a Member State or a third country in
which the applicable rules are equivalent to the rules of the legislation of the European Union.
The requirement in Sentence 1 shall apply until the equity reaches the BGN equivalent of
EUR 10,000,000.
84 (4) In calculating the total asset value of the managed alternative investment funds under
Paragraph 3, the assets that the alternative investment fund manager manages by means of
delegation shall not be included.
(5) No less than 25 percent of the capital under Paragraph 1 shall be available upon
submission of the application for the issuance of a license to carry out the activity of an
alternative investment fund manager, and the remainder shall be paid in within 14 days after
receipt of a written notice from the Commission that it will issue the license after the
availability of the full equity amount is certified.
(6) The alternative investment fund manager shall be required to hold at all times equity
exceeding or equal to the value under Paragraphs 1 – 5.
(7) Notwithstanding the requirement of Paragraph 6, the equity of the alternative investment
fund manager shall at all times be in an amount no less than a quarter of its fixed total costs
for the previous financial year, determined on the basis of the annual financial statements
certified by a registered auditor. In the event of a substantial change in the current year as
compared to the previous volume of business of the alternative investment fund manager, the
Deputy Chairperson may adjust the required value under Sentence 1. For an alternative
investment fund manager who has not performed any activity during the entire previous
financial year, as of the date of receipt of the license, the amount of the equity shall be
determined based on the projected fixed total costs included in the programme of activities,
unless the Deputy Chairperson has requested an adjustment to costs in the programme of
activities.
(8) The requirements of Paragraphs 1 – 7 shall not apply to alternative investment fund
managers and simultaneously holding a license to carry out the business of management
companies.
(9) Notwithstanding the requirements of Paragraph 1 – 8, alternative investment fund
managers, including alternative investment funds whose management has not been entrusted
to a person other than them shall also meet one of the following requirements for the proper
implementation of Commission Delegated Regulation (EU) No 231/2013:
1. to have additional equity in an amount sufficient to cover the risks of liability due to
professional negligence;
2. to have professional liability insurance for liability arising from professional negligence,
consistent with the risks covered.
(10) The equity of the alternative investment fund manager, to the extent necessary to meet
the requirements of Paragraphs 1 – 9, may only be invested in liquid assets, the additional
requirements for which shall be set forth in a regulation. The investment of the equity under
Sentence 1 shall not be of speculative nature.
(11) The alternative investment fund manager shall be required to comply with the capital
requirements and to maintain a minimum liquidity, as defined in a regulation.
85 (12) In case of a violation of the requirements for capital adequacy and liquidity, the
alternative investment fund manager shall notify the Deputy Chairperson within 7 days of the
occurrence of the violation, stating the reasons for the violation and proposing specific
measures as a result of which the violation will be remedied within one month of its
occurrence.
Article 200. An alternative investment fund manager shall be managed by at least two
persons. For the members of the management and supervisory bodies, the representatives of
legal entities members of such bodies, and all other persons who may conclude transactions
with another person jointly or severally on behalf of an alternative investment funds manager,
the respective requirements of Articles 93 and 94 shall apply.
Section II
Issuance and revocation of a license to carry out the activity of alternative investment fund
management to persons domiciled in the Republic of Bulgaria
Article 201. (1) Licenses to carry out the activity of alternative investment fund management
shall be issued by the Commission.
(2) An application form shall be filed for the issuance of a license under Paragraph 1, with
the following attachments:
1. data and documents relating to the applicant:
a) the statutes and other incorporation documents;
b) data and documents certifying the subscribed and paid-in capital;
c) data and other necessary documents relating to the managers of the applicant, respectively
relating to natural persons representing legal persons members of management or supervisory
bodies of the applicant or relating to other persons authorised to manage and represent the
applicant, as well as evidence of their professional qualifications and experience;
d) a programme for the activities including at least a description of the organisational
structure of the applicant and the information about the manner in which it will ensure the
performance of its obligations under this Law;
e) the rules regarding the personal transactions in financial instruments of the members of the
management and supervisory bodies of the applicant, of its employees and of its related
persons;
f) the rules establishing policies and practices in relation to the remunerations under Article
221;
g) the rules establishing the conditions and procedures for outsourcing of functions to third
parties, as well as the outsourcing contracts, data and documents certifying compliance with
the requirements for the outsourcing and justifying the selection of the particular third party;
h) data on persons holding directly or indirectly a qualifying holding in the applicant
company or who may control it and on the number of the votes held by them;
86 i) a written statement regarding the beneficial owners of the applicant and the origin of the
funds from which they have made contributions against the subscribed shares, including
whether the funds are borrowed and regarding the taxes paid by them in the last five years, in
a format approved by the Deputy Chairperson;
k) data on the persons with whom the applicant is a related person;
l) other documents and information, as specified in a regulation;
2 data and documents related to the alternative investment funds which the applicant intends
to manage:
a) data on the investment strategy, including the types of investment sub-funds if the
alternative investment fund consists of separate sub-funds, the leverage policy, the risk profile
and other characteristics of each alternative investment fund which the applicant manages or
intends to manage;
b) details on the country of establishment of each alternative investment fund which the
applicant manages or intends to manage;
c) details on the country of establishment of the master alternative investment funds for
which the alternative investment funds which the applicant manages or intends to manage
represent feeder funds;
d) the statute, the rules and other incorporation documents of each alternative investment
fund which the applicant manages or intends to manage;
e) data on the measures for selection of the depositary of each alternative investment fund
which the applicant manages or intends to manage, the contracts signed with the depositary
and information and documents certifying the depositary's compliance with requirements and
justifying its selection;
f) information and documents on all other circumstances subject to disclosure under Chapter
Twenty-One, Section II.
(3) A management company which applies for a license to carry out the activity of alternative
investment fund management may not attach to the application under Paragraph 2 such data
and documents which have already been submitted to the Commission in the course of the
issuance of a license of Article 86, Paragraph 1, provided that they are up-to-date and the
management company has declared this fact.
(4) When an alternative investment fund manager wishing to carry out the services under
Article 198, Paragraphs 2 and/or 5 which are not included in its license, it must submit an
application to the Commission, in a format approved by the Deputy Chairperson, for an
extension of the scope of the license, enclosing the documents under Paragraph 2 Item 1,
letters "a", "b", "d" and "g", as well as other data and documents as specified in a regulation.
87 (5) The documents enclosed with the application under Paragraph 2 or Paragraph 4 shall meet
all regulatory requirements and shall contain data which are correct, complete, clear and
consistent.
(6) Based on the submitted documents, the Commission shall determine whether the
requirements for issuance of a license have been met. If the submitted data and documents are
incomplete or irregular or additional information or proof of the accuracy of the data is
needed, the Commission shall send a notice and set a term to remedy the established
deficiencies and irregularities or to provide additional information and documents, which term
cannot be shorter than one month and longer than two months.
(7) If the notice under Paragraph 3 is not accepted at the correspondence address provided by
the applicant, the term to remedy the established omissions and inconsistencies or to provide
additional information and documents shall commence upon placement of the notice at a
place specifically designated for this purpose in the building of the Commission. This
circumstance shall be certified by means of a report drawn up by officials appointed with an
order of the Chairperson of the Commission.
(8) The Commission shall issue a decision on the application after consulting the competent
authorities of the respective Member States if the applicant:
1. is a subsidiary of another alternative investment fund manager, management company,
investment intermediary, credit institution or insurer authorised to carry out such activities by
the competent authorities of another Member State;
2. is a subsidiary of the parent company of another alternative investment fund manager,
management company, investment intermediary, credit institution or insurer authorised to
carry out such activities by the competent authorities of another Member State;
3. is controlled by natural or legal persons controlling another alternative investment fund
manager, management company, investment intermediary, credit institution or insurer
authorised to carry out such activities by the competent authorities of another Member State.
(9) The Commission shall issue a decision on the application within two months of its
receipt, and when additional information and documents have been requested - within two
months of their receipt, respectively of the expiration of the term under Paragraph 6, Sentence
2. The term for issuance of a decision shall not commence if the documents under Paragraph 2
Item 1, Letters "c", "d", "f" and "h" and Item 2, Letters "a", "b" and "c", as a minimum, have
not been provided.
(10) The decision to issue a license shall specify the investment strategies of the alternative
investment funds which the alternative investment fund manager manages or intends to
manage. The Commission may limit the scope of the issued license to the management of
alternative investment funds with defined investment strategies as indicated under Paragraph
2. In the cases under Sentence 2, the applicant shall be informed of the justification for
limitation with the communication under Paragraph 6.
(11) The applicant shall be notified of the decision in writing within 7 days.
88 (12) An alternative investment fund manager which has not yet become liable to carry out the
activity of alternative investment fund on the basis of a license may apply for the issuance of a
license in accordance with the requirements and procedures set forth in this Section and
Implementing Regulation (EU) No 447/2013.
(13) Upon the issuance of a license, the alternative investment fund manager shall be entered
into the register kept by the Commission under Article 30, Paragraph 1 of the Financial
Supervision Commission Act. ESMA shall be notified of the issuance of the license.
Article 202. (1) The Commission shall refuse to issue a license or an extension of an issued
license with a reasoned decision if:
1. the capital of the applicant does not meet the requirements of Article 199;
2. any of the persons under Article 200 cannot hold office due to a legal prohibition or do not
meet the requirements of this Law;
3. a person who holds directly or indirectly a qualifying holding or which may control the
applicant with its activity or its decision-making influence may endanger the company or its
operations;
4. persons holding directly or indirectly a qualifying holding in the applicant company have
made contributions with borrowed funds or the origin of the funds with which these persons
have made contributions is not clear and legitimate;
5. at its discretion, the amount of the property of the persons holding a qualifying holding in
the applicant and/or their business in terms of scale and financial results is not consistent with
the shareholding in the applicant stated for acquisition and creates doubt regarding the
reliability and suitability of these persons to provide financial support to the applicant, if
necessary;
6. the applicant has submitted false information or documents with false contents;
7 at its discretion, the activity which the applicant intends to perform does not ensure the
required reliability and financial stability;
8. the applicant is a person related to one or more natural or legal persons and this
relationship could create obstacles to the effective exercise of the supervisory functions of the
Commission or of the Deputy Chairperson;
9. there are obstacles to the effective exercise of the supervisory functions of the Commission
or of the Deputy Chairperson, arising from or in connection with the application of a legal or
administrative act of a third country governing the activity of one or more persons with which
the applicant is a related party;
10. the applicant does not meet any of the other requirements established by the Law and its
implementing regulations.
89 (2) In the cases under Paragraph 1, Items 1, 2, 4 and 10, the Commission may refuse
conclusively to issue a license only if the applicant has failed to remedy the inconsistencies
and to submit the required documents within the term defined by it under Article 201,
Paragraph 6.
(3) The Commission may refuse to issue a license if it is unable to identify the actual owners
of a qualified shareholder.
(4) In case of refusal, the applicant may file a new application for the issuance of a license no
earlier than 6 months as of the enforcement of the refusal.
Article 203. (1) A person who has obtained a license for alternative investment fund
management may commence to manage alternative investment funds in accordance with the
data enclosed with the application, after the entry into force of the issued license, if all
necessary data and documents in accordance with Article 201, Paragraph 2 have been
submitted with the application for the issuance of a license.
(2) A person who has obtained a license for alternative investment fund management who has
not submitted all necessary information and documents in accordance with Article 201,
Paragraph 2 with the application for the issuance of a license may commence to manage
alternative investment funds after the entry into force of the issued license and the submission
of all necessary information and documents in accordance with Article 201, Paragraph 2,
which are subject to the approval of the Deputy Chairperson. The documents submitted in
compliance with Sentence 1 shall meet all regulatory requirements and shall contain data
which are correct, complete, clear and consistent.
(3) The Deputy Chairperson shall grant or refuse to grant the approval under Paragraph 2
within 14 days of receipt of the application with its attachments, and if additional information
and documents have been requested - within 14 days of their receipt.
(4) Based on the submitted documents, the Deputy Chairperson shall determine whether the
requirements for issuance of the requested approval have been met. If the submitted data and
documents are incomplete or incorrect or additional information is needed, the Deputy
Chairperson shall send a notice and shall set a term for remedy of the established deficiencies
and inconsistencies or for provision of additional information and documents.
(5) If the notice under Paragraph 4 is not accepted at the correspondence address provided by
the applicant, the term to remedy the omissions and inconsistencies, respectively to provide
additional information and documents shall commence upon placement of the notice at a
place specifically designated for this purpose in the building of the Commission. This
circumstance shall be certified by means of a report drawn up by officials appointed with an
order of the Deputy Chairperson.
(6) The Deputy Chairperson shall refuse to grant the approval under Paragraph 2 if the
requirements of the Law and/or its implementing regulations have not been met or if the
interests of the investors have not been protected. The refusal shall be justified in writing.
Article 204. (1) The Commission shall revoke the issued license if:
90 1. the person does not commence to carry out the activity under Article 198, Paragraph 1
within 12 months of the issuance of the license, expressly relinquishes the issued license or
has not carried out the activity under Article 198, Paragraph 1 for more than 6 months;
2. the person has submitted false information which has served as the basis for the issuance
of the license;
3. the person ceases to meet the conditions under which the license has been issued;
4. the person ceases to meet the requirements for capital adequacy and/or liquidity and within
7 days of the occurrence of the violations does not offer measures to bring it into conformity
with those requirements or does not remedy the violation within the term set forth in Article
199, Paragraph 12;
5. the financial standing of the person is permanently impaired and it is unable to fulfil its
obligations;
6. the alternative investment fund manager and/or persons under Article 200 have not
complied with an imposed coercive administrative measure under Article 271, Paragraph 1 or
have committed or allowed a violation of Article 35, Paragraph 1 of the Markets in Financial
Instruments Act and of Article 11 of the Measures against Market Abuse with Financial
Instruments Act or another gross violation or systematic violations of this Law, of the Public
Offering of Securities Act, of the Markets in Financial Instruments Act, of the Measures
against Market Abuse with Financial Instruments Act and/or their implementing regulations;
7. the person obstructs the supervision exercised by the Commission and/or the Deputy
Chairperson, including through a failure to provide required information on its activities,
through submission of incomplete, unclear or conflicting information or information
preventing the establishment of the actual activities performed, the amount and/or the
justification for the realised revenues and/or expenses or other circumstances material to the
exercised supervision and the assessment of its activities;
8. the person ceases to meet the requirements of Part Two, Title Two if its license includes
the services under Article 198, Paragraph 5, Item 1.
(2) Before the revocation of the license of the person domiciled in the Republic of Bulgaria
which manages an alternative investment fund domiciled in another Member State, the
Commission shall consult the competent authorities of that Member State.
(3) The Commission shall notify the company in writing within 7 days of the decision to
revoke its license. ESMA shall be notified of the revocation of the license.
(4) An alternative investment fund manager may change its subject of activity only if it
explicitly relinquishes the license issued to it and if there are no grounds for a forced
revocation of its license.
(5) After the entry into force of the decision to revoke the license, the Commission shall
immediately forward it to the Registry Agency for entry into the trade register and for
91 appointment of a receiver or to the court for initiation of insolvency proceedings, and shall
undertake the necessary measures to inform the public.
Article 205. (1) An alternative investment fund manager shall not have the right to carry out
activities under Article 198 after the revocation of its issued license and after the court ruling
for initiation of insolvency proceedings. Article 23 of the Markets in Financial Instruments
Act shall apply for alternative investment fund managers.
(2) An alternative investment fund manager which has provided services under Article 198,
Paragraph 5, shall, within 14 days of becoming aware of the Commission's decision to revoke
its license, prepare and submit to the Commission a plan for settlement of the relations with
its clients. The receiver, respectively the representative of the company, shall monitor the
implementation of the plan for settlement of the relations with clients of the company and
shall submit documents certifying the settlement of these relations to the Deputy Chairperson.
(3) Deletion of the company from the trade register shall be allowed only after the settlement
of the relations with its clients, of which the Deputy Chairperson shall notify the Registry
Agency.
Article 206. An alternative investment fund manager may be transformed only with the
authorisation of the Commission, provided that all companies involved in the transformation
are managers of alternative investment funds. The conditions and procedures for the issuance
of an authorisation for transformation shall be set forth in a regulation.
Section III
Issuance and revocation of a license to carry out the activity of alternative investment
fund management to persons domiciled in a third country.
Article 207. (1) The license to carry out the activity of management of alternative investment
fund domiciled in a Member State by a person domiciled in a third country to which the
Republic of Bulgaria is designated as a Member State of reference and for the marketing in
Member States of alternative investment funds managed by such a person shall be issued by
the Commission.
(2) The Republic of Bulgaria may be defined as Member State of reference for the purposes
of Paragraph 1 in the cases when the alternative investment fund manager intends to:
1. manage one or more alternative investment funds established in the Republic of Bulgaria
without managing or marketing alternative investment funds in the territory of other Member
States;
2. manage one or more alternative investment funds domiciled in the Republic of Bulgaria
and in the territory of other Member States without managing or marketing alternative
investment funds in the territory of other Member States, provided that the Republic of
Bulgaria is the Member State where most of the alternative investment funds are domiciled or
where most of the assets are managed;
92 3. manage only one alternative investment fund domiciled in a Member State, which is
authorised or registered in the territory of a Member State and the Republic of Bulgaria is the
Member State of origin of this fund or the Member State in which the fund will be marketed;
4. manage only one alternative investment fund domiciled in a Member State, which is not
authorised or registered in the territory of a Member State and the Republic of Bulgaria is the
Member State in which the fund will be marketed;
5. market only one alternative investment fund domiciled in a third country, only in the
territory of the Republic of Bulgaria;
6. market in the territory of more than one Member State only one alternative investment
fund domiciled in a Member State, which is authorised or registered in the territory of a
Member State and the Republic of Bulgaria is the Member State of origin of this fund or is
one of the Member States in which the fund will be marketed;
7. market in the territory of more than one Member State only one alternative investment
fund domiciled in a Member State, which is not authorised or registered in the territory of a
Member State and the Republic of Bulgaria is one of the Member States in which the fund
will be marketed;
8. market only one alternative investment fund domiciled in a third country in the territory of
more than one Member State and the Republic of Bulgaria is one of the Member States in
which the fund will be marketed;
9. market in the territory of Member States more than one alternative investment fund
domiciled in a Member State which are authorised or registered in the territory of one
Member State and the Republic of Bulgaria is the Member State of origin of these funds or
the Member State in which most of these funds will be marketed;
10. market in the territory of Member States more than one alternative investment fund
domiciled in a Member State which are authorised or registered in the territory of more than
one Member State and the Republic of Bulgaria is the Member State in which most of these
funds will be marketed;
11. market in the territory of Member States more than one alternative investment fund
domiciled in a Member State and in a third country, or more than one alternative investment
fund from a third country and the Republic of Bulgaria is the Member State in which most of
these funds will be marketed.
(3) If upon application of the criteria for determining the Member State of reference under
Paragraph 2, in addition to the Republic of Bulgaria another Member State of reference can be
determined in the cases under Paragraph 2 Items 2, 3, 6 – 9, the alternative investment fund
manager domiciled in a third country which intends to manage alternative investment funds
domiciled in a Member State and/or to market the alternative investment funds managed by it
in Member States, it shall file an application with the Commission and with the competent
authorities of all other potential Member State of references for a determination of the
,Member State of references, with which application it shall enclose its strategy for marketing
of the alternative investment funds managed by it in the territory of the Member States.
93 (4) In the cases under Paragraph 3, the Commission and the competent authorities of the other
Member States which may be determined as the Member State of references shall jointly
determine the Member State of reference within one month of the filing of the application
Paragraph 3 and shall promptly notify the applicant about that. If the authorities under
Sentence 1 fail to issue a decision within the indicated term or fail to notify the applicant of
the decision, within 7 days of the issuance of the decision the applicant shall determine one
Member State of reference from among the indicated countries on the basis of the criteria
under Paragraph 2. If the Commission does not agree with the determination of a Member
State of reference made by the applicant, the Commission may notify ESMA to ensure
assistance in accordance with Article 19 of Regulation (EU) No 1095/2010.
(5) The additional requirements relating to the procedure under Paragraphs 1 – 4 are set forth
in Commission Regulation (EU) No 448/2013 of 15 May 2013 establishing a procedure for
determining the Member State of reference of a non-EU alternative investment fund manager
pursuant to Directive 2011/61/EU of the European Parliament and of the Council (OJ, L 132/3
of 16 May 2013), hereinafter referred to as "Implementing Regulation (EU) No 448/2013".
Article 208. (1) An application form shall be filed for the issuance of a license under Article
207, Paragraph 1, with the following attachments:
1. the data and documents under Article 201, Paragraph 2;
2. a justification for the determination of the Republic of Bulgaria as a Member State of
reference and the applicant's strategy for marketing of the alternative investment funds
managed by it in the territory of Member States;
3. information on the provisions of this Title which the applicant is unable to comply with
due to conflict with mandatory provisions of the national law of the applicant or of an
alternative investment fund managed by it domiciled in a third country to be marketed in the
territory of Member States;
4. proof that the relevant law of the third country contains provisions equivalent to the
provisions of Paragraph 3 in terms of regulatory purpose and ensured level of investor
protection, and that the applicant complies with these provisions of the law of the third
country;
5. a legal opinion on the provisions of the third country under Item 4, their regulatory purpose
and the investor protection intended with them;
6. the name or the company name of the legal representative of the applicant and his
permanent address or its management address, as well as the correspondence address, if
different.
(2) The data and documents under Article 201, Paragraph 2, Item 2 may be submitted only
for alternative investment funds domiciled in Member States which the applicant intends to
manage and for the alternative investment funds which it intends to market in the territory of
Member States.
94 (3) The applicant may not comply with the provisions of this Title, if it proves that:
1. the compliance with the respective provision is in conflict with a mandatory provision of
the national law of the applicant or of an alternative investment fund managed by it domiciled
in a third country which will be marketed in the territory of Member States;
2. the law of the third country applicable to the applicant or to the alternative investment fund
managed by it domiciled in a third country contains provisions equivalent to those provisions
which will be complied with in terms of regulatory purpose and ensured level of investor
protection;
3 The applicant and/or the alternative investment fund managed by it complies with the
provisions of the law of the third country under Item 2.
(4) The data and documents under Paragraph 1 shall meet the requirements of Article 201,
Paragraph 5.
(5) The Commission shall issue a decision on the filed application subject to Article 201,
Paragraphs 6 – 12 and in compliance with Paragraphs 6 – 8, respectively. The term for
issuance of the decision shall not commence if the documents under Paragraph 1 have not
been provided.
(6) On receipt of the application under Paragraph 1, the Commission shall assess the
determination of the Republic of Bulgaria as the Member State of reference in accordance
with the criteria of Article 207, Paragraph 2, and in case of a positive assessment, it shall
immediately and no later than one month of receipt of the application notify ESMA of the
assessment made and shall provide to ESMA for an opinion the data and documents under
Paragraph 1 Item 2 enclosed with the application. The term of Article 201, Paragraph 9 shall
be suspended from the notification under Sentence 1 to the presentation of ESMA's opinion
on the determination of the Member State of reference.
(7) On receipt of the application under Paragraph 1, the Commission shall assess the
existence of the requirements under Paragraph 3 and in case of a positive assessment, it shall
immediately and no later than one month of receipt of the application notify ESMA of the
assessment made and shall provide to ESMA the data and documents under Paragraph 1 Items
3 – 5 enclosed with the application. The term of Article 201, Paragraph 9 shall be suspended
from the notification under Sentence 1 to the presentation of ESMA's opinion on the
application of the release.
(8) In case that the Commission has issued a decision without taking into account the opinion
provided by ESMA under Paragraph 6 and/or Paragraph 7, it shall immediately notify ESMA
thereof, stating its reasons for deviating from the provided opinion. In case that the applicant
intends to market alternative investment funds managed by it in the territory of other Member
States and/or other Member States are countries of origin of alternative investment funds
managed by the applicant, the notification under the Sentence 1 shall also be sent to the
competent authorities of those Member States.
Article 209. (1) The Commission shall refuse to issue a license or an extension of an issued
license with a reasoned decision if:
95 1. any of the conditions of Article 202, Paragraph 1, Items 1 – 9 exists;
2. the determination of the Republic of Bulgaria as Member State of reference is not in
accordance with Article 207, Paragraph 2 or this determination is not supported by the
applicant's strategy for marketing of alternative investment funds managed by it in the
territory of Member States;
3 the legal representative of the applicant does not meet the requirements of Article 223;
4. there are no appropriate arrangements for cooperation between the Commission, the
competent authorities of the Member State of origin of the respective alternative investment
funds and the supervisory authorities of the third country where the applicant is domiciled to
ensure efficient exchange of information that allows the competent authorities to fulfil their
obligations in relation to the supervision of the applicant;
5. the third country where the applicant is domiciled is listed as a Non-Cooperative Country
or Territory by the Financial Action Task Force;
6. there is no bilateral or multilateral agreement concluded between the Republic of Bulgaria
and the third country where the applicant is domiciled in accordance with the standards set
forth in Article 26 of the Model Tax Convention on Income and on Capital of the
Organisation for Economic Cooperation and Development, ensuring effective exchange of
information on tax matters;
7. there are obstacles to the effective exercise of the supervisory functions of the Commission
or of the Deputy Chairperson, arising from or in connection with the application of a legal or
administrative act of a third country applicable for the applicant or from restrictions in the
supervisory powers of the competent authorities of the third country;
8. the applicant does not meet the other requirements established by the Law and its
implementing regulations, unless the prerequisites for its release from them under Article 208,
Paragraph 3 exist.
(2) In the cases under Paragraph 1, Items 3 and 8 and Article 202, Paragraph 1, Items 1, 2 and
4, the Commission may refuse conclusively to issue a license only if the applicant has failed
to remedy the inconsistencies and to submit the required documents within the term defined
by it under Article 201, Paragraph 6
(3) The Commission may refuse to issue a license if it is unable to identify the actual owners
of a qualified shareholder.
(4) In case of refusal, the applicant may file a new application for the issuance of a license no
earlier than 6 months as of the enforcement of the refusal.
(5) In case that the competent authority of an alternative investment fund domiciled in a
Member State does not in due course become a signatory to the arrangements provided for in
Paragraph 1, Item 4, the Commission may notify ESMA to ensure assistance in accordance
with Article 19 of Regulation (EU) № 1095/2010.
96 Article 210. (1) A person who has obtained a license under this Section may commence to
carry out the licensed activity in accordance with the data enclosed with the application, after
the entry into force of the issued license, if all necessary data and documents in accordance
with Article 201, Paragraph 1 have been submitted with the application for the issuance of a
license.
(2) A person who has obtained a license under this Section but who has not submitted all
necessary information and documents in accordance with Article 208, Paragraph 1 with the
application for the issuance of a license may commence to manage alternative investment
funds after the entry into force of the issued license and the submission of all necessary
information and documents in accordance with Article 208, Paragraph 1. Article 203,
Paragraphs 2 – 6 shall apply accordingly.
Article 211. (1) If a person licensed under this Section, within two years of the issuance of its
license, changes its strategy for the marketing of the alternative investment funds managed by
it in the territory of Member States in a manner that would have affected the determination of
the Republic of Bulgaria as Member State of reference in accordance with Article 207 if this
strategy was submitted together with the license application, the person shall notify the
Commission before the implementation of the new strategy, indicating the Member State of
reference determined pursuant to Article 207 and the new strategy and shall submit the
revised strategy and the data under Article 208, Paragraph 1, Item 6 on the legal
representative in the new Member State of reference.
(2) On receipt of the notice under Paragraph 1, the Commission shall assess the
determination of the new Member State of reference and no later than one month of receipt of
the notice it shall notify ESMA of the assessment made and shall provide to ESMA the data
and documents enclosed with the application.
(3) The Commission shall inform the person licensed under this Section, its original legal
representative and ESMA about its opinion on the submitted notice within one month of the
submission of the opinion of ESMA on the determination of the Member State of reference or
within one month of the expiration of the one-month term since the notification of ESMA
under Paragraph 2, in case that ESMA fails to issue an opinion within that term.
(4) If the opinion of the Commission under Paragraph 3 supports the assessment of the
person licensed under this Section on the determination of a new Member State of reference,
the Commission shall inform the competent authority of the new Member State of reference
thereof and within 14 days shall provide to that person a copy of all documents submitted or
drawn up in connection with the licensing and supervision of the person licensed under this
Section, as of which moment the powers of the Commission with regard to that person shall
be terminated.
(5) In case that the final assessment of the Commission under Paragraph 3 differs from the
opinion submitted by ESMA, it shall immediately notify ESMA thereof, stating its reasons for
deviating from the provided opinion. In case that the applicant markets alternative investment
funds managed by it in the territory of other Member States and/or other Member States are
countries of origin of alternative investment funds managed by the applicant, the notification
under the Sentence 1 shall also be sent to the competent authorities of those Member States.
97 (6) In case that the activity actually performed by a person licensed under this Section in the
territory of Member States deviates from the marketing strategy presented with the license
application or based on this activity it may be assumed that the strategy presented with the
license application has contained misrepresentation or that the person has changed its strategy
without complying with Paragraphs 1 – 5, the Commission shall require from the person to
indicate the correct Member State of reference on the basis of the actually implemented
marketing strategy. Paragraphs 1 – 5 shall apply accordingly.
(7) A person licensed under this Section, which after the expiration of two years from the
issuance of the license changes its strategy for marketing of alternative investment funds
managed by it in the territory of Member States on the basis of this change it intends to
change its Member State of reference, shall submit an application to this effect to the
Commission. Paragraphs 1 – 5 shall apply accordingly.
(8) If the Commission does not agree with the determination of a Member State of reference
in compliance with Paragraphs 1 – 7, it may notify ESMA to ensure assistance in accordance
with Article 19 of Regulation (EU) No 1095/2010.
Article 212. (1) The Commission shall revoke the issued license if:
1 the person does not commence to carry out the licensed activity under this Section within
12 months of the issuance of the license, expressly relinquishes the issued license or has not
carried out the licensed activity for more than 6 months;
2. the person has submitted false information which has served as the basis for the issuance
of the license;
3. the person ceases to meet the conditions under which the license has been issued;
4. the person ceases to meet the requirements for capital adequacy or liquidity and within 7
days of the occurrence of the violations does not offer measures to bring them into conformity
with those requirements or does not remedy the violation within the term set forth in Article
199, Paragraph 11
5. the financial standing of the person is permanently impaired and it is unable to fulfil its
obligations;
6. the alternative investment fund manager and/or persons under Article 200 have not
complied with an imposed coercive administrative measure under Article 264, Paragraph 1 or
have committed or allowed a violation of Article 35, Paragraph 1 of the Markets in Financial
Instruments Act and of Article 11 of the Measures against Market Abuse with Financial
Instruments Act or another gross violation or systematic violations of this Law, of the Public
Offering of Securities Act, of the Markets in Financial Instruments Act, of the Measures
against Market Abuse with Financial Instruments Act and/or their implementing regulations;
7. the person obstructs the supervision exercised by the Commission and/or the Deputy
Chairperson, including through a failure to provide required information on its activities,
through submission of incomplete, unclear or conflicting information or information
98 preventing the establishment of the actual activities performed, the amount and/or the
justification for the realised revenues and/or expenses or other circumstances material to the
exercised supervision and the assessment of its activities;
8. the person does not apply for a change of the Member State of reference in accordance
with Article 211, Paragraph 6.
(2) Before the revocation of the license of an alternative investment fund manager domiciled
in another Member State, the Commission shall consult the competent authorities of that
Member State.
(3) The Commission shall notify the company in writing within 7 days of the decision to
revoke the license.
(4) The consequences of the license revocation shall be governed by Article 205, Paragraphs
1 and 2.
Article 213. (1) The Commission shall notify ESMA of the issued licenses, the license
refusals, the revoked licenses, as well as of any changes in the issued licenses under this
Section.
(2) The Commission may request access to the central register, kept by ESMA, of the data on
the licenses issued to alternative investment fund managers, the license refusals, the revoked
licenses, as well as of any changes in the issued licenses under this Section, and shall treat
such information as confidential.
Section IV
Registration of alternative investment fund managers domiciled in the Republic of
Bulgaria
Article 214. (1) An alternative investment fund manager whose assets do not exceed the
thresholds set forth in Article 197, Paragraph 1 shall apply for entry in the register under
Article 30, Paragraph 1 of the Financial Supervision Commission Act.
(2) The application under Paragraph 1 shall contain the following attachments:
1. data on the company name, seat and management address of the person;
2. data on the company name, seat, management address and investment strategies of the
managed alternative investment funds in accordance with Article 5, Paragraph 2 of Delegated
Regulation (EU) No 231/2013;
3. data on the amount of assets of the managed alternative investment funds, indicating
specifically assets acquired through use of leverage, calculated in accordance with Article 2 of
Delegated Regulation (EU) No 231/2013;
4. other data and documents, as specified in a regulation.
99 (3) The Commission shall issue a decision on the application under Paragraph 1 within one
month of its submission together with all documents under Paragraph 2. Article 201,
Paragraphs 5 – 7 and 11 shall apply accordingly.
(4) The Commission may refuse the entry into the register if the submitted data and
documents are incomplete, contain contradictions, if the value of the assets under
management cannot be established on the basis of the provided information or if it is
established that this amount exceeds the thresholds set forth in Article 197, Paragraph 1.
Article 215. (1) A person registered under this Section shall, within 7 days of the occurrence
of the relevant circumstance, notify the Commission of:
1 changes in its company name, seat and management address;
2 changes in the company name, seat, management address and investment strategies of the
managed alternative investment funds;
3. initiation or termination of the management of alternative investment fund;
4. other data, as specified in a regulation.
(2) A person registered under this Section shall submit to the Commission the information
under Article 110, Paragraph 1 of Delegated Regulation (EU) No 231/2013 by the end of the
month following each half year.
Article 216. (1) A person registered under this Section shall perform on-going monitoring of
the assets under management in accordance with Articles 3 and 4 of Delegated Regulation
(EU) No 231/2013.
(2) In case that the assets managed by a person registered under this Section exceed the
thresholds set forth in Article 197, Paragraph 1, the person shall notify the Commission of this
circumstance within 3 days in compliance with Article 4 of Delegated Regulation (EU) No
231/2013.
(3) In case that a person registered under this Section ceases to meet the registration
requirements in terms of the value of the assets under management in compliance with Article
4, Paragraph 2 of Delegated Regulation (EU) No 231/2013, then it shall, within 30 days of the
occurrence of this circumstance, apply for the issuance of a license under Section II.
(4) A person registered under this section and managing assets at a value below the
thresholds set forth in Article 197, Paragraph 1, it may apply for the issuance of a license for
management of alternative investment funds under the provisions of this Chapter.
Article 217. (1) The provisions of this Title, other than those specified in this Section, shall
not apply to managers of alternative investment fund registered under this section for which
no obligation has arisen to carry out the activity of alternative investment fund management
based on a license and which have not applied for the issuance of such a license without
having the obligation to do so.
100 (2) National investment funds managed by a management company shall be entered into the
register of alternative investment funds upon the issuance of an authorisation or license under
Article 171, Paragraph 6.
Chapter Twenty-One
REQUIREMENTS TO THE ACTIVITY OF ALTERNATIVE INVESTMENT FUND
MANAGERS
Section I
Requirements regarding alternative investment fund managers
Article 218. (1) An alternative investment fund manager shall:
1. act in good faith in the best interest of the alternative investment funds it manages and of
the market as a whole;
2. act with the necessary skills, care and diligence, applying the best professional standards,
in the best interest of the alternative investment funds it manages, of their investors and of the
market as a whole;
3. have and use effectively the resources and procedures necessary to carry out its activities
in accordance with the applicable requirements and best professional standards;
4. invest the assets of the managed alternative investment funds in accordance with their
statute, respectively with their rules or incorporation documents;
5. avoid conflict of interests and when this cannot be avoided, identify, monitor and manage,
as well as disclose, if appropriate, the existing conflicts of interest in order to ensure the
interests and fair treatment of the managed alternative investment funds and their investors;
6. comply with all regulatory requirements when carrying out its activity in the best interest
of the managed alternative investment funds, the investors and the market as a whole.
(2) An alternative investment fund manager shall treat the investors in each of the managed
fund fairly and equitably. The preferential treatment of an investor shall be allowed only if
this is provided for in the statute, respectively, in the rules or the other incorporation
documents of the respective alternative investment fund.
(3) An alternative investment fund manager whose license includes the provision of the
services under Article 198, Paragraph 5, Item 1 shall not have the right to invest all or a part
of a client's portfolio in units of the alternative investment funds it manages without receiving
prior approval from the client.
(4) Additional requirements related to the implementation of Paragraph 1 other than those set
forth in Delegated Regulation (EU) No 231/2013 may be determined in a regulation.
101 Article 219. (1) In the organisation and performance of its activity, an alternative investment
fund manage shall:
1. build and maintain a stable and properly documented internal organisation ensuring the
professional and continuous performance of its activities, allocation of the responsibilities,
prevention, identification, monitoring, management and disclosure of conflicts of interest,
clear lines of accountability, information exchange and control;
2. have clear and adequate internal control mechanisms;
3. adopt and enforce rules for the personal transactions of the management and supervisory
bodies of the alternative investment fund manager, of its employees and their related parties,
as well as rules for investment of the personal funds of the alternative investment fund
manager;
4. have established control and security mechanisms for electronic data processing;
5. have an accounting organisation ensuring timely, complete, and correct keeping,
presentation and storage of the accounting records;
6. have at all times the necessary human and technical resources to ensure the professional
and independent management of the alternative investment funds;
7. draw up and implement rules for the storage of information and for reporting in order to
ensure the traceability of each transaction concluded on behalf of the alternative investment
funds managed by it, at a minimum in terms of the history of the transaction, its value, the
parties to it, its nature, the time and place of its conclusion and whether it has been concluded
in compliance with the statute, respectively with the rules of the alternative investment fund
and with the statutory requirements in force at the time of the conclusion of the transaction.
(2) Additional requirements related to the implementation of Paragraph 1 other than those set
forth in Delegated Regulation (EU) No 231/2013 may be determined in a regulation.
Article 220. (1) An alternative investment fund manager shall undertake, in accordance with
Delegated Regulation (EU) No 231/2013 and the written rules and procedures under Article
219, Paragraph 1, Item 1. all necessary measures to prevent, identify, monitor and manage
conflicts of interest that arise or may arise in the course of the management of alternative
investment funds between:
1. the alternative investment fund manager, including members of its management and
supervisory bodies, other individuals who work for it or are its related parties and the
alternative investment funds it manages or the investors in them;
2. two or more alternative investment funds or the investors in them;
3. an alternative investment fund or its investors and another client of the alternative
investment fund manager;
102 4. an alternative investment fund or its investors and a collective investment scheme managed
by the alternative investment fund manager or the investors in the scheme;
5. two clients of the alternative investment fund manager.
(2) An alternative investment fund manager shall establish in the written rules and procedures
under Article 219, Paragraph 1, Item 1 and shall implement effective organisational and
administrative mechanisms to prevent, identify, monitor and manage conflicts of interest in
order to prevent damage to the interests of the managed alternative investment funds and their
investors. These measures shall include as a minimum:
1. identification of the processes and activities, which according to their nature, the
applicable requirements or the best professional standards may be considered incompatible
with each other or the joint realisation of which may result in systemic conflicts of interest, by
providing for an organisational ensuring the independent performance of such processes and
activities;
2. identification of the prerequisites in the organisation, management, resources and other
conditions relating to the performance of the activity which may result in major conflicts of
interest and their disclosure to the investors in the managed alternative investment funds;
3. disclosure to the investors of the nature and sources of conflicts of interest when the
measures introduced for the identification, prevention, monitoring and management of
conflicts of interest do not sufficiently guarantee the prevention of damage to the interests of
investors;
4. conclusion of a written contract with the principal investment intermediary whose services
will be used in the implementation of the investment policy of a managed alternative
investment fund, if such an investment intermediary is used;
5. other measures set forth in Delegated Regulation (EU) No 231/2013 or determined with a
regulation.
(3) An alternative investment fund manager shall select the principal investment
intermediaries whose services will be used in the implementation of the investment policy of
a managed alternative investment fund with the necessary skills, care and diligence, applying
the best professional standards. The contract under Paragraph 2 Item 4 shall identify the
conditions for the transfer and subsequent use of the assets of the alternative investment fund
in accordance with the statute, rules or other incorporation documents of the managed fund. A
copy of the contract shall be provided to the depositary of the alternative investment fund.
Article 221. (1) An alternative investment fund manager shall adopt and implement a policy
covering all forms of remuneration in connection with the management of alternative
investment funds, such as salaries and other financial and/or material incentives, including
benefits related to voluntary pension and/or health insurance paid by the alternative
investment fund manager and all compensations paid directly by the managed alternative
investment funds, including deferred compensation, as well as transfer of shares or units by
the managed alternative investment funds to the following categories of employees:
103 1. executives;
2. employees whose activity involves risk-taking;
3. employees engaged in control functions;
4. all other employees whose compensations are commensurate with the compensations of
employees under Items 1 and 2 and whose activities have an impact on the risk profile of the
alternative investment fund manager or on the risk profile of the managed alternative
investment funds.
(2) The policy under Paragraph 1 shall meet the following requirements, depending on the
size and organisation of the alternative investment fund manager, as well as on the nature,
scope and complexity of its activity:
1. is in compliance with the principles of sound and effective risk management and promotes
such management and does not promote the undertaking of risks which are not compliant with
the risk profiles, statute, rules or incorporation documents of the managed alternative
investment funds;
2. the remuneration policy is consistent with the business strategy, objectives, values and
interests of the alternative investment fund manager and of the managed alternative
investment funds or the investors in them and includes measures to prevent conflicts of
interest;
3. the persons under Paragraph 1, Item 3 receives compensations consistent with the
achievement of the objectives related to their functions, independent of the results of the
sectors of activity controlled by such persons;
4. the remuneration of the persons under Paragraph 1, Item 1 performing functions in the
field of risk management and compliance is directly controlled by the remuneration
committee;
5. where the remuneration is performance-based, its total amount is based on a combination
of the assessment of performance of the individual and the organisational unit in which this
person operates, or of the respective alternative investment fund and the overall performance
of the alternative investment fund manager;
6. the assessment of the individual results is carried out based on financial and non-financial
indicators;
7. the assessment of the results is a part of an assessment process encompassing a period of
several years, consistent with the economic cycle of the alternative investment funds managed
by the alternative investment fund manager, in order to ensure that the assessment process is
based on longer-term results and that the actual payment of the performance-based
components of the remuneration is spread over a period which takes into account the
redemption policy of the managed alternative investment funds and their investment risks;
104 8. guaranteed variable remuneration is provided only as an exception, upon employment of
new employees and only for the first year following the start of their employment;
9. an appropriate balance between the fixed and variable remuneration, depending on the
category of employees and a cap on the variable remuneration is defined for each category of
employees, and the fixed remuneration is sufficient and exceeds the allowed variable portion
of the remuneration, so that it is possible to implement a flexible policy regarding the variable
remuneration components, including an option not to pay such components;
10. payments related to the early termination of a contract reflect the results achieved over
time and are defined in such a way as to not encourage failure;
11. the measurement of the performance used to calculate the variable remuneration
components or pools of variable components includes a comprehensive adjustment
mechanism in order to take into account all current and future risks;
12. depending on the legal and organisational structure of the alternative investment fund and
its statute, rules or incorporation documents, at least 50 percent of the variable remuneration
consists of units or shares of the respective alternative investment fund or equivalent
ownership rights or share-linked instruments or equivalent non-cash instruments, and this
threshold may be lower if the management of the alternative investment fund constitutes less
than 50 percent of the total portfolio managed by the alternative investment fund manager;
13. the instruments under Item 12 are subject to an appropriate retention policy designed to
align incentives with the interests of the alternative investment fund manager and of such
managed funds and their investors;
14. not less than 40 percent of the variable remuneration is deferred for a period of at least
three to five years depending on the economic cycle and redemption policy for the units of the
respective alternative investment fund and it is consistent with the nature of the risks of this
fund; the term may be shorter than three years if the economic cycle of the fund is shorter, and
the remuneration is paid proportionally over time, and in case of an especially large amount of
the variable remuneration, the payment of at least 60 percent of the amount is deferred;
15. the variable remuneration, including the deferred portion thereof, is paid only if it is
consistent with the overall financial standing of the alternative investment fund manager and
if it is justified by the results of the person under Paragraph 1, the organisational unit in which
the person operates and of the respective alternative investment fund, and in case of poor or
negative financial performance of the alternative investment fund manager or of the
respective alternative investment fund, the total variable remuneration is significantly
reduced, including by reducing on-going compensations, reducing amounts payable for
previous periods or reimbursement of already paid remuneration;
16. the policy regarding retirement benefits has to be consistent with the business strategy,
objectives, values and long-term interests of the alternative investment fund manager and of
the alternative investment funds managed by it, and in case of the termination of the
employment of an employee prior to retirement, the retirement benefit is retained by the
alternative investment fund manager in the form of instruments under Item 12 for a period of
five years, and when an employee reaches retirement age, the benefit pension is paid in the
105 form of instruments under Item 12, which the employee is not entitled to transfer for a period
of 5 years;
17. employees undertake not to use personal hedging strategies or remuneration- and
liability-related insurance to undermine the risk alignment effects embedded in their
remuneration arrangements;
18. variable remuneration is not paid through instruments or methods that facilitate noncompliance with the requirements indicated in Items 1 – 17.
(3) The policy under Paragraph 1 shall be adopted by the management body of the alternative
investment fund manager, which shall carry out regular reviews of its principles and shall be
responsible for their implementation. The implementation of the policy under Paragraph 1
shall subjected at least once a year to central and independent internal review.
(4) An alternative investment fund manager, which is significant in terms of the size,
organisation, nature, scope or complexity of its activities or in terms of the value of the
managed alternative investment funds, shall establish a remuneration committee, whose
members shall be members of the management body which are not entrusted with governance
duties. The remuneration committee shall be established in a manner that ensures the
formation of a competent and independent judgement on the policy under Paragraph 1 and its
implementation practices, as well as of the introduced risk management incentives. The
remuneration committee shall be responsible for the preparation of the resolutions of the
management body with regard to remuneration, including those that affect the risk and the
management of the alternative investment fund manager or of the managed alternative
investment funds.
(5) Additional requirements regarding the applicable remuneration policy may be set forth in
a regulation.
Article 222. (1) An alternative investment fund manager may conclude a contract with a third
party, with which it delegates to the third party the performance of some of its functions,
provided that the following conditions are satisfied:
1. the assignment of functions to a third party is required by objective reasons;
2. delegation of functions is not an extent to which the alternative investment fund manager
can no longer be regarded as such, or in such a manner that its functions will be reduced to
only the receipt and transmission of information;
3. the selection of the third party and the subsequent review of the selection and of the
performance of the functions delegated to that party is carried out with the necessary skills,
care and diligence, applying the best professional standards, in the best interest of the
alternative investment funds it manages, of their investors and of the market as a whole;
4. the third party shall have an organisation, technical resources and qualified personnel
ensuring the performance of the assigned functions in accordance with the requirements of
this Law;
106 5. the persons managing the activities of such a third party have good reputation and
experience in the assigned activity of at least one year;
6. when the functions of portfolio management or risk management are delegated, they are
delegated only to companies that are licensed or registered for the purpose of asset
management and are subject to supervision or, if this condition cannot be satisfied, the third
party shall be approved by the Deputy Chairperson;
7. when the functions of portfolio management or risk management are delegated to a
company from a third country, cooperation between the Commission and supervisory
authority for the third party has to be ensured;
8. the conclusion of a contract with a third party does not create obstacles to the effective
exercise of the supervisory functions of the Commission or of the Deputy Chairperson and
does not prevent the management of the alternative investment fund in the best interest of the
investors;
9. the contract with a third party shall contain provisions allowing the alternative investment
fund manager to exercise at all times effective supervision over the activities of the third party
in connection with the performance of the concluded contract, including to receive
information from that person periodically and/or upon request;
10. the contract with a third party shall contain provisions allowing the alternative investment
fund manager to give at all times further instructions to the other contractual party and to
unilaterally terminate the contract without notice, when this is in the interest of the investors.
(2) An alternative investment fund manager shall not delegate the functions of portfolio
management or risk management to the depositary or a subcontractor of the depositary.
(3) An alternative investment fund manager shall not delegate the functions of portfolio
management or risk management to a third party whose interests may conflict with the
interests of the alternative investment fund manager or of the investors in the managed
alternative investment funds, unless that person has detached organisationally and
functionally the performance of portfolio management or risk management functions from the
processes and activities it performs and which are or could potentially be incompatible with
these functions and the conflicts of interest which may arise are respectively identified,
managed, monitored and disclosed to the investors in the managed alternative investment
funds.
(4) Delegation of the functions to third parties shall be allowed only after a preliminary
approval has been granted for such a delegation by the Deputy Chairperson. The application
for the issuance of approval shall enclose the concluded contract and such data and documents
certifying compliance with the requirements of Paragraph 1 and justifying the choice of the
particular third party, as are to be set forth in a regulation. The Deputy Chairperson shall issue
a decision following the procedure set forth in Article 203, Paragraphs 3 - 6.
(5) A third party to which functions are delegated by an alternative investment fund manager
may subsequently delegate one or more of these functions, and the person to which these
107 functions have been subsequently delegated may further delegate any of them, if the
following conditions are met:
1. the alternative investment fund manager has given its consent before the subsequent
delegation;
2. the requirements of Paragraphs 1 and 4 respectively have been met.
(6) In the cases under Paragraph 5, the restrictions under Paragraphs 2 and 3 shall also apply.
(7) The delegation of functions under Paragraph 1 and the subsequent delegation under
Paragraph 5 shall not release the alternative investment fund manager from its responsibility
to the managed alternative investment funds and their investors.
(8) The alternative investment fund manager and the third party to which functions are
delegated under Paragraph 1, if it has performed a subsequent delegation of any of these
functions, shall, at least annually, review the concluded contracts for delegation of functions
and their performance.
(9) Additional requirements related to the implementation of Paragraph 1 other than those set
forth in Delegated Regulation (EU) No 231/2013 may be determined in a regulation.
Article 223. (1) An alternative investment fund manager domiciled in a third country for
which the Republic of Bulgaria is a Member State of reference shall have a legal
representative with a permanent address, if a natural person, or with a seat or branch, if a legal
person, in the territory the Republic of Bulgaria, through which to carry out the
correspondence between the Commission and the alternative investment fund manager,
between the investors from the European Union in the respective alternative investment fund
marketed and/or managed by that manager and between that manager and other persons with
which it has relations in connection with the marketing and/or management of an alternative
investment fund in the territory of a Member State.
(2) The legal representative under Paragraph 1, together with the person it represents, shall
perform compliance functions related to the management and marketing activities performed
by the person from the third country in accordance with this Law. A legal representative natural person shall have qualifications and professional experience to perform the function
under Sentence 1, and a legal representative - legal person shall have employees with the
necessary qualifications and experience. Additional requirements to the legal representative
shall be set forth in a regulation.
Article 224. (1) Any natural or legal person or persons acting in concert, intending to acquire,
directly or indirectly, a qualifying holding in an alternative investment fund manager shall
notify the Deputy Chairperson in writing before the acquisition. The requirement of Sentence
1 shall also apply to any natural or legal person or persons acting in concert, which intend to
subsequently increase, directly or indirectly, their qualifying holding in such a manner that it
would reach or exceed the thresholds of one-fifth, one-third or one-half of the capital or votes
in the general meeting of an alternative investment fund manager, or in such a manner that as
a result of this increase the alternative investment fund manager would become their
subsidiary.
108 (2) The Deputy Chairperson shall assess the application of the acquisition under Paragraph 1,
respectively applying Article 26 - 26e of the Markets in Financial Instruments Act, with the
term of under Article 26b, Paragraph 4 of the Markets in Financial Instruments Act being 30
business days, and the term under Article 26c of the same Act being 20 business days.
Article 225. A change in the documents under Article 201, Paragraph 2, Item 1, Letters "d"
and "f" shall be allowed after an approval by the Deputy Chairperson which is issued on the
basis of an application filed, with attached documents as specified in a regulation. The Deputy
Chairperson shall issue a decision following the procedure set forth in Article 203, Paragraphs
3 - 6.
Article 226. (1) An alternative investment fund manager shall submit an annual report to the
Commission within 90 days after the end of the financial year, with content as specified in a
regulation.
(2) An alternative investment fund manager shall submit to the Commission by the 10th day
of the month following the quarter, a balance sheet and a profit and loss statement as of the
last day of each quarter, as well as a quarterly report on its capital adequacy and liquidity with
content as specified in a regulation.
(3) If any omissions or other inconsistencies with requirements of the law, including with the
International Financial Reporting Standards in reports on capital adequacy and liquidity and
in the financial statements, registers and other accounting records are established, the Deputy
Chairperson shall send a notice and set a term within which the alternative investment fund
manager is required to remedy them. Article 203, Paragraph 5 shall apply accordingly.
(4) The auditor of the alternative investment fund manager shall notify the Commission
immediately of any circumstances that the auditor has become aware of in the course of the
audit of the alternative investment fund manager or any of its related parties and that
constitute a material violation of this Law and/or its implementing regulations or that may
adversely affect the activities of the alternative investment fund manager or that constitute
grounds for refusal to issue an opinion, grounds for expression of reservations or grounds for
the issuance of a negative opinion. In the cases under Sentence 1, the restrictions on the
disclosure of information stipulated in a law, in a statutory regulation or in a contract shall not
apply.
Article 227. (1) An alternative investment fund manager shall inform the Commission of:
1. the opening or closing of a branch;
2. changes to the company name entered in the issued license and changes in the seat or
management address;
3. amendments and supplements to the statute or articles of association and to the other
documents which have served as a basis for the issuance of the license to the alternative
investment fund manager;
4. changes in the composition of the persons under Article 200;
109 5. other circumstances, as specified in a regulation.
(2) The obligation under Paragraph 1 shall be performed by the alternative investment fund
manager within 7 days of the resolution, of carrying out or becoming aware of the amendment
or supplement, and in cases where the circumstance is subject to entry into the trade register of its entry.
(3) The alternative investment fund manager shall notify the Commission of any acquisition
or transfer of interests under Article 231 within one day of becoming aware of it and shall
submit to the Commission a list of persons holding, directly or indirectly, a qualifying
holding, as well as data on their votes in the general meeting, as of 30 June and 31 December
each year within 10 days of the indicated dates.
Article 228. (1) In the cases when the license of an alternative investment fund manager
includes the provision of the services under Article 198, Paragraph 5, Item 1 and the
alternative investment fund manager holds cash and/or financial instruments of these clients
and therefore may become liable to them, it shall make cash contributions to the Investor
Compensation Fund under Article 77n, Paragraph 2 of the Public Offering of Securities Act.
The provisions of Chapter Five, Section IV of the Public Offering of Securities Act shall
apply accordingly.
(2) For an alternative investment fund manager and provider of services under Article 198,
Paragraph 5, Article 4, Paragraph 2, Article 24, Paragraphs 1 – 3, 7 and 8, Article 27,
Paragraphs 4 – 7, Articles 28, 29, Article 32, Paragraph 6 and Articles 33 and 34 of the
Markets in Financial Instruments Act shall apply accordingly.
Section II
Requirements regarding the managed alternative investment funds
Article 229. (1) An alternative investment fund manager shall adopt and implement a clear,
comprehensive and specific written rules for risk management in order to identify, measure,
continuously monitor, manage and control at all times the risk of each investment position and
its impact on the overall risk profile of each managed alternative investment fund and all other
risks to which the alternative investment fund is exposed or may be exposed and which have
an impact on its investment strategy.
(2) The rules under Paragraph 1 shall ensure:
1. the functional and organisational separation, by means of the establishment of a permanent
risk management unit, of the risk management functions from the portfolio management
functions and from the other operational functions the execution of which may create risks for
the alternative investment fund;
2. the correct identification, measurement, monitoring, management and control of the risks
associated with each investment position and of their impact on the overall risk profile of each
managed alternative investment fund, including through the use of appropriate stress-testing
procedures;
110 3. the determination of and compliance with a maximum degree of leverage applicable to the
management of the respective alternative investment fund and of the right to reuse a collateral
which may be provided in connection with investment positions with leverage, taking into
account the type of the alternative investment fund, its investment strategy, the sources of the
leverage used, all other connections and relationships with financial market institutions which
may cause a systemic risk, the need to limit the exposure to all counterparties, the level of
securitisation when using leverage, the ratio of the assets and liabilities, the scale, nature and
volume of business of the alternative investment fund manager on the relevant markets.
(3) When investing the assets of a managed alternative investment fund, the alternative
investment fund manager shall:
1. comply with the investment strategy, objectives and risk profile of the alternative
investment fund;
2. apply sufficient and adequate procedures, set forth in the rules under Paragraph 1, for due
diligence with regard to the nature and extent of the risks to which the alternative investment
fund may be exposed during the respective investment and the impact of these risks on the
investment strategy of the alternative investment fund;
3. provide continuous monitoring and reassessment of the risks to which the alternative
investment fund may be exposed in connection with each of its investment positions and as a
result of the combination of several or all of its investment positions;
4. manage the identified risks in such a manner as to ensure that the risk profile of the
alternative investment fund corresponds to the size and structure of portfolio, to the
investment strategies and objectives of the fund as set out in the statute, the rules or other
incorporation documents, the prospectus and the documents related to the marketing of the
alternative investment fund.
(4) The alternative investment fund manager shall, at least once per year, perform an
assessment of the risk management systems introduced with the rules under Paragraph 1 and
of their operation, and shall make modifications to these rules, if necessary.
(5) A modification of the rules under Paragraph 1 shall be allowed after an approval by the
Deputy Chairperson which is issued on the basis of an application filed, with attached
documents as specified in a regulation. The Deputy Chairperson shall issue a decision
following the procedure set forth in Article 203, Paragraphs 3 - 6.
(6) Additional requirements related to the risk management rules, organisation, system and
processes other than those set forth in Delegated Regulation (EU) No 231/2013 may be
determined in a regulation.
Article 230. (1) For each managed alternative investment fund other than a closed-ended
alternative investment fund that does not use leverage, the alternative investment fund
manager shall adopt and implement clear, comprehensive and specific written rules on
liquidity management in order to identify, measure, monitor, manage and control the risk
111 related to the liquidity of the alternative investment fund and to ensure consistency between
the liquidity profile of the investments and the liabilities of the fund.
(2) The alternative investment fund manager shall carry out, with a frequency consistent with
the characteristics of the managed alternative investment fund, liquidity-related stress tests
under normal and emergency conditions which enable it to assess and monitor the liquidity
risk of the managed fund.
(3) For each managed alternative investment fund the alternative investment fund manager
shall ensure the consistency of the investment strategy, liquidity profile and redemption policy
of the fund.
(4) Additional requirements related to the liquidity management rules, organisation, system
and processes other than those set forth in Delegated Regulation (EU) No 231/2013 may be
determined in a regulation.
Article 231. An alternative investment fund manager may invest the assets of an alternative
investment fund managed by it in securitisation positions only in compliance with Articles 50
– 56 of Delegated Regulation (EU) No 231/2013.
Article 232. (1) For each managed alternative investment fund the alternative investment fund
manager shall adopt and enforce clear, comprehensive and specific written rules in order to
make an accurate and independent assessment of the assets and to calculate the net asset value
per unit or share of the fund in accordance with the applicable law of the country in which the
respective alternative investment fund is domiciled and with its statute, rules or its other
incorporation documents. Modifications to the rules under Sentence 1 shall be subject to the
prior approval of the Deputy Chairperson, who shall rule on the application for the issuance of
approval following the procedure set forth in Article 203, Paragraphs 3 – 6.
(2) The assessment of the assets of the alternative investment fund shall be made by the
alternative investment fund manager or by an external valuator - a natural or legal person,
independent from the fund, from the fund manager and from parties related to the fund or to
the fund manager.
(3) If the assessment of the assets of the alternative investment fund is performed by its
manager, the performance of the assessment function shall be organisationally and
functionally separate from the performance of its portfolio management functions and
measures shall be implemented in the established and applied by the alternative investment
fund manager rules, including in the applicable remuneration policy, to limit conflicts of
interest and prevent undue influence to be exercised on the employees performing these
functions.
(4) If the assessment of the assets of the alternative investment fund is performed by an
external party, the following requirements shall be satisfied:
1. the external valuator operates on the basis of a mandatory professional registration set out
in a law or on the basis of statutory regulations or rules of professional conduct;
112 2. there are objectively verifiable guarantees that the external valuator is able to effectively
perform the assessment function in accordance with the requirements of Paragraphs 1 – 3 and
Paragraphs 5 – 11;
3. the requirements of Article 222, Paragraphs 1, 2 and 3 and of Delegated Regulation (EU)
No 231/2013 are satisfied.
(5) An alternative investment fund manager shall not assign function of assessment of the
assets of a managed alternative investment fund to its depositary, unless the depositary has
detached organisationally and functionally the performance of its functions as a depository
from the performance of the functions of a valuator and any conflicts of interest that may arise
are properly identified, managed, monitored and disclosed to the investors in the alternative
investment fund.
(6) Delegation of the assessment function to an external valuator shall be allowed only in
compliance with the Delegated Regulation (EU) No 231/2013 and if prior approval for this
has been issued by the Deputy Chairperson under Article 222, Paragraph 4. The application
for the issuance of an approval shall enclose additional data and documents certifying
compliance with the requirements of Paragraph 4.
(7) The appointed external valuator shall not delegate the assessment function to a third party.
(8) The assessment of the assets of the alternative investment fund and the calculation of the
net asset value per unit or share shall be performed on the basis of objective criteria and in
accordance with the procedures set forth in the rules under Paragraph 1 and in the applicable
legislation, exercising due care and at the following intervals:
1. for closed-ended alternative investment funds - on an annual basis as a minimum, and for
funds for which the Republic of Bulgaria is the Member State of origin - on a quarterly basis,
as well as upon any capital increase or reduction;
2. for open-ended alternative investment funds - at intervals which are consistent with the
fund's issuance and redemption policy and which are appropriate with regard to the assets
held by it.
(9) The alternative investment fund manager shall disclose to the Commission and
communicate to the investors in a suitable manner defined in the statute, the rules or the other
incorporation documents of the managed alternative investment fund information on the
calculated net asset value per unit or share of the alternative investment fund no later than the
day following the day of calculation of this value.
(10) The alternative investment fund manager shall be liable for the accurate assessment of
the assets of the managed alternative investment funds, the calculation of net asset value and
its publication. The liability under Sentence 1 shall not be limited in case of assignment of the
assessment function to an external valuator. The external valuator shall be liable before the
alternative investment fund manager for any loss suffered by the manager as a result of the
external valuator's failure to perform the obligations for which it is liable.
113 (11) Additional requirements related to the assessment of the assets and the calculation of the
net asset value other than those set forth in Delegated Regulation (EU) No 231/2013 shall be
determined in a regulation.
Article 233. (1) For each managed alternative investment fund the alternative investment fund
manager shall conclude a contract with a depositary which:
1. stores the assets owned by the alternative investment fund, including through the
alternative investment fund manager acting for the fund as follows:
a) dematerialized financial instruments are entered into a depository institution under a subaccount of the depositary, and the depositary keeps these instruments in separate accounts
opened in the name of the alternative investment fund or of the alternative investment fund
manager acting for the fund;
b) the other financial instruments are kept with the depository;
c) the depositary keeps a register of assets remaining after certifying the ownership of the
alternative investment fund on these assets, including though the alternative investment fund
manager acting for the fund, based on the presented by the alternative investment fund,
including through the alternative investment fund manager acting for the fund, data and
documents or other evidence to which the depositary has access, and the depositary maintains
continuously updated information on the ownership;
2. monitors the cash flow of the alternative investment fund and ensures that the payments
received as a result of the issuance of units or shares of the alternative investment fund are
transferred to, and that respectively all monies of the fund are kept in accounts opened in the
name of the alternative investment fund or in the name of the alternative investment fund
manager acting for the alternative investment fund or in the name of the depositary acting for
alternative investment fund, with an entity under Article 34, Paragraph 3, Items 1 – 3 of the
Markets in Financial Instruments Act or with another entity with the same functions as the
entity under Article 34, Paragraph 3, Items 1 – 3 of the Markets in Financial Instruments Act
on the respective market in a third country, where it is necessary to maintain cash accounts,
provided that this entity is subject to regulation and supervision equivalent to the requirements
and principles of the law of the European Union regulating the activities of the entities under
Article 34, Paragraph 3, Items 1 – 3 of the Markets in Financial Instruments Act; the monies
of the alternative investment fund are kept separate from the monies of the entity under
Article 34, Paragraph 3, Items 1 – 3 of the Markets in Financial Instruments Act and from the
monies of the depository or of another person in whose name the accounts have been opened;
3. ensures that the issuance, sale, redemption and cancellation of the units or shares of the
alternative investment fund is managed in accordance with the law and the statute,
respectively the rules or by other incorporation documents of the alternative investment fund;
4. ensures that the calculation of the units or shares of the alternative investment fund is
managed in accordance with the law and the statute, respectively the rules or the other
incorporation documents of the alternative investment fund;
114 5. disposes of the assets entrusted to it only in accordance with the instructions of the
alternative investment fund manager, unless they conflict with the law, the statutes,
respectively the rules or the other incorporation documents of the alternative investment fund;
6. monitors for the transfer to the benefit of the alternative investment fund within the
standard time frames of all monies arising from transactions with assets of the fund;
7. ensures that the collection and use of the revenues of the alternative investment fund in
accordance with the law and the statute, respectively the rules or the other incorporation
documents of the alternative investment fund;
8. reports regularly on the entrusted assets and the executed operations to the alternative
investment fund .
(2) A depositary of an alternative investment fund may be:
1. for an alternative investment fund originating from the Republic of Bulgaria - a depository
meeting the requirements of Article 35;
2. for an alternative investment fund originating from another Member State - a depository
which has its seat or a branch office in that Member State and which meets the requirements
of its legislation;
3. for an alternative investment fund from a third country - a bank or an investment
intermediary which has its seat or a branch office in that third country and is licensed in it, or
a depository which has its seat or a branch office in the Member State of origin or in the
Member State of reference of the alternative investment fund manager and which meets the
requirements of the legislation of that Member State.
(3) A bank or an investment intermediary license in a third country may be a depository of an
alternative investment fund if the following requirements are met:
1. there are appropriate arrangements for cooperation between the Commission, the
competent authorities of the Member State in which the units or shares of the alternative
investment fund will be marketed, if they are not one and the same, and the supervisory
authorities of the third country in which the depository has its seat or a branch office, which
arrangements ensure effective exchange of information allowing the Commission to exercise
its supervisory powers;
2. the activity of the depositary is subject to effective regulation and supervision, including
with respect to minimum capital requirements equivalent to those under the law of the
European Union;
3. the third country where the depository has its seat or a branch office is not listed as a NonCooperative Country or Territory by the Financial Action Task Force;
4. an agreement is concluded between the Republic of Bulgaria, the Member State in which
the units or shares of the respective alternative investment fund will be marketed and the third
country in which the depository has its seat or a branch office, in accordance with the
115 standards set forth in Article 26 of the Model Tax Convention on Income and on Capital of
the Organisation for Economic Cooperation and Development, ensuring effective exchange of
information on tax matters.
(4) The depository is a person separate from the alternative investment fund manager, from
the prime broker whose services will be used for the implementation of the investment policy
of the managed alternative investment fund, unless that person has detached organisationally
and functionally the performance of its functions as a depository from the processes and
activities that it performs as an investment intermediary, and the conflicts of interest which
may arise are adequately identified, managed, monitored and disclosed to the investors in the
alternative investment fund.
(5) The contract between the depositary and the alternative investment fund manager acting
on behalf of an alternative investment fund shall regulate in detail the rights and obligations of
the depositary, of the alternative investment fund and of its manager in accordance with
Paragraph 1, including the rules for exchange of information, the liability of the parties and
the restrictions on their activities. Additional requirements to the contract shall be set forth in
a regulation.
(6) A substitution of the depositary and a modification of the contract under Paragraph 5 shall
be allowed after an approval by the Deputy Chairperson which is issued on the basis of an
application filed, with attached data and documents as specified in a regulation. The Deputy
Chairperson shall issue a decision following the procedure set forth in Article 203, Paragraphs
3 - 6.
(7) Delegation of functions under Paragraph 1 by the depository to a third party and the
subsequent delegations of functions by that third party shall be allowed only for the functions
under Paragraph 1, Item 1 and subject to the following conditions:
1. the assignment of functions is not performed with the intent of and does not result in
avoidance of statutory requirements to the depository and its activities;
2. the assignment of functions to a third party is required by objective reasons;
3. the depository selects the third party and performs subsequent reviews of its selection and
of the performance of the functions delegated to that party with the necessary skills, care and
diligence, applying the best professional standards, in the best interest of the alternative
investment funds it manages, of their investors and of the market as a whole;
4. the contract with a third party shall contain provisions allowing the depository to exercise
at all times effective supervision over the activities of the third party in connection with the
performance of the concluded contract, including to receive information from that person
periodically and/or upon request;
5. the third party shall have an organisation, technical resources and qualified personnel
consistent with the nature and complexity of the assets of the alternative investment fund or of
the alternative investment fund manager acting for it, ensuring the performance of the
assigned functions in accordance with the requirements of this Law;
116 6. the activities of the third party in connection with the safekeeping of financial instruments
is subject to effective regulation and supervision, including in respect to minimum capital
requirements and to periodic external audits on the performance of these functions, unless the
law of a third country requires that certain financial instruments be kept by a resident and
there is no resident that meets the specified assignment requirements, provided that:
a) the investors in the alternative investment fund have been informed of the need for such an
assignment before making the investment, respectively before the assignment, if it occurs
after the investment is made, and
b) the assignment is made at the order of the alternative investment fund or of the alternative
investment fund manager acting for it;
7. the third party separates the assets entrusted to it for safekeeping from its own assets and
from the assets of the depositary for the purpose of establishing undisputed ownership of
these assets.
(8) The provision of services set out in Directive 98/26/EC of the European Parliament and of
the Council of 19 May 1998 on settlement finality in payment and securities settlement
systems hereinafter referred to as "Directive 98/26/EC" by securities settlement systems
designated for the purposes of that Directive or the provision of similar services by securities
settlement systems of a third country shall not be regarded as delegation of functions under
Paragraph 7.
(9) In the performance of the functions under Paragraph 1, the depository and any third party
to which functions are delegated in accordance with Paragraph 7 shall act fairly, with the
necessary skills, care and diligence, applying the best professional standards, and
independently, in the best interest of the alternative investment fund and the investors in it.
(10) The depositary and any third party to which functions are delegated in accordance with
Paragraph 7 shall not carry out activities for the alternative investment fund or for the
manager of this fund which may give rise to conflicts of interest between the alternative
investment fund, its manager, the investors in the fund and the depositary or the third party to
which depository functions are assigned, unless the depositary or the third party to which
functions are delegated under Paragraph 7 has detached organisationally and functionally the
performance of the depositary functions from the processes and activities that it performs and
that are or may be incompatible with these functions, and the conflicts of interest which may
arise are adequately identified, managed, monitored and disclosed to the investors in the
alternative investment fund.
(11) The depositary and any third party to which functions are delegated under Paragraph 7
shall not use assets of the alternative investment fund without the consent of the alternative
investment fund or of the alternative investment fund manager acting for it, and without the
prior notification of the depositary by the third party to which functions are delegated under
Paragraph 7.
(12) The depository shall be liable to the alternative investment fund and to its investors for
any damages suffered by them as a result of a default on its obligations, including any
incomplete, inaccurate and untimely performance, as well as for any loss of financial
117 instruments held by it or a third party to which it has assigned depository functions, when this
is due to reasons for which the depositary is responsible, including for the actions or inactions
of a third party to which the depositary has delegated functions. The alternative investment
fund and the investors may hold the depositary liable directly or indirectly, through the
alternative investment fund manager, depending on the nature of the relationship between the
depositary, the alternative investment fund, the alternative investment fund manager and the
investors. The depositary shall not be held liable if it can prove that the loss is due to an
external event beyond its control, the consequences of which would have been unavoidable
regardless of all reasonable efforts to prevent them.
(13) In case of loss of financial instruments, the depositary shall immediately reimburse
financial instruments of the same type and in the same amount or their cash value.
(14) The depository may be released from liability for loss of financial instruments held by a
third party under Paragraph 7 if the following conditions are satisfied:
1. the requirements of Paragraph 7 for the assignment of functions to the third party are met;
2. The depositary's liability is transferred to the third party based on a written contract
between the depositary and the third party, which regulates the liability of the third party in
accordance with Paragraph 12, which liability may be pursued by the alternative investment
fund or by its manager, directly or indirectly through the depositary;
3. the transfer of the liability in accordance with Item. 2 is based on a written contract
between the depositary and the alternative investment fund or its manager, indicating the
reasons for that transfer;
4. if the holding of the assets is delegated to a third party, in the event that the exception
Paragraph 7, Item 6 is applied, the following additional conditions are satisfied:
a) the statute, rules or other incorporation documents of the alternative investment fund
specifically regulate the possibility for release of the depositary from liability in compliance
with the requirements of Items 1 – 3 and Letter "b";
b) the investors in the alternative investment fund have been informed of the need for such an
assignment before making the investment, respectively before the assignment, if it occurs
after the investment is made.
(15) The depository under Article 35 and a depository with its seat or a branch office in the
Republic of Bulgaria shall provide to the Commission all the information related to the
performance of its obligations and which is needed by the Commission or the competent
authorities of another Member State for supervisory purposes. The Commission shall submit
to the competent bodies of the alternative investment fund and respectively to the alternative
investment fund manager, if they are not one and the same, the information obtained in its
capacity of a competent authority of the depositary of the respective alternative investment
fund.
(16) Additional requirements related to the depositary other than those set forth in Delegated
Regulation (EU) No 231/2013 shall be determined in a regulation.
118 Article 234. (1) An alternative investment fund manager shall notify the Commission of any
acquisition and disposal of holdings in a company domiciled in a Member State whose shares
are not admitted to trading on a regulated market under Article 73 of the Markets in Financial
Instruments Act and which is not a company under Article 77y, Paragraph 1, Item 2 of the
Public Offering of Securities Act or a vehicle with the special purpose of acquisition,
operation and management of real estate, as a result of which the voting rights held in an
alternative investment fund managed by it reaches, exceeds or falls below 10, 20, 30, 50 or 75
percent of the votes in the general meeting of the company within 10 business days of the
acquisition or transfer of the holding.
(2) For any acquisition by an alternative investment fund managed by it severally or jointly
on the basis of an agreement with another alternative investment fund controlled by it or by
another person, including through a company or person controlled by such an alternative
investment fund acting for the account of such a company or of the alternative investment
fund, of control over a company domiciled in a Member State whose shares are admitted to
trading on a regulated market under Article 73 of the Markets in Financial Instruments Act,
with such control determined in accordance with the law of country of domicile of the
respective company, or of more than 50 percent of the votes in the general meeting of a
company whose shares are not admitted to trading on such a market and which is not a
company under Article 77y, Paragraph 1, Item 2 of the Public Offering of Securities Act or a
vehicle with the special purpose of acquisition, operation and management of real estate, the
alternative investment fund manager shall, within 10 business days of the acquisition, notify:
1. the Commission;
2. the company in which the holding is acquired;
3. the shareholders in the company in which a holding is acquired, of whose identification
and address the alternative investment fund manager is provided with information or for
which such information may be obtained from the company or from a register to which the
alternative investment fund manager has or can obtain access.
(3) The notice under Paragraph 2 shall include information on:
1. the company name of the alternative investment fund manager or managers who have
acquired, severally or jointly, the holding under Paragraph 2;
2. the policy for prevention and management of conflicts of interest, including between the
alternative investment funds which have acquired the holding, their managers and the
company as well as information on the specific guarantees that any agreement between these
parties has been concluded on the basis of the arm's length principle;
3. the policy for provision of information related to the company, including its employees;
4. in the case of an acquired holding in a company other than a company whose shares are
admitted to trading on a regulated market under Article 73 of the Markets in Financial
Instruments Act, additional information on:
119 a) the number of acquired voting rights and their share of the total number of voting rights
calculated on the basis of all voting shares, regardless of whether the exercise of voting rights
under a portion of the issued shares is restricted or not;
b) the date of acquisition of the holding under Paragraph 2;
c) the conditions subject to which the holding is acquired and data on the name or company
name, the address or seat of the shareholders - alternative investment funds, of companies
controlled by them or of persons acting for the account of such companies, whose holdings
are included in the calculation of the total acquired holdings under Paragraph 2, and the
respective data on any other person entitled to vote on behalf of these persons and the chain of
companies through which the voting right is exercised.
(4) In the notice under Paragraph 2 to the company in which a holding is acquired, the
alternative investment fund manager shall request from its governing body to provide
promptly to the representatives of its employees within the meaning of Directive 2002/14/EC
of the European Parliament and of the Council of 11 March 2002 establishing a general
framework for informing and consulting employees in the European Community, hereinafter
referred to as "Directive 2002/14/EC" or to the employees, when there are no such
representatives, the information under Paragraph 2 and shall undertake the necessary
measures for the provision of the respective information.
(5) An alternative investment fund manager, upon acquisition by an alternative investment
fund managed by it of a holding under Paragraph 2 in a company whose shares are not
admitted to trading on a regulated market under Article 73 of the Markets in Financial
Instruments Act, shall, within the term under Paragraph 2, notify the Commission and the
investors in the alternative investment fund which has acquired such a holding of the size and
the terms of the funding of the investment made in that company.
(6) An alternative investment fund manager, upon acquisition by an alternative investment
fund managed by it of a holding under Paragraph 2 in a company whose shares are not
admitted to trading on a regulated market under Article 73 of the Markets in Financial
Instruments Act, shall provide to the company and to the shareholders under Paragraph 2,
Item 3 information about its plans for the future activities of the company and their impact on
the number of employees and the terms of their contracts with the notice under Paragraph 2
and shall immediately upon subsequent changes in those plans request from the management
body of the company to promptly provide this information to the representatives of its
employees within the meaning of Directive 2002/14/EC or to the employees, when there are
no such representatives, and shall take the necessary measures for the provision of this
information.
(7) Within two years of acquisition by an alternative investment fund managed by it of a
holding under Paragraph 2, an alternative investment fund manager shall not have the right to
assist, vote or give instructions, including in the execution of functions in the management
body of the company under Paragraph 2, and shall undertake all necessary actions to prevent:
1. the payment of dividends or any other payments relating to the shares of the company
under Paragraph 2 which are in excess of the distributable profits and the portion of the funds
of the company in excess of the minimum amount established by law or in the statute, or after
120 the payment of which the net asset value of the company would fall below the amount of the
equity and the funds that the company is required to create and maintain by law or in
accordance with its statute;
2. a reduction of the capital of the company under Paragraph 2, except to cover a loss or form
a reserve which is not subject to distribution and which is in an amount no higher than 10
percent of reduced capital;
3. a redemption or acquisition in another manner of its own shares by the company under
Paragraph 2, which would result in a reduction of the net asset value of the company below
the amount of the equity and the funds that the company is required to create and maintain by
law or in accordance with its statute.
(8) An alternative investment fund manager, upon acquisition by an alternative investment
fund managed by it of a holding under Paragraph 2 in a company whose shares are not
admitted to trading on a regulated market under Article 73 of the Markets in Financial
Instruments Act, shall request from the management body of the company to promptly
provide the annual financial statements of the company, including the information under
Article 235, Paragraph 1, Item 5, to the representatives of its employees within the meaning of
Directive 2002/14/EC or to the employees, when there are no such representatives, and shall
undertake the necessary measures for the provision of this information. An alternative
investment fund manager may undertake no action under Sentence 1 if it has included in its
annual statements information under Article 235, Paragraph 1, Item 5, in which case it shall
request from the management of the company to provide the annual financial statements
within the term under Article 235, Paragraph 1 to the representatives of its employees within
the meaning of Directive 2002/14/EC or to the employees, when there are no such
representatives, and shall undertake the necessary measures for the provision of this
information.
The requirements of Paragraphs 1 – 8 shall not affect the application of the stricter measures
set forth in the applicable legislation in connection with the acquisition of a holding or control
in companies under Paragraphs 1 and 2.
Article 235. (1) An alternative investment fund manager shall be obliged to provide to the
Commission annual statements for each of the alternative investment funds managed by it and
domiciled in a Member State and for each of the alternative investment funds marketed by it
in a Member State, within 90 days after the end of the financial year, including:
1. audited annual financial statements and the auditor's report;
2. annual activity report;
3. a document summarising all changes in the information provided to investors in accordance
with Article 237 which have occurred during the last financial year;
4. information about the total amount and number of the recipients of the remuneration for
the financial year, indicating the paid fixed compensation, the accrued and paid variable
compensation, the deferred variable compensation, as well as the total amount of the
121 compensations for the persons under Article 221, Paragraph 1, Item 1 and of the
compensations of the persons under Article 221, Paragraph 1, Item 4;
5. information on the companies whose shares are not admitted to trading on a regulated
market under Article 73 of the Markets in Financial Instruments Act and in which the
alternative investment fund has holdings in accordance with Article 234, Paragraph 1,
containing:
a) a description of the activity of the respective company during the reporting period and of
its financial position at the end of the financial year;
b) important events that have occurred from the end of the financial year to the date of the
report;
c) the potential future development of the company;
d) the number of own shares held directly or through another person.
(2) The financial statements under Paragraph 1, Item 1 shall be prepared in accordance with
accounting standards applicable in the Member State of origin of the alternative investment
fund or in the third country, in the case of an alternative investment fund from a third country,
and in accordance with the accounting rules set forth in the statute, in the rules or in other
incorporation documents of the fund, and shall be audited by one or more persons legally
qualified for this purpose in the respective country.
(3) The annual statements of an alternative investment fund which discloses information in
accordance with Directive 2004/109/EC of the European Parliament and of the Council of 15
December 2004 on the harmonisation of transparency requirements in relation to information
about issuers whose securities are admitted to trading on a regulated market and amending
Directive 2001/34/EC, hereinafter referred to as "Directive 2004/109/EC" shall further
include the information under Paragraph 1, which is not a part of the annual statements under
the above Directive.
(4) Additional requirements related to the preparation, submission to the Commission and
disclosure of the annual statements other than those set forth in Delegated Regulation (EU)
No 231/2013 shall be determined in a regulation.
Article 236. (1) The alternative investment fund manager shall submit to the Committee
within 10 days of the end of each quarter:
1. information on the principal markets and instruments in which the alternative investment
funds managed by it invest, as well as on the significant exposures to a single person or a
group of persons and the concentration of the investments by geographical areas or sectors;
2. information on each managed and/or marketed by it alternative investment fund, including:
a) the share of the assets of the alternative investment funds which are subject to special
treatment because of their low liquidity;
122 b) the applied new approaches for liquidity management;
c) the current risk profile of the alternative investment fund and applied risk management
systems;
d) information on the main categories of assets in which the alternative investment fund has
invested;
e) the results of the stress test carried out in compliance with Article 229, Paragraph 2, Item 2
and Article 230, Paragraph 2;
3. information on each alternative investment fund managed by it or each marketed in the
territory of in the European Union alternative investment fund from a third country investing
at a degree of leverage that results in an exposure exceeding three times the value of its assets:
a) the degree of total leverage;
b) information about the source of the used leverage depending on whether it is the result of
the borrowing of cash or securities or the result of the use of derivative financial instruments;
c) identification of the five largest lenders and the amount of the borrowings provided by
each of them;
d) information on the reuse of assets under contracts with leverage;
e) additional information and evidence of the soundness and the compliance with the
restrictions set forth in Article 229, Paragraph 2, Item 3.
(2) The Commission may require the submission of additional information necessary for the
monitoring of systemic risk, of which it shall notify ESMA.
(3) The Commission shall establish, on the basis of the information under Paragraphs 1 and
2, the impact of used leverage on the systemic risk in the financial system, the market stability
and the sustainable economic development, and if it establishes increased risk for the financial
system and the market stability, it may impose restrictions on the use of leverage or other
restrictions regarding the management of alternative investment funds under Article 264. The
Commission shall inform ESMA, the European Systemic Risk Board and the competent
authorities responsible for the supervision of alternative investment funds of the planned
measures, the reasons for their application and initial term of their effect within 10 business
days prior to the application of the measures under Sentence 1 or of the continuation of their
effect, unless the circumstances require the undertaking of the measures in a shorter term.
(4) In case that ESMA issues an opinion on the measures under Paragraph 3 or an opinion on
the basis of any other information provided to it on the undertaking of measures which the
Commission has to undertake in relation to identified risks to the financial system, including
in relation to the imposition of restrictions on the use of leverage, and the Commission
deviates from this opinion, it shall immediately inform ESMA thereof, stating its reasons for
deviating from the issued opinion.
123 (5) Additional requirements related to the application of Paragraphs 1 – 4 other than those set
forth in Delegated Regulation (EU) No 231/2013 shall be determined in a regulation.
Article 237. (1) The alternative investment fund manager shall provide to the investors for
each alternative investment fund managed by it and domiciled in a Member State and for each
alternative investment fund marketed by it in a Member State in the manner set forth in the
statute, the rules or the other incorporation documents of the fund, the following information
prior to the execution of the investment and any subsequent changes to it:
1. information on the alternative investment fund, including:
a) a description of its investment strategy and objectives;
b) the domicile of each principal alternative investment fund and of the base funds, if the
alternative investment fund is a fund of funds;
c) the types of assets in which the fund can invest, investment restrictions and the techniques
it can apply and the risks associated with such techniques;
d) the conditions for the use of leverage, its maximum allowable amount, the allowed types
and sources of leverage permitted and the associated risks, the restrictions on the use of
leverage and the conditions for reuse of collateral or assets;
2. the terms and conditions for amending the investment strategy and/or policy of the fund;
3. the name or the company name and seat and address of the alternative investment fund
manager, of the depositary, the auditor and any other service providers of the fund, as well as
a description of their obligations and the rights of the investors;
4. a description of the major legal implications of the contractual relations established in
connection with the investment, including information on the competent jurisdiction, the
applicable law and the presence or absence of legal instruments providing for the recognition
and enforcement of court rulings in the territory in which the alternative investment fund is
domiciled;
5. a description of the manner in which the alternative investment fund manager ensures
compliance with the requirements of Article 199, Paragraph 9;
6. a description of any functions delegated by the alternative investment fund manager and by
its depositary, the company name and seat of the persons to whom such functions have been
delegated and any potential conflicts of interest this such delegation may give rise to;
7. the rules for assessment of the assets of the alternative investment fund under Article 232,
including the methods used for assessment of assets with difficult to measure value;
8. a description of the liquidity management rules;
9. terms and procedures for the issuance and sale of units or shares of the alternative
investment fund;
124 10. the terms and procedures for redemption, including in emergencies, and the existing
redemption arrangements with the investors;
11. information on the type and amount of all fees, charges and expenses that are directly or
indirectly borne by the investors;
12. information on the rules to ensure the equal treatment of the investors and the options for
provision of preferential treatment to certain investors or categories of investors and their
relationship with the alternative investment fund or its manager;
13. the annual statements under Article 235 and historical information on the financial
performance of the fund;
14. the net asset value or the latest market price of a unit or share of the alternative
investment fund under Article 232;
15. the company name and seat of the prime broker and a description of the material terms of
the contracts with such brokers and the manner of management of conflicts of interest, as well
as the terms of the contract with the depositary for the transfer and reuse of assets of the fund
and for potential transfer of the liability to the prime broker;
16. the availability of an option for release of the depositary from liability in compliance with
Article 233, Paragraph 14;
17. the procedures and time frames for disclosure of the information under Paragraph 3.
(2) Alternative investment funds which are obligated to publish a prospectus shall include the
information under Paragraph 1 separately or as additional information in the prospectus.
(3) The alternative investment fund manager shall provide to the investors for each managed
and/or marketed alternative investment fund under Paragraph 1, in a manner specified in the
statute, the rules or the other incorporation documents of the fund, within 10 days of the end
of each quarter:
1. the information under Article 236, Paragraph 1, Item 2, Letters "a" – "c";
2. for alternative investment funds using leverage - information on the degree of total
leverage, any changes in the maximum amount of the used leverage and the right to reuse
collateral which may be provided in connection with investment positions using leverage.
(4) Additional requirements related to the content and manner of representation of the
information under Paragraphs 1 – 3 other than those set forth in Delegated Regulation (EU)
No 231/2013 shall be determined in a regulation.
Article 238. 2. A person under Article 195, Paragraph 2, Item 1, who cannot ensure
compliance with the requirements of this Chapter by the alternative investment fund managed
by it or by another person acting in its name, shall immediately inform about that the
Commission and the competent authority for the alternative investment fund, when this
125 authority and the Commission are not one and the same, and shall submit the measures it will
undertake to ensure compliance with these requirements and time frames for their
implementation.
(2) The person under Paragraph 1 shall suspend the management and/or marketing of the
alternative investment fund if the measures under Paragraph 1 are not undertaken within the
time frames specified in the notice under Paragraph 1 or if regardless of the undertaking of
those measures, compliance with the requirements of this Chapter has not been achieved. The
Commission shall notify the competent authorities of the host Member States of the
circumstance under Sentence 1.
Chapter Twenty Two
MANAGEMENT AND MARKETING OF ALTERNATIVE INVESTMENT FUNDS
Section I
Management and marketing of alternative investment funds in the territory of the
Republic of Bulgaria by alternative investment fund managers originating in the
Republic of Bulgaria
Article 239. (1) An alternative investment fund manager originating in the Republic of
Bulgaria may manage an alternative investment fund domiciled in the Republic of Bulgaria
and offer in the territory of the Republic of Bulgaria units or shares of an alternative
investment fund domiciled in the Republic of Bulgaria or in another Member State after
submitting a notice to the Deputy Chairperson, enclosing:
1. data on the company name, Member State of origin and address of the alternative
investment fund;
2. the statute, rules and other incorporation documents of the alternative investment fund;
3. data on the company name, country of licensing or registration, respectively the country in
which the master alternative investment fund is domiciled and the address of the master
alternative investment fund in the case of a feeder alternative investment fund;
4. data on the company name, the country in which the depository has its seat or a branch
office, the address of the depositary and the contract with it;
5. the information under Article 237, Paragraph 1 and any other information provided to the
investors;
6. information on the measures for prevention of the marketing of the units or shares of the
alternative investment fund to non-professional investors, including where the fund manager
uses third party service providers for the services provided to the fund.
(2) If the proposed alternative investment fund is a feeder alternative investment fund, a
person under Paragraph 1 domiciled in the Republic of Bulgaria may carry out the marketing
activities under Paragraph 1 only if the master alternative investment fund originates in a
Member State and is managed by an alternative investment fund manager originating in a
Member State.
126 (3) The Deputy Chairperson shall issue a decision on the notice under Paragraph 1 within 20
business days of its receipt and the provision of all data and documents under Paragraph 1,
subject to the respective application of Article 203, Paragraphs 3 – 6.
(4) The Deputy Chairperson may issue a ban on the planned management and marketing, if
on the basis of the provided data and documents it cannot be established that the management
of the alternative investment fund is carried out and will be carried out in accordance with the
requirements of this Law or that the activity of the alternative investment fund manager is
carried out and will be carried out in accordance with these requirements.
(5) If the Deputy Chairperson does not issue a ban under Paragraph 4, the alternative
investment fund manager may commence the management and/or marketing of units or shares
of the alternative investment fund as of the date of receipt of the authorization under
Paragraph 3. The Deputy Chairperson shall send the decision under Sentence 1 to the
competent authorities for the alternative investment fund originating in another Member State
to be marketed in the territory of the Republic of Bulgaria. In case the alternative investment
fund manager is a person domiciled in a third country for which the Republic of Bulgaria is a
Member State of origin, the Deputy Chairperson shall submit its decision under Sentence 1 to
ESMA as well.
(6) The alternative investment fund manager shall notify the Deputy Chairperson of any
material changes in the data and documents under Paragraph 1 at least one month prior to the
change and in case of the occurrence of an unplanned change - within one day of its
occurrence.
(7) The Deputy Chairperson may issue a ban on the execution of a planned change within 14
days of receipt of the notice under Paragraph 6, respectively subject to Paragraph 4.
(8) The Deputy Chairperson may ban an alternative investment fund manager from marketing
units or shares of an alternative investment fund if a planned change under Paragraph 6 is
executed despite an issued ban under Paragraph 7 or upon the occurrence of an unplanned
change as a result of which the management of the alternative investment fund or the activity
of the alternative investment fund manager ceases to satisfy the requirements of this Law.
Article 240. (1) An alternative investment fund manager originating in the Republic of
Bulgaria may market in the territory of the Republic of Bulgaria units or shares of an
alternative investment fund domiciled in a third country and feeding an alternative investment
fund domiciled in a Member State which does not meet the requirement of Article 239,
Paragraph 2, after submitting a notice to the Deputy Chairperson, if the following conditions
are satisfied:
1. the alternative investment fund manager meets all the requirements of this Law;
2. appropriate arrangements exist for cooperation between the Commission and the
competent authorities of the country in which the alternative investment fund is domiciled,
ensuring efficient exchange of information allowing the Commission to exercise its
supervisory powers;
127 3. the third country where the alternative investment fund is domiciled is not listed as a NonCooperative Country or Territory by the Financial Action Task Force;
4. an agreement has been concluded between the Republic of Bulgaria, the third country in
which the alternative investment fund is domiciled and all other Member States in which the
units or shares of the alternative investment fund will be marketed in accordance with the
standards set forth in Article 26 of the Model Tax Convention on Income and on Capital of
the Organisation for Economic Cooperation and Development, ensuring effective exchange of
information on tax matters.
(2) If the person under Paragraph 1 is an alternative investment fund manager domiciled in a
third country for which the Republic of Bulgaria is a Member State of origin, in addition to
the conditions under Paragraph 1, the following conditions shall also be satisfied:
1. appropriate arrangements exist for cooperation between the Commission and the
competent authorities of the country in which the alternative investment fund manager is
domiciled, ensuring efficient exchange of information allowing the Commission to exercise
its supervisory powers;
2. the third country where the alternative investment fund manager is domiciled is not listed
as a Non-Cooperative Country or Territory by the Financial Action Task Force.
(3) The Deputy Chairperson shall issue a decision on the filed notice, subject to Article 239,
Paragraphs 1, 3, 4 and Paragraph 5, Sentence 1, respectively. The Deputy Chairperson shall
provide the decision allowing the marketing under Paragraph 1 to ESMA as well.
(4) In case of a material change in the data and documents enclosed with the notice under
Paragraph 1, Article 239, Paragraphs 6 – 8 shall apply respectively. In case of termination of
the marketing of units and shares of certain alternative investment funds or of the marketing
of units and shares of additional alternative investment funds by a person under Paragraph 2,
and if the Deputy Chairperson has not issued a ban under Article 239, Paragraphs 7 or 8, the
Deputy Chairperson shall notify ESMA of the change.
Article 241. (1) An alternative investment fund manager domiciled in the Republic of
Bulgaria may market in the territory of the Republic of Bulgaria units or shares an alternative
investment fund managed by it domiciled in a third country without complying with the
requirements of Article 240, if the following conditions are satisfied:
1. in the management of the alternative investment fund, the alternative investment fund
manager complies with all requirements of this Law, with the exception of Article 233;
2. the alternative investment fund manager has ensured the execution of the functions under
Article 233, Paragraph 1 by one or more third parties, about whose company names and seats
it shall provide information to the Commission;
3. appropriate arrangements exist for cooperation in compliance with the international
standards for systemic risk monitoring between the Commission and the competent authorities
of the country in which the alternative investment fund is domiciled, ensuring efficient
exchange of information allowing the Commission to exercise its supervisory powers;
128 4. the third country in which the alternative investment fund is domiciled, and in the absence
of a licensing or registration requirement, the country in which its seat is located, is not listed
as a Non-Cooperative Country or Territory by the Financial Action Task Force.
(2) The Deputy Chairperson shall issue an authorization for the marketing under Paragraph 1,
subject to Article 203, Paragraphs 3 – 6, respectively.
(3) Additional requirements related to the marketing under Paragraph 1 may be determined in
a regulation.
Article 242. (1) An alternative investment fund manager originating in the Republic of
Bulgaria may market units or shares of an alternative investment fund in the territory of the
Republic of Bulgaria only to professional investors within the meaning of § 1, Item 9 of the
Additional Provisions of the Markets in Financial Instruments Act.
(2) A person under Paragraph 1 may offer to non-professional investors within the meaning
of § 1, Item 10 of the Additional Provisions of the Markets in Financial Instruments Act in the
territory of the Republic of Bulgaria only units or shares of a national investment fund under
Article 171 in accordance with the requirements of Part Three, Title One.
Section II
Management and marketing of alternative investment funds from a third country by an
alternative investment fund manager originating in the Republic of Bulgaria
Article 243. (1) An alternative investment fund manager with a seat in the Republic of
Bulgaria may manage an alternative investment fund domiciled in a third country without
marketing it in the territory of a Member State, if the following conditions are satisfied:
1. in the management of the alternative investment fund, the alternative investment fund
manager complies with all requirements of this Law, with the exception of Articles 233 and
235;
2. appropriate arrangements exist for cooperation between the Commission and the
competent authorities of the country in which the respective alternative investment fund is
domiciled, ensuring efficient exchange of information allowing the Commission to exercise
its supervisory powers.
(2) Prior to commencing the management of an alternative investment fund under Paragraph
1, the alternative investment fund manager with a seat in the Republic of Bulgaria shall
submit to the Commission the data and documents under Article 201, Paragraph 2 Item 2. The
person under Sentence 1 may commence the management of the alternative investment fund
under Paragraph 1 if the Deputy Chairperson does not issue a ban. Article 239, Paragraphs 3 –
8 shall apply accordingly.
Section III
129 Management and marketing of alternative investment funds in the territory of another
Member State by alternative investment fund managers originating in the Republic of
Bulgaria
Article 244. (1) An alternative investment fund manager originating in the Republic of
Bulgaria may manage an alternative investment fund domiciled in another Member State,
either directly or by opening a branch, provided that pursuant to the license issued to it, the
alternative investment fund manager shall have the right to manage the respective type of
alternative investment funds after submitting a notice to the Deputy Chairperson before first
commencing to manage an alternative investment fund in the territory of the respective other
Member State. All branch offices established in another Member State shall be regarded as a
single branch.
(2) The notice under Paragraph 1 shall contain the following attachments:
1. data on the host Member State;
2. programme of the activities including information on the type of services that the
alternative investment fund manager will carry out in the host Member State;
3. data on the company name and address of the alternative investment funds which the
alternative investment fund manager intends to manage in the host Member State;
4. in case that the alternative investment fund manager intends to open a branch office, the
following additional information shall be submitted:
a) the organisational structure of the branch office;
b) the addresses of the alternative investment funds in the Member State of their origin;
c) the names and contact details of the persons responsible for the management of the branch
office.
The Deputy Chairperson shall provide to the respective competent authority of the host
Member State the information under Paragraph 2 within one month of its receipt or
respectively within two months of its receipt, when the alternative investment fund manager
intends to open a branch office in the territory of the host Member State in which it will carry
out alternative investment fund management activities, and when additional data and
documents have been requested - within a month or respectively within two months of their
receipt. With the submission of the information under Sentence 1, the Deputy Chairperson
shall confirm that the alternative investment fund manager is licensed by the Commission.
The Deputy Chairperson shall immediately notify the person under Paragraph 1 of the
provision of the information under Sentence 1. In case the alternative investment fund
manager is a person from a third country for which the Republic of Bulgaria is a Member
State of origin, the Deputy Chairperson shall notify ESMA of the provision of the information
under Sentence 1.
130 (4) Within the term under Paragraph 3, the Deputy Chairperson may refuse to provide the
information under Paragraph 3, if on the basis of the provided data and documents it cannot
be established that the management of the alternative investment fund is carried out and will
be carried out in accordance with the requirements of this Law or that the activity of the
alternative investment fund manager is carried out and will be carried out in accordance with
these requirements.
(5) If the Deputy Chairperson does not issue a refusal under Paragraph 4, the alternative
investment fund manager may commence the management of the alternative investment fund
in the host Member State as of the date of submission of the information under Paragraph 2.
(6) In case of a material change in the data and documents enclosed with the notice under
Paragraph 1, Article 239, Paragraphs 6 – 8 shall apply respectively. In case the Deputy
Chairperson has not issued a ban under Article 239, Paragraphs 7 or 8, the Deputy
Chairperson shall notify the competent authority of the host Member State of the change.
Article 245. (1) An alternative investment fund manager originating in the Republic of
Bulgaria may market units or shares of an alternative investment fund domiciled in the
Republic of Bulgaria or in another Member State in the territory of another Member State
after submitting a notice to the Deputy Chairperson, enclosing:
1. data on the host Member State;
2. data on the company name, the Member State in which the alternative investment fund is
domiciled and the address of the alternative investment fund which it intends to market;
3. the statute, rules and other incorporation documents of the alternative investment fund;
4. data on the company name, domicile and address of the master alternative investment fund
in the event of a feeder alternative investment fund;
5. data on the company name, the country in which the depository has its seat or a branch
office and the address of the depositary;
6. the information under Article 237, Paragraph 1 and any other information provided to the
investors;
7. information on the measures for marketing of the units or shares of the alternative
investment fund and on the measures for prevention of the marketing to non-professional
investors, including where the fund manager uses third party service providers for the services
provided to the fund.
(2) If the proposed alternative investment fund is a feeder alternative investment fund, a
person under Paragraph 1 domiciled in the Republic of Bulgaria may carry out the marketing
activities under Paragraph 1 only if the master alternative investment fund is domiciled in a
Member State and is managed by an alternative investment fund manager originating in a
Member State.
131 (3) The Deputy Chairperson shall submit to the respective competent authority of the host
Member State the notice and the information under Paragraph 1 within 20 business days of its
receipt and the submission of all data and documents under Paragraph 1. With the submission
of the information under Sentence 1, the Deputy Chairperson shall confirm that the alternative
investment fund manager is licensed by the Commission and that its license includes the
management of alternative investment funds with the respective investment strategy. The
Deputy Chairperson shall immediately notify the person under Paragraph 1 of the provision of
the information under Sentence 1. In case that an alternative investment fund domiciled in
another Member State is subject of marketing, the Deputy Chairperson shall notify its
competent body that the alternative investment fund manager may commence the marketing
of units or shares of this fund in the territory of the host Member State. In case that the
alternative investment fund manager is a person with a seat in a third country for which the
Republic of Bulgaria is a Member State of origin, the Deputy Chairperson shall inform ESMA
that the alternative investment fund manager may commence the marketing of the units or
shares of this fund in the territory of the host Member State.
(4) Within the term under Paragraph 3, the Deputy Chairperson may refuse to provide the
information under Paragraph 3, if on the basis of the provided data and documents it cannot
be established that the management of the alternative investment fund is carried out and will
be carried out in accordance with the requirements of this Law or that the activity of the
alternative investment fund manager is carried out and will be carried out in accordance with
these requirements.
(5) If the Deputy Chairperson does not issue a refusal under Paragraph 4, the alternative
investment fund manager may commence the marketing of the alternative investment fund in
the host Member State as of the date of submission of the information under Paragraph 3.
(6) In case of a material change in the data and documents enclosed with the notice under
Paragraph 1, Article 239, Paragraphs 6 – 8 shall apply respectively. In case the Deputy
Chairperson has not issued a ban under Article 239, Paragraphs 7 or 8, the Deputy
Chairperson shall notify the competent authority of the host Member State of the change. In
case of termination of the marketing of units and shares of certain alternative investment
funds or of the marketing of units and shares of additional alternative investment funds by a
person with a seat in a third country, and if the Deputy Chairperson has not issued a ban under
Article 239, Paragraphs 7 or 8, the Deputy Chairperson shall notify ESMA of the change.
(7) The presented information under Paragraphs 1 – 6 shall be in the English language.
Article 246. (1) An alternative investment fund manager originating in the Republic of
Bulgaria may market in the territory of another Member State units or shares of an alternative
investment fund domiciled in a third country and feeding an alternative investment fund
domiciled in a Member State which does not meet the requirement of Article 245, Paragraph
2, after submitting a notice to the Deputy Chairperson under Article 245, Paragraph 1, if the
conditions of Article 240, Paragraph 1 are satisfied,
(2) If the person under Paragraph 1 is an alternative investment fund manager domiciled in a
third country for which the Republic of Bulgaria is a Member State of origin, in addition to
the conditions under Paragraph 1, the conditions under Article 240, Paragraph 2 also need to
be satisfied.
132 (3) The Deputy Chairperson shall review the submitted notice, subject to Article 245,
Paragraph 1, Paragraph 3, Sentences 1 and 2 and Paragraphs 4 and 5. The Deputy Chairperson
shall inform ESMA that the alternative investment fund manager may commence the
marketing of units or shares of this fund in the territory of the host Member State.
(4) In case of a material change in the data and documents enclosed with the notice under
Paragraph 1, Article 239, Paragraphs 6 – 8 shall apply respectively. In case of termination of
the marketing of units and shares of certain alternative investment funds or of the marketing
of units and shares of additional alternative investment funds by a person under Paragraph 1,
and if the Deputy Chairperson has not issued a ban under Article 239, Paragraphs 7 or 8, the
Deputy Chairperson shall notify ESMA and the competent authorities of the Member States
of the change.
(5) The presented information under Paragraphs 1 – 4 shall be in the English language.
Article 247. The marketing of units and shares of alternative investment funds in accordance
with this Section shall only apply to professional investors within the meaning of § 1, Item 9
of the Additional Provisions of the Markets in Financial Instruments Act, unless a competent
authority of the host Member State authorises the marketing to non-professional investors
within the meaning of § 1, Item 10 of the Additional Provisions of the Markets in Financial
Instruments Act.
Section IV
Marketing of units or shares of alternative investment funds in the territory of the
Republic of Bulgaria by alternative investment fund managers originating in another
Member State
Article 248. (1) An alternative investment fund manager originating in another Member State
may manage an alternative investment fund domiciled in Bulgaria directly or by opening a
branch based on a notice received at the Commission by the competent authority of the
Member State of origin of the alternative investment fund manager, with attached data and
documents under Article 244, Paragraph 2 and a confirmation by the competent authority of a
Member State of origin that the alternative investment fund manager is licensed by the
competent authority of the Member State of origin. All branch offices established in the
territory of Bulgaria shall be regarded as a single branch.
(2) A person under Paragraph 1 who will carry out activity through the opening of a branch
office may commence the activity for which a notice has been received after the registration
of its branch in the Republic of Bulgaria.
(3) The Commission accepts as current the information contained in the data and documents
under Paragraph 1 submitted by the respective competent authority, until notified by the
respective competent authority of a change in the data.
Article 249. (1) An alternative investment fund manager originating in another Member State
may market units or shares of an alternative investment fund domiciled in the Republic of
Bulgaria or another Member State, or an alternative investment fund domiciled in a third
133 country, in the territory of the Republic of Bulgaria based on a notice received at the
Commission by the competent authority of the Member State of origin of the alternative
investment fund manager, with attached data and documents under Article 245, Paragraph 1
and a confirmation by the competent authority of the Member State of origin and holding a
license with a scope including the management of alternative investment funds with the
respective investment strategy. The Commission shall ensure the capacity for electronic
reception of the information under the preceding sentence.
(2) The Commission accepts as current the information contained in the data and documents
under Paragraph 1 submitted by the respective competent authority, until notified by the
respective competent authority of a change in the data.
(3) The marketing of the units or shares of the alternative investment fund offered under the
terms and conditions of Paragraph 1, and the introduction and implementation of measures for
prevention of the marketing to non-professional investors, including when the fund managers
uses third party service providers for the services provided to the fund shall be in compliance
with the requirements of the law of the Republic of Bulgaria.
Article 250. (1) The marketing of units or shares of alternative investment funds by a person
originating from another Member State in accordance with this Section shall only apply to
professional investors within the meaning of § 1, Item 9 of the Additional Provisions of the
Markets in Financial Instruments Act.
(2) A person under Paragraph 1 may offer to non-professional investors within the meaning
of § 1, Item 10 of the Additional Provisions of the Markets in Financial Instruments Act in the
territory of the Republic of Bulgaria in due compliance with the requirements of Part Three,
Title One.
Section V
Marketing of units or shares of alternative investment funds in the territory of the
Republic of Bulgaria by alternative investment fund managers from a third country
Article 251. (1) Notwithstanding the requirements of Section IV, an alternative investment
fund manager originating in a third country may market an alternative investment fund in the
territory of the Republic of Bulgaria without marketing it in the territory of another Member
State, if the following conditions are satisfied:
1. in the management of the alternative investment fund, the alternative investment fund
manager complies with all requirements of this Law, with the exception of Articles 235 – 237
and the requirements of Article 234, when applicable;
2. appropriate arrangements exist for cooperation in compliance with the international
standards for systemic risk monitoring between the Commission, the competent authorities of
the country in which the alternative investment fund is domiciled, the competent authorities of
the third country where the seat of the alternative investment fund manager is located,
ensuring efficient exchange of information allowing the Commission to exercise its
supervisory powers;
134 3. the third country where the seat of the alternative investment fund manager is located and
the third country where the alternative investment fund is domiciled are not listed as a NonCooperative Country or Territory by the Financial Action Task Force.
(2) The competent authority for the purposes of Articles 234 – 237 shall be the Commission,
and the investors are the persons to which the alternative investment fund is marketed in the
territory of the Republic of Bulgaria.
(3) The Deputy Chairperson shall issue an authorization for the marketing under Paragraph 1,
subject to Article 203, Paragraphs 3 – 6, respectively.
(4) In case that the competent authority of an alternative investment fund domiciled in a
Member State does not in due course become a signatory to the arrangements provided for in
Paragraph 1, Item 2, the Commission may notify ESMA to ensure assistance in accordance
with Article 19 of Regulation (EU) № 1095/2010.
Section VI
Applicable law, cooperation and exchange of information
Article 252. (1) The Commission and the Deputy Chairperson shall supervise alternative
investment fund managers originating in the Republic of Bulgaria regardless of whether these
persons manage and/or market alternative investment funds in the territory of other Member
States.
(2) The Commission and the Deputy Chairperson shall supervise alternative investment fund
managers originating in another Member State in connection with the compliance with:
1. the provisions of Articles 218 and 220 to the alternative investment funds managed and/or
marketed through a branch office in the territory of the Republic of Bulgaria;
2. the requirements with regard to the marketing of units or shares of an alternative
investment fund in the territory of the Republic of Bulgaria, as well as the introduction and
implementation of measures for prevention of their marketing to non-professional investors,
including where the fund manager uses third party service providers for the services provided
to the fund.
(3) Alternative investment fund managers originating in another Member State shall provide
to the Commission and to the Deputy Chairperson the information necessary for the
performance of their supervisory functions with respect of such persons.
(4) If an alternative investment fund manager originating in another Member State violates
any rules whose compliance is supervised by the Commission, the Deputy Chairperson shall
request from that person to discontinue the violation and to inform the competent authorities
of the Member State of origin thereof.
135 Article 253. (1) If an alternative investment fund manager originating in another Member
State refuses to provide information under Article 252, Paragraph 3 or fails to undertake
necessary measures to discontinue a violation of Article 252, Paragraph 4, the Vice-President
shall inform thereof the competent authorities of the Member State of origin of this person.
(2) If despite of the measures undertaken by the competent authorities of the Member State of
origin of the person under Paragraph 1 or due to the absence of appropriate and sufficient
measures, the person under Paragraph 1 still fails to provide the information under Article
252, Paragraph 3 or fails to undertake the necessary measures to discontinue a violation under
Paragraph 1, the Vice-President shall take the necessary measures to prevent and sanction the
violations, including by compelling the person to cease the management of alternative
investment funds in the Republic of Bulgaria and by banning the management and/or
marketing of new alternative investment funds in the territory of the Republic of Bulgaria by
that person. The Vice-President shall inform the competent authorities of the Member State of
origin of the person under Paragraph 1 prior to undertaking the measures under Sentence 1.
Article 254. (1) When the Vice-President has clear and demonstrable grounds for believing
that an alternative investment fund manager originating in another Member State violates
requirements over which the Commission or the Vice-President have no supervisory powers,
they shall inform the competent authority of the Member State of origin about that.
(2) If despite the measures undertaken by the competent authority of the Member State of
origin or because such measures have proven to be inadequate or inappropriate, or if the
competent authority fails to undertake action within a reasonable term and the person under
Paragraph 1 continues to act in violation of the interests of the investors or the proper
functioning of the capital markets in the territory of the Republic of Bulgaria, the Vice
President may, after informing the competent authority of the Member State of origin,
undertake the necessary measures to protect the investors and the financial stability and to
ensure the proper functioning of the capital markets, including by banning the person under
Paragraph 1 to carry out activities in the territory of the Republic of Bulgaria.
(3) Paragraphs 1 and 2 shall also apply if the Commission, respectively the Deputy
Chairperson, have clear and demonstrable grounds for disagreement with the license issued by
another Member State to an alternative investment fund manager originating in a third
country.
Article 255. (1) When an alternative investment fund manager originating in the Republic of
Bulgaria violates rules the compliance with which is supervised by the competent authorities
of the host Member State and despite a request sent to it by these authorities, it does not
discontinue the violation, after being informed of this by the competent authorities of the host
Member State, the Commission or the Vice-President shall promptly undertake all appropriate
measures to enable the respective company to provide the information required by the host
Member State or to discontinue this violation. In case of a violation by an alternative
investment fund manager from a third country, the Commission shall request the necessary
information from the respective supervisory authorities of the third country. The VicePresident shall inform the competent authority of the host Member State of the undertaken
measures.
136 (2) When the competent authority of another Member State notifies the Commission that
there are grounds to believe that an alternative investment fund manager originating from the
Republic of Bulgaria violates rules the compliance with which is supervised by the
Commission, respectively the Deputy Chairperson, the Commission, respectively the Deputy
Chairperson shall promptly undertake the necessary measures, including by submitting a
request for information to the respective supervisory authorities of a third country.
Article 256. When the Vice-President believes that an alternative investment fund manager
from a third country licensed by the Commission violates the requirements of Directive
2011/61/EC of the European Parliament and of the Council of 08 June 2011 on alternative
investment fund managers and amending Directive 2003/41/EC and Directive 2009/65/EC
and of Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ, L 174/1 of 01 July
2011), hereinafter referred to as "Directive 2011/61/EU", it shall immediately notify ESMA
thereof.
Article 257. (1) The Commission shall cooperate with the competent authorities of the other
Member States in the exercise of its supervisory powers under this Law and its implementing
regulations and shall, if necessary, cooperate with those authorities in the exercise of their
supervisory powers.
(2) In the course of the cooperation under Paragraph 1, the Commission, respectively the
Deputy Chairperson, shall also use their statutory powers in cases where the action under
investigation by the competent authorities of other Member States does not constitute a
violation of the laws of the Republic of Bulgaria.
Article 258. (1) The Commission, respectively the Deputy Chairperson, shall immediately
provide information to a competent authority from another Member State, when such
information is necessary for the exercise of the competent authority's powers under Directive
2011/61/EU.
(2) The Commission shall provide to the host Member States of the respective alternative
investment fund managers copies of the agreements for cooperation and exchange of
information with competent authorities of other countries signed under this Title and the
information received from those authorities regarding these persons.
(3) The Commission, respectively the Deputy Chairperson, shall immediately provide
information to ESMA, the European Systemic Risk Board and the competent authorities of
other Member States when such information is relevant for the monitoring and for the
prevention or overcoming of potential adverse effects of the activity of one or more
alternative investment fund managers to systemically important financial institutions or to the
proper functioning of markets on which these alternative investment fund managers operate.
(4) In case of a disagreement with the assessment made by a competent authority of another
Member State which is a Member State of origin of an alternative investment fund manager in
connection with the application of provisions of national law similar to Article 233, Paragraph
3, Items 1 and 3 and Paragraphs 7, 11 and 12, Article 240, Paragraph 1, Items 2 and 3, Article
208, Paragraph 3 and Article 209, Paragraph 1, Items 1 – 5 and 7, or with the assessment,
action or inaction of a competent authority in areas that require cooperation and coordination
between the competent authorities of more than one Member State, or with an authorization to
137 carry out activities issued by a competent authority of another Member State to an alternative
investment fund manager with a seat in a third country or with measures undertaken by a
competent authority of another Member State under Articles 252-255, and also if in the
capacity of a competent authority of a host Member State it considers that the agreements
concluded under this Title for cooperation and exchange of information with competent
authorities of other Member States do not comply with the requirements applicable to them,
the Commission may notify ESMA to ensure assistance in accordance with Article 19 of
Regulation (EU) No 1095/2010.
Article 259. (1) Where the Vice-President has clear and demonstrable grounds to believe that
a person over whose activity it does not exercise supervisory powers violates or has violated
the requirements of Directive 2011/61/EU, the Vice-President shall inform ESMA and the
competent supervisory authorities of the respective Member State of origin and of the host
Member States of the alternative investment fund manager.
(2) Where the Commission has been informed by a competent authority of a Member State
that a person over whose activity this authority does not exercise supervisory powers and for
which the Republic of Bulgaria is a Member State of origin or a host Member State violates or
has violated the requirements of Directive 2011/61/EU, the Vice-President shall undertake the
necessary measures and shall inform ESMA and the competent authority of the Member State
of the results and of any subsequent material circumstances.
Article 260. (1) When exercising its supervisory activity, including when conducting on-site
inspections or investigations in the territory of a Member State, the Commission, respectively
the Deputy Chairperson, may request the assistance of the respective competent authority of
that Member State.
(2) When the competent authority decides to carry out the inspection or investigation under
Paragraph 1 independently, the Commission, respectively the Vice-President, may request
that experts of the Commission accompany the experts of the competent authority during the
inspection or investigation.
Article 261. (1) Upon request made by a competent authority of a Member State to carry out
an on-site inspection or investigation in the territory of the Republic of Bulgaria, the
Commission may, within its powers:
1. carry out the inspection or investigation independently;
2. allow the performance of the inspection or investigation by the competent authority of the
other Member State;
3. allow the inspection or investigation to be carried out by auditors or experts.
(2) In the cases under Paragraph 1, Item 1, at the request of the competent authority of the
other Member State to carry out the inspection or investigation, the officers of the
Commission shall be accompanied by officers of that competent authority. Regardless of that,
the control on the performance of the inspection or investigation shall be carried out by the
competent authorities in the Republic of Bulgaria.
138 (3) In the cases under Paragraph 1, Item 2, the Commission may request that during the
performance of the inspection or investigation, the officers of the competent authority of the
other Member State are accompanied by officers of the Commission.
Article 262. (1) The Commission may refuse to provide information or cooperation for the
performance of an on-site inspection or investigation under Article 268, when:
1. the performance of an on-site inspection or of an investigation and the provision of
information may adversely affect the sovereignty, security or public order of the Republic of
Bulgaria;
2. proceedings have already been instituted by the judicial authorities in the Republic of
Bulgaria with regard to the same actions and persons about which cooperation has been
requested;
3. a definitive judgement has been issued in the Republic of Bulgaria with regard to the same
actions and persons about which cooperation has been requested.
(2) In the cases under Paragraph 1, the Commission shall notify the authority requesting
cooperation and provide to it detailed information on the reasons for the refusal.
Title Three
SPECIAL INVESTMENT PURPOSE COMPANIES
Art. 263 Collective investment undertaking is also a special investment purpose company, the
activities of which are regulated under the Act on the Special Investment Purpose Companies.
Part Four
COERCIVE ADMINISTRATIVE MEASURES AND
ADMINISTRATIVE LIABILITY
Chapter Twenty-Three
COERCIVE ADMINISTRATIVE MEASURES
Art. 264. (1) When establishing that supervised persons, their employees, persons performing
managerial functions under a contract or entering into transactions for the account of
supervised persons, as well as persons possessing a qualifying holding in a management
company, have carried out or carry out activities in breach of this Law, its implementing
instruments, decisions of the Commission or of the Deputy Chairperson, as well as where the
exercising of control activity by the Commission or the Deputy Chairperson is impeded or the
investor interests are jeopardized, the Commission or the Deputy Chairperson may:
1. obligate them to take measures needed for prevention and removal of the offences, their
prejudicial effects or of the jeopardy for the investors’ interests within set by it term;
139 2. convene, with agenda determined by the Commission, a general meeting and/or schedule a
meeting of the management or supervisory bodies of the persons supervised by the
Commission in order to adopt resolutions on the measures to be taken;
3. inform the public of any activity which jeopardizes investor interests;
4. suspend for a period of 10 consecutive working days or definitively the sale or execution of
transactions in units or shares of the collective investment scheme or another collective
investment undertaking;
5. order in writing a supervised entity to dismiss one or more persons authorized to manage
and represent the respective entity, and divest such person of his/her managerial and
representation rights until his/her dismissal;
6. appoint quaestors in the cases provided for in this Law;
7. appoint a registered auditor who is to conduct a financial or other audit of a supervised
person in accordance with requirements set by the Deputy Chairperson, where the expense
shall be covered by the audited person;
8. take a decision for temporary suspension of the redemption of units or shares of a collective
investment scheme or another collective investment undertaking.
9. to request the attachment of property.
(2) A coercive administrative measure is also the withdrawal of a license, or authorization to
pursue activity, provided for in this Law, except in the cases when the person has explicitly
renounced the issued license, or authorization.
(3)When establishing that a depositary bank pursues its activities in contravention of this Law
or its implementing instruments, the Deputy Chairperson may apply the measures under para
1, Item 1, as well as to propose to the Bulgarian National Bank the applying of the relevant
measures under Art. 103, para 2 of the Law on Credit Institutions. The Bulgarian National
Bank shall communicate its decision to the Deputy Chairperson within one month of receipt
of the proposal.
(4) The Deputy Chairperson may propose to the Bulgarian National Bank to withdraw the
license of a depositary bank only if the depositary bank systematically infringes the provisions
of this Law or its implementing instruments.
(5) On request of the Commission, or the Deputy Chairperson, the Registry Agency shall
enter the circumstances, respectively announce the acts under para 1, in the Trade Register.
Art. 265. (1) A procedure for imposition of coercive administrative measures shall be
instituted on the initiative of the Deputy Chairperson, and in the cases of Art. 264, para 1,
Item 5 and 6 – on the initiative of the Commission.
(2) The notifications and communications in the procedure pursuant to para 1 can also be
made via registered mail with delivery receipt, by telegram, over the phone, telex, facsimile or
by e-mail. The notifications and communications through registered mail with delivery receipt
or telegram are verified by notice of their delivery, over the phone – in writing by the official
who made them, and those by telex, facsimile or e-mail – by written confirmation of the
forwarded communication.
(3) If the notifications and communications in the procedure under para 1 are not received on
the address, telephone, telex or fax indicated by the persons, or entered in the respective
register pursuant to Art. 30, para 1 of the Financial Supervision Commission Act, such
notifications and communications shall be considered made with their posting at a specially
designated for the purpose place in the building of the Commission. The latter circumstance is
ascertained by a protocol drawn up by officials appointed by order of the Deputy Chairperson.
(4) The coercive administrative measures under Art. 264, para 1, Item 1 - 4, 7 and 8 shall be
applied by a written reasoned decision of the Deputy Chairperson, and the coercive
140 administrative measures under Art. 264, para 1, Item5 and 6 – by a written reasoned decision
of the Commission, which is communicated to the person concerned within 7-days term of its
pronouncement.
Art. 266. The decision to apply a coercive administrative measure shall be subject to
immediate enforcement, regardless of whether it has been appealed against.
Art. 267. In so far as no special rules are provided in this Chapter, the relevant provisions of
the Administrative Procedure Code shall apply.
Chapter Twenty-Four
QUAESTOR
Art. 268. (1) The Commission may appoint for an investment company or a management
company one or several quaestors from a list approved by the Commission:
1. by adopting a resolution to impose a measure under Art. 264, para 1, Item 1 or 5 for a
period of up to 6 months, or
2. in case of withdrawal of the license to pursue business – until the appointment of a
liquidator, or trustee.
(2) Where upon the expiration of the 6-month term referred to in para 1, Item 1, the
company’s license to pursue business is not withdrawn, the powers of the quaestors shall be
discontinued and the rights of the company’s bodies shall be restored.
(3) The Commission may at any time terminate the powers of a quaestor and appoint another
one in his place. The act shall not be subject to appeal.
Art. 269. (1) The quaestor is a natural person.
(2) A quaestor shall meet respectively the requirements of Art. 93, para 1, Item 1, 2 and 6,
and:
1. not be a sole trader or a member of a management or supervisory body, or a general partner
in a company or cooperative, for which bankruptcy proceedings have been instituted, or that
has been wound-up due to bankruptcy, if unsatisfied creditors have been left;
2. not be an insolvent debtor whose rights are not restored;
3. not be the spouse, a relative in the direct or collateral line up to the sixth degree or by
affinity up to the third degree to a member of a management body of the person under Art.
268, para 1, whose powers are terminated with the act of appointment of the quaestor;
4. not have with the person under Art. 268, para 1 or with his debtor relations which give
good reasons to doubt the quaestor’s impartiality.
(3) The quaestor shall declare in writing before the Commission the circumstances under para
2. He must without delay notify the Commission of any change in those circumstances.
Art. 270. (1) After issuing the act of appointment of a quaestor, the Commission shall
forthwith serve on the person under Art. 268, para 1 and publish a notice in at least one
central daily newspaper.
(2)With the appointment of a quaestor all powers of the supervisory and of the management
board or the board of directors of the person under Art. 268, para 1, shall be terminated and
shall be exercised by the quaestor, unless the act of his appointment provides for some
restrictions. The quaestor shall take all necessary measures to protect the investors’ interests.
141 (3) During the quaestor’s management, the general meeting of shareholders may only be
convened by the quaestor and shall pass resolutions in accordance with the agenda announced
by the quaestor.
(4) Acts and transactions executed in the name and for the account of the person under Art.
268, para 1 without preliminary authorization by the quaestor shall be void.
(5) Where two or more quaestors are appointed, they shall make decisions unanimously and
shall exercise their powers jointly, unless the Commission decides otherwise.
(6) The Commission may issue binding prescription to the quaestors in relation to their
activities.
(7) The quaestor shall report on his activities only to the Commission and, upon the latter’s
request, shall immediately submit to it a report on his activities.
Art. 271. (1) The quaestor shall have unrestricted access to and control over the premises of
the person under Art. 268, para 1, the accounting and other documentation and its property.
(2) On request of the quaestor, the Public Prosecution and the authorities of the Ministry of
the Interior shall render assistance for the exercise of his powers pursuant to para 1.
Art. 272. (1) The quaestor shall exercise his powers with due diligence. He shall only be
liable for damages, which he has caused intentionally or with gross negligence.
(2) All employees of the person under Art. 268, para 1 must assist the quaestor in the exercise
of his powers.
(3) The quaestor shall receive for his work remuneration for the account of the person
pursuant to Art. 268, para 1, which shall be determined by the Commission.
Chapter Twenty-Five
ADMINISTRATIVE LIABILITY AND PENALTY PAYMENTS
Art. 273. (1) A person who commits or allows a violation of:
1. Article 6, Paragraphs 4 and 5, Article 10, Paragraph 5, Article 17, Paragraph 2, Article 18,
Paragraphs 1, Article 48, Paragraphs 3 and 4, Article 52, Article 57, Paragraphs 1, 5 – 10,
Article 58, Paragraph 2, Article 59, Article 61, Paragraphs 1 and 2, Articles 62, 63, Article 65,
Paragraphs 1 – 3, Article 78, Paragraphs 4 and 5, Article 79, Article 81, Paragraph 2, Article
91, Article 93, Paragraphs 1 – 5, Article 94, Paragraphs 1 and 2, Article 98, Paragraph 2,
Article 171, Paragraphs 7 and 8, Articles 179, 182, Article 197, Paragraph 6, Article 199,
Paragraph 12, Articles 225, 227, Article 229, Paragraphs 4 and 5 and Article 232 or the
secondary legislation implementing the Law shall be punishable with a fine in the amount of
BGN 1,000 to BGN 4,000;
2. Article 6, Paragraph 3, Article 21, Paragraph 9, Article 24a, Paragraphs 2 and 3, Article 25,
Article 26, Paragraphs 1 and 2, Article 34, Paragraphs 1 and 3, Article 36, Paragraph 1,
Article 51, Article 56, Paragraph 1, Article 57, Paragraph 4, Article 58, Paragraph 1, Article
60, Paragraph 1, Article 64, Article 67, Paragraphs 2 and 3, Article 69, Paragraph 5, Article
71, Paragraph 2, Article 72, Paragraph 1, Article 75, Paragraphs 1 and 2, Article 77,
Paragraph 2, Article 78, Paragraphs 1 – 3, Article 80, Article 82, Paragraph 1, Article 87,
142 Paragraph 2, Article 89, Article 92, Paragraphs 1 – 3, Article 93, Paragraph 7, Article 100,
Paragraph 4, Article 101, Paragraph 2, Article 103, Article 104, Paragraphs 1 and 2, Article
105, Paragraph 1, Article 106, Paragraphs 1 and 3, Article 108, Article 109, Paragraphs 1, 7, 8
and 10, Article 110, Paragraphs 1, 5 – 8, Article 113, Paragraphs 2, 3 and 5, Article 114,
Paragraphs 1, 4 and 6, Article 116, Paragraph 1, Article 117, Paragraphs 1 – 3, Article 119,
Paragraphs 1, 2 and 4, Article 120, Paragraphs 1 and 5, Article 122, Article 124, Paragraph 3,
Article 128, Paragraph 1, Articles 130, 131, 132, Article 136, Paragraphs 1, 6 and 8, Article
149, Article 151, Paragraph 3, Article 154, Paragraph 3, Article 156, Article 185, Article 191,
Paragraph 2, Article 205, Paragraph 2, Article 215, Article 218, Paragraphs 1 – 3, Article 219,
Paragraph 1, Articles 220, 221, 222, 223, 224, 226, Article 228, Paragraph 1, Articles 233,
234, 235, 236, 237, Article 239, Paragraphs 1, 2 and 6, Article 240, Paragraphs 1, 2 and 4,
Article 243, Article 244, Paragraphs 1 and 6, Article 245, Paragraphs 1 and 6, Article 246,
Paragraphs 1 and 4 and Article 249, Paragraph 1 shall be punishable with a fine in the amount
of BGN 4,000 to BGN 10,000;
3. Article 4, Paragraph 4, Article 7, Paragraph 7, Article 21, Paragraphs 1, 6 and 8, Article
22, Paragraphs 1 – 4, Article 24b, Article 24c, Paragraphs 2 and 3, Article 27, Paragraph 1,
Article 28, Paragraph 1, Articles 29, 31, 32, Article 36, Paragraphs 4 and 5, Articles 38, 40,
41, Article 43, Paragraphs 1 and 2, Article 45, Paragraphs 1 – 9 and 11, Article 46, Paragraph
1, Article 47, Article 48, Paragraphs 1 and 2, Article 49, Paragraphs 1 and 2, Article 53,
Article 69, Paragraph 1, Article 75, Paragraph 4, Article 76, Article 81, Paragraph 1, Article
83, Article 86, Paragraphs 6 – 8, Article 90, Paragraphs 2 – 4, 6, 9 and 10, Article 101,
Paragraph 1, Article 102, Paragraphs 1 and 2, Article 175, Paragraph 1, Article 183,
Paragraphs 1 and 3, Article 184, Paragraph 1, Articles 186, 187, 189, 190, Article 198,
Paragraphs 3 and 6, Article 199, Paragraphs 3, 6, 7, 9 – 11, Article 203, Paragraphs 1 and 2,
Article 205, Paragraph 1, Articles 206, 210, Article 211, Paragraph 1, Article 216, Paragraphs
1 – 3, Article 229, Paragraphs 1 – 3, Articles 230, 238, Article 241, Paragraph 1, Article 242,
Article 248, Paragraph 1, Article 250 and Article 251, Paragraph 1 shall be punishable with a
fine in the amount of BGN 10,000 to BGN 20,000.
(2) In case of a repeated infringement under para 1, the guilty person shall be liable to a fine
in amount as follows:
1. for infringements under para 1, Item 1 – from BGN 4000 to BGN 10 000;
2. for infringements under para 1, Item 2 – from BGN 10 000 to BGN 20 000;
3. for infringements under para 1, Item 3 – from BGN 20 000 to BGN 40 000.
(3) To any person who commits or allows a violation of Article 6, Paragraph 2, Article 98,
Paragraph 1, Article 171, Paragraph 6 and Article 197, Paragraphs 1, 3 and 4, a fine,
respectively a penalty payment in the amount from BGN 20,000 to BGN 200,000 shall be
imposed.
(4) In case of non-compliance with the imposed coercive administrative measures under Art.
264, para 1, those who have committed the act and those who have allowed it shall be liable
to a fine, or property sanction, in amount from BGN 10 000 to BGN 100 000.
(5) For infringements under para 1, property sanctions shall be imposed on legal entities and
sole traders in amount as follows: 1. for infringement under para 1, Item 1 – from BGN 4000
to BGN 10 000 and in case of a repeated infringement – from BGN 10 000 to BGN 20 000;
2. for infringements under para 1, Item 2 – from BGN 10 000 to BGN 20 000 and in case of a
repeated infringement – from BGN 20 000 to BGN 40 000;
3. for infringements under para 1, Item 3 – from BGN 20 000 to BGN 40 000 and in case of a
repeated infringement – from BGN 40 000 to BGN 100 000.
143 (6) Incomes acquired from activities unlawfully carried out shall be confiscated in favor of the
State to the extent to which the affected persons cannot be compensated.
Art. 274. (1) The acts of established infringements under Art. 273 shall be drawn up by
authorized by the Deputy Chairperson officials, and the penalty warrants shall be issued by
the Deputy Chairperson.
(2) The establishment of infringements, the issuing, appeal against and enforcement of
penalty warrants shall be carried out in accordance with the Law on Administrative Offences
and Penalties.
Art. 275. (1) The Commission may disclose any applied measure or imposed penalty for
violation of the provisions of this Law and its implementing regulation, unless this would
seriously jeopardize the stability of the financial markets, would be detrimental to the interests
of the investors or could cause damage disproportionate to the committed violation to the
persons whom the information concerns.
(2) The Commission shall submit an annual summary to ESMA on the applied measures or
imposed penalties for violations of the provisions of this Law and its implementing
regulations.
Additional Provisions
§ 1. For the purposes of this Law:
1. "Member State" means a state, which is a member of the European Union or another state –
a party to the Agreement on the European Economic Area.
2. "Home Member State" is:
a) for a management company – the Member State in which the management company has its
registered office;
b) for a collective investment scheme – the Member State, whose competent authority has
issued the license, or the authorization to pursue business.
c) for alternative investment fund managers - the Member State where its seat is located,
respectively the Member State of reference - for alternative investment fund managers with a
seat in a third country;
d) for alternative investment funds - the Member State whose competent authority has issued
the authorization to conduct the activity or where the fund was first registered, and in the
absence of an authorization or registration - the Member State where its seat and/or its
management is located.
3. "Subsidiary" means a subsidiary within the meaning of § 1, Item 10 of the Additional
Provisions of the Law on Supplementary Supervision on Financial Conglomerates.
4. "Units of a collective investment scheme" are financial instruments issued by a collective
investment scheme, which express the rights of their owners over its assets. Units of a
collective investment scheme also mean shares of a collective investment scheme.
5. "Investor" means investor within the meaning of § 1, Item 1 of the Additional Provisions of
the Law on Public Offering of Securities.
6. "Money market instruments" means instruments normally dealt in on the money market
which are liquid and have a value which can be accurately determined at any time.
7. "Qualifying holding" means a direct or indirect holding in a management company
respectively in an alternative investment fund manager, which represents 10 per cent or more
than 10 percent of the capital or of the voting rights at the general meeting, determined
144 according to Art. 145 and 146 of the Law on Public Offering of Securities, or which makes it
possible to exercise a significant influence over the management of the company, respectively
in an alternative investment fund manager.
8. "Client" means any natural or legal person and any other company, including a collective
investment scheme, whose activities are managed by a management company or that uses the
services pursuant to Art. 86, para 2.
9. "Branch "of a management company, respectively of an alternative investment fund
manager, means a place of business which is a part of the management company, respectively
of the alternative investment fund manager, which has no legal personality and which
provides the services for which the management company, respectively the alternative
investment fund manager, has been authorized.
10. "Collective investment scheme" means an undertaking organized as an investment
company, contractual fund or unit trust, that has been granted authorization to pursue business
under Directive 2009/65/EC.
11. "Competent authorities "means the authorities of the respective country which have
supervisory powers with regard to the respective institution.
12. "Control" means control within the meaning of § 1, т. 8 of the Additional Provisions of
the Law on Supplementary Supervision on Financial Conglomerates.
13. "Net asset value" is the total value of all assets in the collective investment scheme’s
portfolio, reduced with all liabilities.
14. "Repeated" means an infringement committed within a year of the effective date of the
penalty warrant penalizing the offender for an infringement of the same kind.
15. "Fixed costs" means the amount of the incurred expenses for depreciation, rents,
compulsory insurances, taxes and charges of real properties, remunerations to the members of
the management and supervisory bodies and other expenses that are not dependent on the
level of the performed activity.
16. "Parent undertaking" means a parent undertaking within the meaning of § 1, Item 9 of the
Additional Provisions of the Law on Supplementary Supervision on Financial Conglomerates.
17. "Transferable securities" means:
a) shares in companies and other securities equivalent to shares;
b) bonds and other forms of securitized debt (debt securities);
c) any other negotiable securities which carry the right to acquire transferable securities by
subscription or exchange.
18. "Host Member State" means:
a) for a management company – a Member State, other than the Member State within the
meaning of Item 2, letter "a", in which the management company has a branch or oprovides
services;
b) for a collective investment scheme – a Member State, other than a Member State within the
meaning of Item 2, letter "b", in which the units of the collective investment scheme are
marketed.
c) for an alternative investment fund manager:
aa) a Member State other than the Member State of origin in which an alternative investment
fund manager with a seat in a Member State manages an alternative investment fund
domiciled in a Member State;
bb) a Member State other than the Member State of origin in which an alternative investment
fund manager with a seat in a Member State markets units or shares of an alternative
investment fund domiciled in a Member State;
145 cc) a Member State other than the Member State of origin in which an alternative investment
fund manager with a seat in a Member State markets units or shares of an alternative
investment fund domiciled in a third country;
dd) a Member State other than the Member State of origin in which an alternative investment
fund manager with a seat in a third country manages an alternative investment fund domiciled
in a Member State;
ee) a Member State other than the Member State of origin in which an alternative investment
fund manager with a seat in a third country markets units or shares of an alternative
investment fund domiciled in a Member State;
ff) a Member State other than the Member State of origin in which an alternative investment
fund manager with a seat in a third country markets units or shares of an alternative
investment fund domiciled in a third country."
19. "Unit-holder" means any natural or legal person holding one or more units in a collective
investment scheme.
20. "Related persons" means the persons within the meaning of § 1, Item 25 ofthe Additional
Provisions of the Markets in Financial Instruments Act.
21. "Systemic infringement" exists where three or more administrative infringement of this
Law or its implementing instruments have been committed with
22. "Durable medium" means an instrument for provision of information to an investor which
enables the investor to store information addressed personally to that investor in a way
allowing future reference with it for a period of time adequate for the purposes of provision of
information and which allows unchanged reproduction of the information stored.
23. "Third country" is a country which is not a Member State.
24. "Financial instruments" means the financial instruments within the meaning of Art. 3 of
the Markets in Financial Instruments Act.
25. "Exchange-trade fund" means a collective investment scheme which has at least one class
of units or shares admitted to trading and traded on a regulated market under Article 73 of the
Markets in Financial Instruments Act or on a multilateral trading facility under § 1, Item 19 of
the Additional Provisions of the Markets in Financial Instruments Act throughout the whole
trading session of the respective market and for which a contract is signed with at least one
market maker, ensuring the upholding of a market price of the shares or units which does not
differ significantly from the net asset value, respectively from the indicative net asset value.
26. "Indicative Net Asset Value" is a measure of the intraday net asset value of an exchangetraded fund based on the most current data.
27. "Actively managed exchange-traded fund" means an exchange-traded fund managed on
the basis on the objectives and policy of the collective investment scheme, in the management
of which no specific index is followed.
28. "Leverage" means any method by which an alternative investment fund managers
increases the exposure of the alternative investment fund it manages, regardless of whether
through borrowing of cash or securities, leverage embedded in derivative positions or
otherwise.
146 29. "Feeder alternative investment fund "is an alternative investment fund which:
a) invests at least 85 percent of its assets in another alternative investment fund (the master
alternative investment fund);
b) invests at least 85 percent of its assets in more than one master alternative investment fund
with the same investment strategies, or
c) has another type of exposure of at least 85 percent of its assets in a master alternative
investment fund.
30. "Master alternative investment fund" is an alternative investment fund in which another
alternative investment fund invests or to which it has exposure in accordance with Item 29.
31. "Country of establishment of an alternative investment fund" means the country in which
an alternative investment fund is authorized or registered, and if not authorized or respectively
not registered - the country in which its seat and/or its headquarters are located.
32. "Member State of reference" means the Member State determined in accordance with
Article 207.
33. "Prime broker" means a credit institution, investment intermediary or another entity
subject to appropriate regulation and supervision which provides services to professional
investors, primarily in connection with the funding and realisation of transactions in financial
instruments in the capacity of a counterparty, in addition it may offer other functions such as
clearing and settlement of transactions, trustee services, lending of securities, customised
technical services and operational support.
34. "Holding Company" means a company that invests in one or more other companies with
regard to the implementation of one or more trading strategies through its subsidiaries,
affiliates or companies in which it has a holding, with the purpose of increasing their longterm value and which meets one of the following requirements:
a) it acts for its account and its shares are admitted to trading on a regulated market under
Article 73 of the Markets in Financial Instruments Act;
b) its primary objective is not to provide a return to the investors through the termination of
its investments in subsidiaries or affiliates, and this is reflected in its annual statements or
other official documents.
35. "Marketing" means any direct or indirect offering or sale at the initiative or on behalf of a
management company or, respectively an alternative investment fund managers, of units or
shares of a collective investment scheme managed by it, respectively of an alternative
investment fund, to investors domiciled or headquartered in the territory of the European
Union.
36. "Deferred compensation" means a compensation paid to an alternative investment fund
manager against services performed by the manager in connection with the management of an
147 alternative investment fund based on the profits of the managed alternative investment fund.
The rate of return from investments in the alternative investment fund made by its manager is
not regarded as compensation.
37. "Market maker" is a person within the meaning of § 1, Item 6 of the Additional
Provisions of the Markets in Financial Instruments Act.
§ 2. 1.The Law implements the provisions of Directive 2009/65/ЕC of the European
Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and
administrative provisions relating to undertakings for collective investment in transferable
securities (UCITS).
2. Directive 2010/78/ЕU
3. Directive 2011/61/EU of the European Parliament and of the Council of 08 June 2011 on
alternative investment fund managers and amending Directive 2003/41/EC and Directive
2009/65/EC and Regulations (EC ) No 1060/2009 and (EU) No 1095/2010 (OJ, L 174/1 of 01
July 2011).
TRANSITIONAL AND FINAL PROVISIONS
§ 3. The collective investment schemes shall replace the simplified prospectus with a key
investor information document according to Art. 57 within a period by 1 July 2012.
§ 4. Investment companies of open-end type shall pass to a one-tier management system
within a period by 1 July 2012.
§ 5. Investment companies of open-end type shall sell at price, not lower than their market
value, the possessed by them movables and real properties, acquired under the provisions of
the canceled Art. 195, para 3 of the Law on Public Offering of Securities, within a period by 1
July 2012.
§ 6. Until the preparation of the list pursuant to Art. 35, para 1, the list of the depositary banks
shall remain in effect under the canceled Art. 173, para 9 of the Law on Public Offering of
Securities.
§ 7. The Financial Supervision Commission shall adopt the ordinances for implementation of
the Law.
§ 8. In the Financial Supervision Commission Act (prom., SG, iss. 8 in 2003; am., iss. 31, 67
and 112 in 2003, iss. 85 in 2004, iss. 39, 103 and 105 in 2005, iss. 30, 56, 59 and 84 in 2006,
iss. 52, 97 and 109 in 2007, iss. 67 in 2008, iss. 24 and 42 in 2009 and iss. 43 and 97 in 2010)
shall be made the following amendments and supplements: 1. In Art. 1, para 2, Item 1 the
words "investment and management companies" are replaced with "collective investment
schemes and closed-end investment companies and management companies", after the words
"Act on Special Investment Purpose Companies" the conjunction "and" is replaced by a
comma and in the end is added "and the Law on the Activities of Collective Investment
Schemes and Other Collective Investment Undertakings".
148 2. В Art. 12, Item 2 after the words "Act on Special Investment Purpose Companies" a
comma is placed and is added "the Law on the Activities of Collective Investment Schemes
and Other Collective Investment Undertakings".
3. In Art. 13:
a) in para 1:
aa) in Item 4 after the words "Markets in Financial Instruments Act" is added "Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings"
and a comma is placed;
bb) in Item 5 after the words "Markets in Financial Instruments Act" is added "Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings"
and a comma is placed;
cc) in Item 6 after the words "Markets in Financial Instruments Act", a comma is placed and
is added "Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings";
dd) in Item 8 after the words "Public Offering of Securities Act" a comma is placed and is
added "Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings";
ee) in Item 10 after the words "Markets in Financial Instruments Act" is added "Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings"
and a comma is placed;
ff) in Item 11 after the words "Markets in Financial Instruments Act" is added "Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings"
and a comma is placed;
b) in para 2 after the words "Markets in Financial Instruments Act" is added "Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings"
and a comma is placed.
4. In Art. 15:
a) in para 1:
aa) in Item 2 after the words "Public Offering of Securities Act" the conjunction "and" is
replaced by a comma, and after the words "Markets in Financial Instruments Act" is added
„and the Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings";
bb) in Item 3 after the words "Public Offering of Securities Act" the conjunction "and" is
replaced by a comma, and after the words "Markets in Financial Instruments Act" is added
"and the Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings";
cc) in Item 4 after the words "Chapter One of the Markets in Financial Instruments Act" a
comma is placed and is added "under Part Four, Chapter Nineteen of the Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings";
dd) in Item 5 after the words "in the cases of Art. 212, para 4 of the Public Offering of
Securities Act" a comma is placed and is added "of Art. 195, para 3 of the Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings",
and after the words "of Art. 212, para 1, Item 1 of the Public Offering of Securities Act" a
comma is placed and is added "of Art. 195, para 1, Item 1 of the Law on the Activities of
Collective Investment Schemes and Other Collective Investment Undertakings";
ee) in Item 6 after the words "Law on Measures Against Market Abuse with Financial
Instruments" a comma is placed and is added "Law on the Activities of Collective Investment
Schemes and Other Collective Investment Undertakings";
149 ff) in Item 7 after the words "Law on Measures Against Market Abuse with Financial
Instruments" a comma is placed and is added " Law on the Activities of Collective Investment
Schemes and Other Collective Investment Undertakings";
gg) in Item 9 the words "investment companies" are replaced with “collective investment
schemes and closed-end investment companies";
hh) in Item 15 after the words "Markets in Financial Instruments Act" a comma is placed and
is added "Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings", and the words "regulation and control over the securities markets"
are replaced with "regulation and control over the market in financial instruments";
b) in para 2:
aa) in letter "a" after the words "Public Offering of Securities Act" the conjunction "and" is
replaced with a comma, and after the words "Markets in Financial Instruments Act" is added
"and the Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings";
bb) in letter "b" the words "Public Offering of Securities Act" are replaced with "Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings",
and the words "investment company" are replaced with "collective investment scheme and
closed-end investment company".
5. In Art. 18:
a) in para 1:
aa) in Item 1 after the words "Public Offering of Securities Act" is added "Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings"
and a comma is placed;
bb) in Item 6 after the words "Public Offering of Securities Act" is added "Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings"
and a comma is placed;
b) in para 3 after the words "Public Offering of Securities Act" is added "Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings"
and a comma is placed.
6. In Art. 19, para 2, Item 1 after the words "Public Offering of Securities Act" is added "Law
on the Activities of Collective Investment Schemes and Other Collective Investment
Undertakings" and a comma is placed.
7. In Art. 24, para 5, Item 1 after the words "Public Offering of Securities Act" is added "Law
on the Activities of Collective Investment Schemes and Other Collective Investment
Undertakings" and a comma is placed.
8. In Art. 27, para 1, Item 1 after the words "Public Offering of Securities Act" is added "Law
on the Activities of Collective Investment Schemes and Other Collective Investment
Undertakings" and a comma is placed.
9. In Art. 30, para 1:
a) Item 4 shall be amended as follows:
"4. collective investment schemes";
b) in Item 5 the words "and the managed by them contractual funds" are deleted;
c) a new Item 6 shall be established:
"6. closed-end investment companies";
d) the former Items 6, 7, 8, 9, 10, 11, 12 and 13 become respectively 7, 8, 9, 10, 11, 12, 13
and 14.
150 § 9. In the Act on the Special Investment Purpose Companies (prom., SG, iss. 46 in 2003;
am., iss. 109 in 2003, iss. 107 in 2004, iss. 34, 80 and 105 in 2006 and iss. 52 and 53in 2007)
shall be made the following amendments and supplements:
1. In Art. 9, para 4 the words "Art. 173 of the Law on Public Offering of Securities" are
replaced with "Art. 28 and Chapter Five of the Law on the Activities of Collective Investment
Schemes and Other Collective Investment Undertakings";
2. In Art. 11, para 3, Item 1 after the words "Law on Public Offering of Securities" a comma
is placed and is added "of the Law on the Activities of Collective Investment Schemes and
Other Collective Investment Undertakings";.
3. In Art. 29, para 1 the words "Article 177, para 4 and 5 of the Law on Public Offering of
Securities" are replaced with "Article 144, para 3 and 4 of the Law on the Activities of
Collective Investment Schemes and Other Collective Investment Undertakings";
4. In § 2 of the Transitional and Final Provisions after the words "Law on Public Offering of
Securities" a comma is placed and is added "of the Law on the Activities of Collective
Investment Schemes and Other Collective Investment Undertakings".
§ 10. In the Markets in Financial Instruments Act (prom., SG, iss. 52 in 2007; am., iss. 109 in
2007, iss. 69 in 2008, iss. 24, 93 and 95 in 2009 and iss. 43 in 2010) shall be made the
following amendments and supplements:
1. In Art. 11, para 2:
a) in Item 8 after the words "the Special Purpose Vehicles Act” a comma is placed and is
added "Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings";
b) in Item 9 after the words "Special Purpose Vehicles Act" a comma is placed and is added
"Law on the Activities of Collective Investment Schemes and Other Collective Investment
Undertakings";
c) in Item 10 after the words "Law on Public Offering of Securities" a comma is placed and is
added "Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings";
2. In Art. 20:
a) in para 1, Item 4 after the words "Special Purpose Vehicles Act" a comma is placed and is
added "Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings";
b) in para 2, Item 4 after the words "Special Purpose Vehicles Act" a comma is placed and is
added "Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings".
3. In Art. 26c, para 3, Item 2 the words "Directive 85/611/EEC" shall be replaced with
"Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the
coordination of laws, regulations and administrative provisions relating to undertakings for
collective investment in transferable securities (UCITS) (OJ, L 302/32 of 17 November
2009), hereinafter referred to as "Directive 2009/65/EC".
4. In Art. 34, para 3, Item 4 the words "Council Directive 85/611/EEC" shall be replaced with
"Directive 2009/65/EC".
5. In § 1, Item 18 of the Additional Provisions the words "Law on Public Offering of
Securities" are replaced with "Law on the Activities of Collective Investment Schemes and
Other Collective Investment Undertakings" and the words "Council Directive 85/611/EEC"
are replaced with "Directive 2009/65/EC".
151 § 11. In the Law on Supplementary Supervision on Financial Conglomerates (prom., SG, iss.
59 in 2006; am., iss. 52 in 2007) in § 1 of the Additional Provisions shall be made the
following amendments:
1. In Item 4 the words "Art. 202, para 1 of the Law on Public Offering of Securities" are
replaced with "Art. 86, para 1 of the Law on the Activities of Collective Investment Schemes
and Other Collective Investment Undertakings".
2. In Item 19, letter "c" the words "Art. 203, para 1 of the Law on Public Offering of
Securities" are replaced with "Art. 90, para 1 and 2 of the Law on the Activities of Collective
Investment Schemes and Other Collective Investment Undertakings".
3. In Item 20, letter "c" the words "Law on Public Offering of Securities" are replaced with
"Law on the Activities of Collective Investment Schemes and Other Collective Investment
Undertakings".
§ 12. In the Law on Public Offering of Securities (prom., SG, iss. 114 in 1999; am., iss. 63
and 92 in 2000, iss. 28, 61, 93 and 101 in 2002, iss. 8, 31, 67 and 71 in 2003, iss. 37 in 2004,
iss. 19, 31, 39, 103 and 105 in 2005, iss. 30, 33, 34, 59, 63, 80, 84, 86 and 105 in 2006, iss.
25, 52, 53 and 109 in 2007, iss. 67 and 69 in 2008, iss. 23, 24, 42 and 93 in 2009, iss. 43 and
101 in 2010 and iss. 57 in 2011) shall be made the following amendments and supplements:
1. In Art. 1, para 1, Item 2 the words "of the investment and management companies, and the
conditions for carrying out such activities" are deleted.
2. In Art. 77y, para 1, Item 8 after the words "investment company" a comma is placed and is
added "contractual fund".
3. In Art. 146:
a) in para 2 the word "included in the individual portfolio managed by it according Art. 202,
para 2, Item 1" are replaced with "included in a portfolio managed by it according to Art. 86,
para 2, Item 1 of the Law on the Activities of Collective Investment Schemes and Other
Collective Investment Undertakings";
b) in para 3, Item 2 the words "Council Directive 85/611/EEC" are replaced with "Directive
2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the
coordination of laws, regulations and administrative provisions relating to undertakings for
collective investment in transferable securities (UCITS) (OJ, L 302/32 of 17 November
2009), hereinafter referred to as "Directive 2009/65/EC".
c) in para 5 the words "Art. 5 of Council Directive 85/611/EEC" are replaced with " Art. 6 of
Directive 2009/65/EC".
4. Title Four "INVESTMENT COMPANIES AND CONTRACTUAL FUNDS" with Art. 164
– 211k is canceled.
5. In Title Five, Chapter Twenty with Art. 216 - 220 is canceled.
6. The following amendments are made in Art. 221:
a) in para 1:
aa) in Item 1 the words "Art.191, para 4, 7 and 8 and Art. 211j" are deleted;
bb) in Item 2 the words "Art. 173, para 12, Art. 174, Art. 180, para 3, Art. 183, para 2, Art.
184, para 2, Art. 187, para 4, Art. 189, Art. 192, para 3, Art. 196, para 14 and Art. 206, para
2" are deleted;
cc) in Item 3 the words "Art. 164, para 2, Art. 168, para 3, Art. 170, para 1, Art. 173, para 1,
sentence one, and para 5, Art. 177a, para 6 and 8, Art. 187, para 3, sentence one, Art. 190,
Art. 191, para 1 and para 4, sentence one, Art. 193, para 9, Art. 197, para 3, Art. 200, para 1,
Art. 202, para 9 and 10, Art. 210, Art. 211a, para 1, 5 and 6, Art. 211b, para 1, 4, 5 and 6, Art.
211e, para 2, 3 and 4, Art. 211f, para 1, 2 and 3, Art. 211h, para 1 and 3, Art. 211i, para 1 - 3,
Art. 211l, para 1, 2 and 4" are deleted;
152 dd) in Item 4 the words "Art. 169, Art. 170, para 2, Art. 172, Art. 173, para 6, Art. 175, Art.
176, Art. 186, Art. 193, para 1, 5, 6 and 10, Art. 194, para 3 and 5, Art. 195, Art. 196, para 1 7, 9 - 12, Art. 197, para 1, Art. 197b, para 3 and 5, Art. 199, Art. 201, para 2 and 5, Art. 202,
para 7 and 8, Art. 203, para 6" are deleted;
b) in para 5 the words "Art. 184, para 1 and Art. 206, para 1" are deleted.
7. In § 1 of the Additional Provisions:
a) in Item 1, letter "c" the words "an investment company, contractual fund" are replaced with
"a collective investment scheme and a closed-end investment company”;
b) items 22, 26, 31, 37, 38 and 39 are canceled.
8. In § 1c of the Additional Provisions, Item 1 is canceled.
§ 13. In the Social Insurance Code (prom., SG, iss. 110 in 1999; Judgment № 5 of the
Constitutional Court from year 2000 - iss. 55 in 2000; am., iss. 64 in 2000; iss. 1, 35 and 41 in
2001, iss. 1, 10, 45, 74, 112, 119 and 120 in 2002, iss. 8, 42, 67, 95, 112 and 114 in 2003, iss.
12, 21, 38, 52, 53, 69, 70, 112 and 115 in 2004, iss. 38, 39, 76, 102, 103, 104 and 105 in 2005,
iss. 17, 30, 34, 56, 57, 59 and 68 in 2006; am., iss. 76 in 2006; am., iss. 80, 82, 95, 102 and
105 in 2006, iss. 41, 52, 53, 64, 77, 97, 100, 109 and 113 in 2007, iss. 33, 43, 67, 69, 89, 102
and 109 in 2008, iss. 23, 25, 35, 41, 42, 93, 95, 99 and 103 in 2009, iss. 16, 19, 43, 49, 58, 59,
88, 97, 98 and 100 in 2010, Judgment № 7 of the Constitutional Court from year 2011- iss. 45
in 2011, am, iss. 60 in 2011) shall be made the following amendments:
1. In Art. 123c, para 4 the words "Art. 202 of the Public Offering of Securities Act" are
replaced with "Art. 86 of the от Law on the Activities of Collective Investment Schemes and
Other Collective Investment Undertakings".
2. In Art. 176, para 1, Item 10 the words "Public Offering of Securities Act" are replaced with
"Law on the Activities of Collective Investment Schemes and Other Collective Investment
Undertakings".
3. In § 1, para 2, Item 16 of the Additional Provisions the words "§ 1, Item 26 of the
Additional Provisions of the Public Offering of Securities Act” are replaced with "§ 1, Item
10 of the Additional Provisions of the Law on the Activities of Collective Investment
Schemes and Other Collective Investment Undertakings".
§ 14. In the Corporate Income Tax Act (prom., SG, iss. 105 in 2006; am., iss. 52, 108 and 110
in 2007, iss. 69 and 106 in 2008, iss. 32, 35 and 95 in 2009, iss. 94 in 2010 and iss. 19, 31, 35
and 51 in 2011) shall be made the following amendments:
1. In Art. 174 the words "the licensed closed-end investment companies under the Law on
Public Offering of Securities" are replaced with "the licensed closed-end investment
companies under the Law on the Activities of Collective Investment Schemes and Other
Collective Investment Undertakings".
2. In § 1, Item 26, letter "c" of the Additional Provisions the words "Law on Public Offering
of Securities" are replaced with "Law on the Activities of Collective Investment Schemes and
Other Collective Investment Undertakings".
§ 15. In the Insurance Code (prom., SG, iss. 103 in 2005; am., iss. 105 in 2005, iss. 30, 33, 34,
54, 59, 80, 82 and 105 in 2006, iss. 48, 53, 97, 100 and 109 in 2007, iss. 67 and 69 in 2008,
iss. 24 and 41 in 2009, iss. 19, 41, 43, 86 and 100 in 2010 and iss. 51 and 60 in 2011) shall be
made the following amendments and supplements:
1. In Art. 73, para 1 Item 3 is modified as follows:
3. "3. units issued by collective investment schemes and shares of closed-end investment
companies under the Law on the Activities of Collective Investment Schemes and Other
153 Collective Investment Undertakings as well as units of collective investment schemes with a
head office in another Member State";
2. In Art. 185:
a) a new para 4 shall be created:
4. "(4) When offering Life insurance under para 1, Item 9, linked to investment in units of a
collective investment scheme, or advising a client in relation to such insurance, the insurer
shall provide its customers with the key investor information document in accordance with
Art. 59, para 3 of the Law on the Activities of Collective Investment Schemes and Other
Collective Investment Undertakings";
b) the former para 4 becomes para 5 and therein the words "para 1 or 3" are replaced with
“para 1 and 4 or para 3";
c) the former para 5 becomes para 6 and therein the words "para 1 - 4" are replaced with "para
1 - 5".
5. In Annex № 1, Section I, Item 3 the words "Public Offering of Securities Act" are replaced
with "Law on the Activities of Collective Investment Schemes and Other Collective
Investment Undertakings".
§ 16. In the Tax and Social Insurance Procedure Code (prom., SG, iss. 105 in 2005; am., iss.
30, 33, 34, 59, 63, 73, 80, 82, 86, 95 and 105 in 2006, iss. 46, 52, 53, 57, 59, 108 and 109 in
2007, iss. 36, 69 and 98 in 2008, iss. 12, 32, 41 and 93 in 2009, iss. 15, 94, 98, 100 and 101 in
2010 and iss. 14 and 31 in 2011) in Art. 143p, para 2 the words "Public Offering of Securities
Act" are replaced with "Law on the Activities of Collective Investment Schemes and Other
Collective Investment Undertakings".
§ 17. In the Law on Financial Collateral Arrangement (prom., SG, iss. 68 in 2006; am., iss. 24
in 2009 and iss. 101 in 2010) shall be made the following amendments:
1. In Art. 3, para 1 Item 9 is modified as follows:
"9. A collective investment scheme and a closed-end investment company;"
2. In Art. 4, para 3, Item 2 the words "shares and units in" are replaced with "units in".
§ 18. In the Gambling Act (prom., SG, iss. 51 in 1999; am., iss. 103 in 1999, iss. 53 in 2000,
iss. 1, 102 and 110 in 2001, iss. 75 in 2002, iss. 31 in 2003, iss. 70 in 2004, iss. 79, 94, 95,
103 and 105 in 2005, iss. 30 and 54 in 2006, iss. 109 and 110 in 2007, iss. 42, 74 and 82 in
2009, iss. 50 in 2010 and iss. 35 and 60 in 2011) in Art. 70 after the words "investment
company" shall be added "management company".
§ 19. In the Electronic Trade Act (prom, SG, iss. 51 in 2006; am., iss. 105 in 2006, iss. 41 in
2007 and iss. 82 in 2009) in Art. 19, para 3, Item 4 the words "securities issued by investment
companies and contractual funds for collective investment" shall be replaced with с "units of
collective investment schemes".
§ 20. In the Value Added Tax Act (prom., SG, iss. 63 in 2006; am., iss. 86, 105 and 108 in
2006; Judgment № 7 of the Constitutional Court from year 2007 - iss. 37 in 2007; am., iss. 41,
52, 59, 108 and 113 in 2007, iss. 106 in 2008, iss. 12, 23, 74 and 95 in 2009, iss. 94 and 100
in 2010 and iss. 19 in 2011) in Art. 46, para 1, Item 6 the words "Law on Public Offering of
Securities" shall be replaced with "Law on the Activities of Collective Investment Schemes
and Other Collective Investment Undertakings".
§ 21. In the Administrative Violations and Sanctions Act (prom., SG, iss. 92 in 1969; am., iss.
54 in 1978, iss. 28 in 1982, iss. 28 and 101 in 1983, iss. 89 in 1986, iss. 24 in 1987, iss. 94 in
154 1990, iss. 105 in 1991, iss. 59 in 1992, iss. 102 in 1995, iss. 12 and 110 in 1996, iss. 11, 15,
59, 85 and 89 in 1998, iss. 51, 67 and 114 in 1999, iss. 92 in 2000, iss. 25, 61 and 101 in
2002, iss. 96 in 2004, iss. 39 and 79 in 2005, iss. 30, 33, 69 and 108 in 2006, iss. 51, 59 and
97 in 2007, iss. 12, 27 and 32 in 2009 and iss. 10, 33, 39 and 60 in 2011) in Art. 34, para 1 in
sentence two after the word "securities" a comma shall be placed and shall be added "the
Markets in Financial Instruments Act, the Act on the Special Investment Purpose Companies,
the Law on Measures Against Market Abuse with Financial Instruments, the Law on the
Activities of Collective Investment Schemes and Other Collective Investment Undertakings,
Part Two, Part Two "a" and Part Three of the Social Insurance Code".
§ 22. In the Law on Credit Institutions (prom., SG, iss. 59 in 2006; am., iss. 105 in 2006, iss.
52, 59 and 109 in 2007, iss. 69 in 2008, iss. 23, 24, 44, 93 and 95 in 2009 and iss. 94 and 101
in 2010) in Art. 57 shall be created para 5: "(5) Where the bank offers a deposit whose interest
rate is linked to the yield of an investment in units of collective investment schemes or offers
advice to its customers on such a deposit, it shall provide its customers with the key investor
information document in accordance with Article 59, paragraph 3 of the Law on Collective
Investment Schemes and Other Collective Investment Undertakings. Upon ascertaining
infringements under the first sentence, the Bulgarian National Bank shall notify the Financial
Supervision Commission thereof”.
TRANSITIONAL AND FINAL PROVISIONS TO THE LAW amending the Law on the
Activities of Collective Investment Schemes and Other Collective Investment
Undertakings, Promulgated in SG, issue 109 of 20 December 2013, effective as of 20
December 2013
§ 73. Collective investment schemes with units or shares admitted to trading on a regulated
market shall bring their activity into compliance with the requirements of trading of the
offered shares or units within 6 months of the entry into force of this Law.
§ 74. Closed-ended investment companies shall bring their activity in compliance with the
requirements of Part Three, Title One within six months of the entry into force of this Law.
§ 75. Alternative investment fund managers under Article 214 shall apply for registration
under Chapter Twenty within one month of the entry into force of this Law.
§ 76. Alternative investment fund managers for which as of the entry into force of this Law a
licensing requirement arises shall file an application for issuance of a license under Chapter
Twenty by 22 July 2014.
§ 77. Persons managing only closed-ended alternative investment funds, as of the entry into
force of this Law may continue to operate without the need to obtain a license for this activity
if after the entry into force of this Law they do not make any additional investments.
§ 78. Persons managing, as of the entry into force of this Law, only closed-ended alternative
investment funds established for a term expiring no later than 22 July 2016 and which are not
accepting new investors may continue to operate without the need to obtain a license for this
activity. Articles 234, 235 and Article 237, Paragraph 1, Item 13 shall apply for the persons
under Sentence 1.
§ 79. The requirements concerning the marketing of units or shares of alternative investment
funds by an alternative investment fund manager with a seat in a Member State shall not
apply to prospectus-based offerings under Chapter Six of the Public Offering of Securities Act
commencing before 22 July 2013, for the term of validity of the prospectus.
§ 80. The Financial Supervision Commission Act (promulgated, SG, issue 8 of 2003;
amended, issue 31, 67 and 112 of 2003, issue 85 of 2004, issue 39, 103 and 105 of 2005, issue
155 30, 56, 59 and 84 of 2006, issue 52, 97 and 109 of 2007, issue 67 of 2008, issue 24 and 42 of
2009, issue 43 and 97 of 2010, issue 77 of 2011, issue 21, 38, 60, 102 and 103 of 2012 and
issue 15 of 2013) shall be amended and supplemented as follows:
1. In Article 1, Paragraph 2, Item 1, after the words "the collective investment schemes" a
comma shall be inserted and the words "and the closed-ended investment companies" shall be
replaced with "the national investment funds", and after the words "the management
companies", the words "the alternative investment fund managers” and a comma shall be
inserted.
2. In Article 12:
a) a new Item 7 shall be inserted:
"7 shall be the competent authority responsible for the implementation of Regulation (EU)
No 648/2012 of the European Parliament and of the Council of 04 July 2012 on OTC
derivatives, central counterparties and trade repositories (OJ, L 201/1 of 27 July 2012),
hereinafter referred to as "Regulation 648/2012";
b) The current Item 7 shall become Item 8.
3. In Article 15:
a) in Paragraph 1:
aa) in Item 4 the words "Part Four, Chapter Nineteen" shall be replaced with "Part Four,
Chapter Twenty-Three";
bb) in Item 6, after the words "Regulation 1060/2009", "Regulation 648/2012" and a comma
shall be inserted;
cc) in Item 7, after the words "Regulation 1060/2009", "Regulation 648/2012" and a comma
shall be inserted;
dd) in Item 9, the words "the closed-ended investment companies" shall be replaced with "the
national investment funds";
ee) in Item 15, after the words "Regulation 1060/2009", "Regulation 648/2012" and a comma
shall be inserted;
b) in Paragraph 2, Letter "b", the words "closed-ended investment company" shall be
replaced with "national investment fund".
4. In Article 18:
a) in Paragraph 1, Items 1 and 6, after the words "Regulation 1060/2009", "Regulation
648/2012" and a comma shall be inserted;
156 b) in Paragraph 3, after the words "Regulation 1060/2009", "Regulation 648/2012" and a
comma shall be inserted.
5. In Article 19, Paragraph 2, Item 1, after the words "Regulation 1060/2009", "Regulation
648/2012" and a comma shall be inserted.
6. In Article 30, Paragraph 1:
a) Item 6 shall be amended as follows:
"6. the national investment funds;"
b) a new Item 7 shall be inserted:
"7. the alternative investment fund managers;"
c) the current Items 7, 8, 9, 10, 11, 12, 13 and 14 shall become Items 8, 9, 10, 11, 12, 13, 14
and 15, respectively .
§ 81. In the Markets in Financial Instruments Act (promulgated, SG, issue 52 of 2007;
amended, issue 109 of 2007, issue 69 of 2008, issue 24, 93 and 95 of 2009, issue 43 of 2010,
issue 77 of 2011, issue 21, 38 and 103 of 2012, and issue 70 of 2013) shall be amended and
supplemented as follows:
1. In Article 11, Paragraph 2:
a) in Item 7, after the words "the Bulgarian National Bank" or "by a corresponding authority
of another country" shall be inserted;
b) in Item 8 after the words "their application", the words "or the respective legislation of
another country" shall be inserted;
c) in Item 9 after the words "their application", the words "or the respective legislation of
another country" shall be inserted;
d) in Item 10, after the words "the Special Purpose Investment Vehicles Act", the words "or
the respective legislation of another country" shall be inserted.
2. In Article 20, Paragraph 2, Item 2, the words "adequacy and liquidity" shall be replaced
with "adequacy and/or liquidity".
3. Paragraph 123 shall be inserted in Article 4:
"(4) The restriction under Paragraph 2 in conjunction with Article 11, Paragraph 2, Item 3
shall not be applicable to:
1. a member of the management or supervisory body of a bank in which the Bulgarian
National Bank has acquired, after 01 October 1995, over 50 percent of the voting shares, if
this person is elected by the competent authority after the acquisition by the Bulgarian
157 National Bank of a shareholding for this amount, has not previously been a member of its
management or supervisory body and has been released from liability by the general meeting
of shareholders of the bank;
2. a member of the management or supervisory body of a bank in which Bank Consolidation
Company AD has held more than 50 percent of the voting shares, if the person has been
elected after 01 January 1994 at the proposal of Bank Consolidation Company AD, has not
previously been a member of a management or supervisory body of the bank and has been
released from liability by the general meeting of its shareholders."
4. In Article 124, Paragraph 3, Sentence 2 shall be inserted: "The receiver may suspend the
execution of resolutions made by the general meeting or by the management bodies of the
investment intermediary, including those related to the distribution of dividends or other
forms of capital and remuneration."
5. In Article 127, Paragraph 1, Item 6, after the words "Regulation (EU) No 236/2012", the
words "and Title Two of Regulation (EU) No 648/2012 on OTC derivatives, central
counterparties and trade repositories (OJ, L 201/1 of 27 July 2012)" shall be inserted.
§ 82. The Public Offering of Securities Act (promulgated, SG, issue 114 of 1999; amended,
issue 63 and 92 of 2000, issue 28, 61, 93 and 101 of 2002, issue 8, 31, 67 and 71 of 2003,
issue 37 of 2004, issue 19, 31, 39, 103 and 105 of 2005, issue 30, 33, 34, 59, 63, 80, 84, 86
and 105 of 2006, issue 25, 52, 53 and 109 of 2007, issue 67 and 69 of 2008, issue 23, 24, 42
and 93 of 2009, issue 43 and 101 of 2010, issue 57 and 77 of 2011, and issue 21, 94 and 103
of 2012) shall be amended as follows:
1. Article 77, Paragraph 2, Item 9 shall be amended as follows:
"9. the collective investment schemes, national investment funds, alternative investment
funds managed by alternative investment fund managers and the special purpose investment
vehicles;".
2. In Article 100i, Paragraph 3, the words "appropriately qualified and experienced expert"
shall be replaced with "independent appraisers under Article 5 of the Independent Appraisers
Act."
3. 3 In Article 100r:
a) in Paragraph 1, the words "shall disclose the regulated information [...] at the same time"
shall be replaced with "shall disclose the regulated information publicly through its provision
";
b) a new Paragraph 4 shall be inserted:
"(4) Regulated information shall be disclosed to the Commission electronically. The
requirements to the format and content of regulated information, as well as the terms, methods
and procedures for its disclosure, shall be determined in a regulation."
c) the current Paragraph 4 shall become Paragraph 5.
158 4. In Article 112e Sentence 1 shall be amended as follows: "By the 10th day of the of the
month following the month in which a capital increase or reduction occurred, a public
company shall disclose under the conditions of Articles 100r and 100t information about the
total number of voting shares and the size of the capital at the end of the month in which a
capital change occurred."
5. In Article 114:
a) in Paragraph 3, Item 1, the words "and participate in the formation or increase of the
capital of the company or make additional cash contributions to a company with assets" shall
be deleted;
b) in Paragraph 4, the words "under Paragraph 1, Item 1" shall be replaced with "under
Paragraph 1, Items 1 and 7", and the words "appropriately qualified and experienced
independent expert" shall be replaced with "independent appraisers under Article 5 of the
Independent Appraisers Act";
c) in Paragraph 6, Item 2, after the words "which is", the words "a counterparty" shall be
added.
6. In Article 114a, Paragraph 5:
a) in Sentence 1, the spelling of the Bulgarian word "interested" shall be amended;
b) in Sentence 2, the words "appropriately qualified and experienced experts" shall be
replaced with "appraisers under Article 5 of the Independent Appraisers Act."
7. In Article 115:
a) in Paragraph 4, Sentence 1, the words "its start" shall be replaced with "the start of the
general meeting of the shareholders";
b) in Paragraph 7, the words "under Article 223a of the Commerce Act" shall be replaced
with "under Article 118, Paragraph 2, Item 4".
8. In Article 126c:
a) in Paragraph 2, the words "appropriately qualified and experienced experts" shall be
replaced with "appraisers under Article 5 of the Independent Appraisers Act";
b) in Paragraph 3, Sentence 1, the words "The experts" shall be replaced with "The
independent appraisers";
c) in Paragraph 4, the word "expert" shall be replaced with "independent appraiser".
9. In Article 221, Paragraph 1:
159 a) in Item 1, the words "Article 114b, Paragraph 2" shall be replaced with "Article 119,
Paragraph 3";
b) in Item 2, after the words "Article 100a, Paragraph 2", "Article 100b, Paragraph 3" and a
comma shall be inserted;
c) in Item 3, after the words "Article 100a, Paragraphs 1, 4, 6 and 7", the words "Article
100c, Paragraph 1" and a comma shall be inserted;
d) in Item 4, the words "Article 114b, Paragraph 1" shall be replaced with "Article 114b".
10. In Article 146, Paragraph 2, the words "Item 1" shall be replaced with "Item 2".
11. In § 1, Item 1, Letter "c" of the Additional Provisions, the words "closed-ended
investment company" shall be replaced with "national investment fund".
§ 83. In the Insurance Code (promulgated, SG, issue 103 of 2005; amended, issue 105 of
2005, issue 30, 33, 34, 54, 59, 80, 82 and 105 of 2006, issue 48, 53, 97, 100 and 109 of 2007,
issue 67 and 69 of 2008, issue 24 and 41 of 2009, issue 19, 41, 43, 86 and 100 of 2010, issue
51, 60 and 77 of 2011, issue 21, 60 and 77 of 2012, and issue 20 and 70 of 2013) shall be
amended as follows:
1. In Article 73, Paragraph 1, Item 3, the words "shares of closed-ended investment
companies" shall be replaced with "unit and shares of national investment funds ".
2. In Article 74, Paragraph 3, Sentence 4 shall be inserted: "The investment in units and
shares of national investment funds shall not exceed 15 percent of the gross amount of the
technical reserves, subject to Paragraph 1, Item. 4 and in compliance with the requirements of
Article 72, Paragraph 3."
3. Everywhere the words "Article 30, Paragraph 1, Item 9 of the Financial Supervision
Commission Act" shall be replaced with "Article 30, Paragraph 1, Item 11 of the Financial
Supervision Commission Act".
§ 84. In the Social Security Code (promulgated, SG, issue 110 of 1999; Resolution No 5 of
the Constitutional Court dated 2000 - issue 55 of 2000; amended, issue 64 of 2000, issue 1, 35
and 41 of 2001, issue 1, 10, 45, 74, 112, 119 and 120 of 2002, issue 8, 42, 67, 95, 112 and 114
of 2003, issue 12, 21, 38, 52, 53, 69, 70, 112 and 115 of 2004, issue 38, 39, 76, 102, 103, 104
and 105 of 2005, issue 17, 30, 34, 56, 57, 59 and 68 of 2006, corrected, issue 76 of 2006;
amended, issue 80, 82, 95, 102 and 105 of 2006, issue 41, 52, 53, 64, 77, 97, 100, 109 and
113 of 2007, issue 33, 43, 67, 69, 89, 102 and 109 of 2008, issue 23, 25, 35, 41, 42, 93, 95, 99
and 103 of 2009, issue 16, 19, 43, 49, 58, 59, 88, 97, 98 and 100 of 2010; Resolution No 7 of
the Constitutional Court of 2011 – issue 45 of 2011; amended, issue 60, 77 and 100 of 2011,
issue 7, 21, 38, 40, 44, 58, 81, 89, 94 and 99 of 2012, issue 15, 20, 70, 98, 104 and 106 of
2013) in Article 122d, Paragraph 2 shall be repealed.
§ 85. In the Bank Deposit Guarantee act (promulgated, SG, issue 49 of 1998; amended, issue
73, 153 and 155 of 1998, issue 54 of 1999, issue 109 of 2001, issue 92 and 118 of 2002, issue
31 and 39 of 2005, issue 59, 64 and 86 of 2006, issue 67 and 98 of 2008, issue 42 and 44 of
160 2009, and issue 97 and 101 of 2010) Article 5, Paragraph 1 Item 11 shall be amended as
follows:
"11. the collective investment schemes, national investment funds, alternative investment
funds managed by alternative investment fund managers and the special purpose investment
vehicles;".
§ 86. The Act Restricting Administrative Regulation and Administrative Control over
Economic Activity (promulgated, SG, issue 55 of 2003; corrected, issue 59 of 2003; amended,
issue 107 of 2003, issue 39 and 52 of 2004, issue 31 and 87 of 2005, issue 24, 38 and 59 of
2006, issue 11 and 41 of 2007, issue 16 of 2008, issue 23, 36, 44 and 87 of 2009, issue 25, 59,
73 and 77 of 2010, issue 39 and 92 of 2011, and issue 26, 53 and 82 of 2012), the Appendix
to Article 9, Paragraph 1 Item 2 Item 3 shall be amended as follows:
"3. "Activity as a regulated securities market, investment intermediary, investment company,
national investment company, management company or alternative investment fund manager,
as well as a joint-stock special purpose investment vehicle."
§ 87. The Financial Collateral Arrangements Act (promulgated, SG, issue 68 of 2006;
amended, issue 24 of 2009, issue 101 of 2010, issue 77 of 2011 and issue 70 of 2013) shall be
amended as follows:
1. In Article 3, Paragraph 1, Item 9, the words "closed-ended investment company" shall be
replaced with "national investment fund".
2. In Article 4, Paragraph 3, Item 2, the words "collective investment schemes" shall be
replaced with "collective investment undertakings".
§ 88. (Effective 1 January 2014 - SG, issue 109 of 2013). The Corporate Income Tax Act
(promulgated, SG, issue 105 of 2006; amended, issue 52, 108 and 110 of 2007, issue 69 and
106 of 2008, issue 32, 35 and 95 of 2009, issue 94 of 2010, issue 19, 31, 35, 51, 77 and 99 of
2011, issue 40 and 94 of 2012, and issue 15, 16, 23, 68, 91 and 100 of 2013) shall be amended
and supplemented as follows:
1. In Article 174:
a) in the heading, the words "closed-ended investment companies" shall be replaced with
"national investment funds";
b) the words "the licensed closed-ended investment companies" shall be replaced with "the
national investment funds".
2. In § 1, Item 21 of the Additional Provisions:
a) in Letter "a" after the words "with units", the words "and shares" shall be inserted, and after
the words "collective investment schemes", the words "and national investment funds" shall
be inserted;
b) a new Letter "c" shall be inserted:
161 "c) concluded under the terms and conditions of redemption by national investment funds
admitted to public offering in the country; the distribution of funds upon liquidation of closedended national investment funds shall also be regarded as redemption;"
c) the current Letter "c" shall become Letter "d".
§ 89. (Effective 1 January 2014 - SG, issue 109 of 2013). The Income Taxes on Natural
Persons Act (promulgated, SG, issue 95 of 2006; amended, issue 52, 64 and 113 of 2007,
issue 28, 43 and 106 of 2008, issue 25, 32, 35, 41, 82, 95 and 99 of 2009, issue 16, 49, 94 and
100 of 2010, issue 19, 31, 35, 51 and 99 of 2011, issue 40, 81 and 94 of 2012, and issue 23,
66 and 100 of 2013) in § 1, Item 11 of the Additional Provisions, the following amendments
and supplements shall be made:
1. In Letter "a" after the words "with units", the words "and shares" shall be inserted, and
after the words "collective investment schemes", the words "and national investment funds"
shall be inserted".
2. A new Letter "c" shall be inserted:
"c) concluded under the terms and conditions of redemption by national investment funds
admitted to public offering in the country; the distribution of funds upon liquidation of closedended national investment funds shall also be regarded as redemption;".
3. The current Letter "c" shall become Letter "d".
§ 90. (Effective 1 January 2014 - SG, issue 109 of 2013). The Value-Added Tax Act
(promulgated, SG, issue 63 of 2006; amended, issue 86, 105 and 108 of 2006; Resolution No
7 of the Constitutional Court dated 2007 - issue 37 of 2007; amended, issue 41, 52, 59, 108
and 113 of 2007, issue 106 of 2008, issue 12, 23, 74 and 95 of 2009, issue 94 and 100 of
2010, issue 19, 77 and 99 of 2011, issue 54, 94 and 103 of 2012, and issue 23, 30, 68, 98, 101
and 104 of 2013) in Article 46, Paragraph 1, Item 6, the words "closed-ended investment
companies" shall be replaced with "national investment funds".
§ 91. Chapter Twenty, Section III shall apply as of the date specified by the European
Commission in accordance with Article 67 of Directive 2011/61/EU.
§ 92. Marketing of alternative investment funds from a third country and management and
marketing of units or shares of alternative investment funds by alternative investment fund
managers with a seat in a third country, except in the cases of Articles 241 and 251, shall be
allowed from the date specified by the European Commission in accordance with Article 67
of Directive 2011/61/EU. Articles 241 and 251 shall apply until the date determined under the
procedure set forth in Sentence 1.
§ 93. From the entry into force of this Law to the submission of ESMA's opinion under
Article 67, Paragraph 1, Letter "a" of Directive 2011/61/EU, the Commission shall provide to
ESMA on a quarterly basis the necessary information regarding alternative investment fund
managers which manage and/or market alternative investment funds under the supervision of
the Commission, both within the scope of the implementation of the passport regime under
Directive 2011/61/EU and within the scope of the national regime.
162 § 94. Until 22 July 2014, the Commission shall inform the European Commission and ESMA
of the types of alternative investment funds which may be offered to non-professional
investors and of the additional requirements thereof, in the cases under Article 242, Paragraph
2 and Article 250 Paragraph 2. The Commission shall inform the European Commission and
ESMA of any subsequent changes in the cases of Sentence 1.
§ 95. The Law shall become effective as of the date of its promulgation in the State Gazette,
with the exception of § 88, 89 and 90, which shall become effective on 01 January 2014. This
Law was passed by the 41st National Assembly on 20 September 2011 and the official seal of
the National Assembly was affixed thereto.
163