Newsletter February 2017: Important amendments of the Commercial act

The Commercial Act was amended at the end of 2016 (SG. 105 of 12.30.2016, effective from 3.01.2016). The amendments refer mainly to: a) the regulations of limited liability companies and b) the insolvency procedure.

Part of the recent amendments to the Commercial Code introduce the form in which certain decisions are adopted by the general meeting of shareholders in limited liability companies. The current written form is replaced by a notary verification of the signatures and the content, carried out simultaneously – art. 137, para. 4 of the Commerce Act.

Such decisions of the General Assembly are the ones under art. 137, para. 1, p. 2, 4, 5, and 7 of the Commercial Act:

• acceptance and release of partners and giving consent for the transfer of shares to a new shareholder;
•  reduction of capital and capital increase;
• appointment of a managing director;
• acquisition and alienation of real estate and rights over real estate.

There is a legal possibility of avoiding the need of notarized signature and content by means of including an explicit clause in the Articles of Association of the company that these decisions are to be made in a written form only (art. 137, para. 4 of the Commercial Code).

The amendments to Art. 15, para. 1 and Art. 129, para. 2 of the Commercial Code envisage that the transfer of a commercial enterprise in limited liability companies shall be done by a contract with notarized signatures and content made simultaneously.

The purpose of the amendments in the Commercial Act is to prevent legal abuses related to the filing of false documents at the Commercial registry.

In relation with these amendments a special text was adopted in the Notary Act- art. 90, which prohibits charging a proportional fee for certification of signatures and content in these cases – only the simplified notary fees shall apply.

The second group of amendments in the Commercial Act refers to the insolvency procedure.

In case a legal entity does not publish its annual financial reports at the Commercial Registry for the last three years, according to the law, this constitutes a ground for opening an insolvency procedure.

The latest amendments in the law introduce also a new procedure within the insolvency procedure – the so called “stabilization of the trader”. The goal of this procedure will be to prevent the opening of the insolvency procedure by an agreement signed between the trader and its creditors.

All these amendments to the Commercial Act enter into force from the beginning of January 2017, except for those relating to the procedure on stabilization of a trader which will be applicable as of 30^th of June 2017.