Chapter One

General Provisions

Art 1.

(Amended, Official Gazette issue No 39 of 1998)

(1)

This Act regulates the terms and procedure for transformation of state-owned enterprises into single-member commercial partnerships and for their privatization.

(2)

The transformation of state-owned enterprises shall constitute a division of the assets allocated to the said enterprises by the State into interests and shares, as provided by the Commercial Code.

(3)

(Amended, Official Gazette issue No 89 of 1997, amended, issue No 39 of 1998) The privatization shall constitute a transfer to natural or juristic persons wherein the State or a municipality holds an interest not exceeding 50 per cent of:

1.

any interests and shares in commercial partnerships held by the State or the municipalities;

2.

(Amended, Official Gazette issue No 51 of 1994, issue No 39 of 1998, issue No 12 0f 1999) ownership of whole enterprises, of self-contained parts thereof, and of units under construction in progress.

3.

(Added, Official Gazette issue No 51 of 1994 and issue No 89 of 1997) any item of municipal non-residential property, which is not incorporated into a state-owned or municipal-owned enterprise, and which is used for business (retail and repair establishment, warehouse, service station, workshop and other such).

Art 2.

 

(1)

(Amended, Official Gazette issue No 109 of 1995, issue No 85 of 1996, issue No 89 of 1997 and issue No 39 of 1998) Privatization shall be carried out pursuant to programs as approved by the Council of Ministers and drawn up according to a procedure thereby established.

(2)

(Amended, Official Gazette issue No 109 of 1995, issue No 85 of 1996, and issue No 39 of 1998) Any annual program shall state:

1.

(Amended, Official Gazette issue No 89 of 1997) the minimum privatization targets for the respective year, including the minimum number of state-owned enterprises subject to privatization and the priority targets;

2.

the expected amount of revenue from privatization and the method whereby the said revenue shall be utilized in compliance with the requirements of this Act;

3.

any expenses as may be incurred for the conduct of privatization;

4.

a list of sectors and/or enterprises, whereof the full or partial privatization shall be prohibited during the term of validity of the said program;

5.

(added, Official Gazette issue No 39 of 1998) the total volume of shares at nominal value, which are to be offered for privatization through centralized public tenders;

6.

(renumbered, Official Gazette issue No 39 of 1998) general guidelines for the privatization policy of the municipalities.

(3)

(Amended, Official Gazette issue No 51 of 1994) The said program shall be introduced before the National Assembly by the Council of Ministers not later than the 31st day of October of the preceding year, and the National Assembly shall debate and pass the said program prior to the passage of the National Budget Act.

(4)

(Amended, Official Gazette issue No 51 of 1994, issue No 85 of 1996 and issue No 89 of 1997) Each year, not later than the 28th day of February, the Council of Ministers shall submit to the National Assembly an annual report on the implementation of the privatization program.

(5)

(Added, Official Gazette issue No 51 of 1994) Determining the validity of any privatization transaction as closed shall not be conditional on the passage of any annual privatization program, save as where the enterprise subject to the said privatization transaction is included in a list pursuant to Para 2, Indent 4.

(6)

(Added, Official Gazette issue No 51 of 1994) Any privatization program passed shall continue in effect until the passage of a program for the succeeding year.

(7)

(Added, Official Gazette issue No 85 of 1996; amended, issue No 89 of 1997) With a view to ensuring the attainment of the minimum privatization targets, indicators and areas of the annual privatization program as adopted, the competent authorities pursuant to Art 3, Para 1, Indents 2 to 4 herein shall adopt annual programs thereof.

(8)

(Added, Official Gazette issue No 109 of 1995; renumbered, issue No 85 of 1996, repealed, issue No 39 of 1998).

(9)

(Added, Official Gazette issue No 109 of 1995; renumbered, issue No 85 of 1996, repealed, issue No 39 of 1998).

(10)

(Added, Official Gazette issue No 85 of 1996, amended issue no 12 of 1999) The Council of Ministers shall determine a list of state-owned enterprises targeted for privatization for which no non-cash instruments will be accepted as payment. This restriction shall not be applicable to privatization pursuant to the procedures of Art 22 and 23 herein. The said list is subject to supplements only.

Art 3.

 

(1)

(Amended, Official Gazette issue No 39 of 1998, amended issue No 12 of 1999) Any decision to privatize any state-owned or municipal-owned enterprise shall be made by:

1.

(Amended, Official Gazette issue No 51 of 1994; supplemented, issue No 85 of 1996; amended, issue No 89 of 1997, amended, issue No 39 of 1998, amended issue No 12 of 1999) a state authority as designated by the Council of Ministers - in respect of any state-owned enterprise, shares or interests held by the State in any commercial partnership, where the book value of the fixed assets thereof shall not exceed BGL 1 billion by December 31, 1997, or any unit of construction in progress;

2.

(Amended, Official Gazette issue No 51 of 1994, amended, issue No 39 of 1998, amended issue No 12 of 1999) the Privatization Agency - in respect of any state-owned enterprise or shares or interests held by the State in any commercial partnership, where the book value of the fixed assets thereof shall exceed BGL 1 billion by December 31, 1997;

3.

(Amended, Official Gazette issue No 51 of 1994) the Privatization Agency upon advance approval by the Council of Ministers - in respect of any state-owned enterprise or shares or interests held by the State in any commercial partnership, as designated by the Council of Ministers in the annual privatization program;

4.

(Supplemented, Official Gazette issue No 51 of 1994 and issue No 85 of 1996) the competent municipal council - in respect of any enterprise which is municipal property, or shares or interests held by the municipalities in any commercial partnership, or any item of municipal-owned non-residential property, which is not incorporated into a municipal-owned enterprise, and which is used for business;

5.

(Added, Official Gazette issue No 51 of 1994, repealed, issue No 39, 1998).

(2)

(Added, Official Gazette issue No 51 of 1994, amended, issue No 39 of 1998) Where any shares or interests held by state-owned or municipal-owned enterprises or single-member commercial partnerships in other commercial partnerships are privatized, the Council of Ministers or the competent municipal council, as the case may be, shall reduce the capital of the first-mentioned partnerships by the book value of the participating interest thereof which has been privatized in compliance with the provisions of Art 149 to 151 and Art 199 to 203 of the Commercial Code.

(3)

(Renumbered from Para 2, Official Gazette issue No 51 of 1994; amended, issue No 109 of 1995 and issue No 39 of 1998) Any authority pursuant to Para 1 shall be competent to prepare and close the transactions for privatization of state-owned or municipal-owned enterprises or to empower others to do so. The relations between the authority pursuant to Para 1 and the person empowered and the specific scope of the delegated representative authority may be determined by means of a contract.

(4)

(Added, Official Gazette issue No 51 of 1994) Notice of any decision pursuant to Para 1 shall be given by publication in the Official Gazette and in at least two national dailies.

(5)

(Added, Official Gazette issue No 109 of 1995; repealed, issue No 89 of 1997).

(6)

(Added, Official Gazette issue No 109 of 1995; amended, issue No 45 of 1996; supplemented, issue No 85 of 1996; repealed, issue No 89 of 1997).

Art 4.

 

(1)

A proposal for a decision pursuant to the foregoing Article may furthermore originate from:

1.

the management bodies of any enterprise which has been transformed into a commercial partnership or of any untransformed enterprise;

2.

not fewer than 20 per cent of the employees of the enterprise concerned;

3.

the Privatization Agency, where the said agency shall not be a competent authority pursuant to Art 3 herein;

4.

(Added, Official Gazette issue No 51 of 1994) the municipal councils - in respect of any state-owned enterprise or self-contained parts thereof located within the territory of the municipality;

5.

(Added, Official Gazette issue No 51 of 1994) any person covered under Art 35 herein.

(2)

(Supplemented, Official Gazette issue No 51 of 1994) Any competent authority pursuant to Art 3 herein shall be obliged to consider and make a decision on any proposal pursuant to the foregoing Paragraph within one month. Any refusal of any such proposal shall have to be reasoned.

Art 4 A.

(Added, Official Gazette issue No 109 of 1995)

In any decision on privatization, the competent authority pursuant to Art 3, Para 1, Indents 1 to 3 herein shall set a time limit wherewithin the management bodies of the state-owned enterprise concerned must submit thereto any documents and information as may be necessary for the effecting of the privatization transaction.

Art 5.

 

(1)

(Supplemented, Official Gazette issue No 51 of 1994, amended, issue No 39 of 1998) All natural and juristic persons shall be eligible to participate in privatization on equal terms, save as where otherwise expressly provided by this Act.

(2)

The following persons shall be entitled to participate on preferential terms:

1.

any member of the staff of the privatizing enterprise who has been in continuous employment therewith for at least two years prior to the date of declaration of the decision on privatization;

2.

(Amended, Official Gazette issue No 51 of 1994, amended, issue No 39 of 1998) any person whereof the labour relationship with the privatizing enterprise has been terminated according to the procedure established by the Labour Code and pursuant to the provisions of the Act on Defense and the Armed Forces of the Republic of Bulgaria not earlier than fourteen years prior to the date of declaration of the decision on privatization and who has been in continuous employment therewith for at least two years, with the exception of any employee dismissed by reason of misconduct or any employee convicted by an effective sentence of any offense against property, save as where the said employee has been rehabilitated;

3.

any person who has retired on pension whilst in employment with the privatizing enterprise not earlier than ten years prior to the date of declaration of the decision on privatization, should the said person have completed at least three years of service prior to his or her retirement from the said employment. No restriction pursuant to this Indent shall apply to any employee who has been registered as totally or partially disabled by any injury suffered in the course of his or her employment with the said enterprise;

4.

(Added, Official Gazette issue No 51 of 1994; amended, issue No 109 of 1995 and issue No 39 of 1998) any person who, without a contract of employment, has been acting as a manager or controller, or as a member of the board of directors or of the management board of the privatizing enterprise in the course of more than one year prior to the date of declaration of the decision on privatization.

(3)

(Supplemented, Official Gazette issue No 51 of 1994) The right to participation on preferential terms pursuant to the foregoing Paragraph shall be limited to a one-time exercise by Bulgarian citizens permanently residing in Bulgaria.

(4)

(Amended, Official Gazette issue No 51 of 1994; repealed, issue No 89 of 1997).

(5)

Any public-debt creditor shall be eligible to participate in privatization by his or her receivables from the said debt according to a procedure established by the Council of Ministers.

Art 6.

(Amended, Official Gazette issue No 51 of 1994 and issue No 39 of 1998)

(1)

(Supplemented, Official Gazette issue No 85 of 1996; amended, issue No 89 of 1997, amended, issue No 39 of 1998, amended issue No 70 of 1998) The proceeds in cash from the privatization of any state-owned enterprises with the exception those pursuant to Paras 5 and 6 and those pursuant to covered under Art 2, Para 10 herein shall be credited to a special cumulative account which shall be managed by the Minister of Finance. The assets on the said account shall be allocated as follows:

1.

(Supplemented, Official Gazette issue No 109 of 1995; amended, issue No 45 of 1996, issue No 89 of 1997, issue No 39 of 1998 and issue No 12 of 1999) for replenishment of the funds covering the cost incurred for the privatization of state-owned enterprises - 10 per cent. A part of this revenue shall be spent on the acquisition of long-term and short-term tangible assets. The consultancy fees related to privatization deals shall be paid out of the revenues in cash from the said deals or from the funds allocated pursuant to Para 1, Item 1. The allocation to these funds may be used for additional incentives for paid to the officials of the Privatization Agency and to officials of the privatization authorities pursuant to Art 3, Para 1, Item 1, applying procedures established by the Supervisory Board for the Privatization Agency, and by the respective senior managing official of the authorities pursuant to Art 3, Para 1, Item 1;

2.

(amended, Official Gazette, Issue No 12 of 1999) for the central republican budget - 90 per cent; for replenishment of the National Environmental Protection Fund: 5 per cent;

3.

(Amended, Official Gazette issue No 57 of 1995, repealed, Official Gazette, Issue No 12 of 1998);

4.

(Amended, Official Gazette issue No 57 of 1995 and issue No 89 of 1997, repealed, Official Gazette, Issue No 12 of 1998);

5.

(Added, Official Gazette issue No 89 of 1997 and issue No 39 of 1998, repealed, Official Gazette, Issue No 12 of 1998);

6.

(Added, Official Gazette issue No 89 of 1997, repealed, Official Gazette, Issue No 12 of 1998);

7.

(Added, Official Gazette, issue No. 89 of 1997, repealed, Official Gazette, Issue No 12 of 1998);

(2)

(Amended, Official Gazette issue No 89 of 1997) The revenue from the privatization of any municipal-owned enterprise shall be distributed as follows:

1.

(Supplemented, Official Gazette issue No 45 of 1996) for replenishment of the fund covering the expenses incurred for the privatization of municipal-owned enterprises: 9 per cent. Part of this revenue shall be spent on acquisition of tangible fixed and current assets and on maintenance of the specialized privatization authorities of the municipal councils. Up to 2 per cent of the moneys credited to the said fund may be spent on payment of fees to lead managers empowered according to the procedure established by Art 3, Para 3 herein;

2.

for replenishment of the municipal environmental protection fund: 5 per cent; 3. (Amended, Official Gazette issue No 51 of 1994, issue No 109 of 1995and issue No 12 of 1999) the balance of 86 per cent shall be credited to a special fund at the disposal of the competent municipal council, and the moneys in the said fund shall be used on a priority basis for investment purposes, including for the acquisition of long-term material assets for social purposes, for repayment of any debts incurred on units of construction in progress and for settlement of bad debts of municipal-owned enterprises. No such moneys may be used for current expenses.

(3)

(Added, Official Gazette issue No 89 of 1997, amended, issue No 39 of 1998) The negotiation and payment of the price and any other obligations in money terms, as well as payment on any privatization transaction, may furthermore be effected in convertible foreign currency.

(4)

(Added, Official Gazette issue No 85 of 1996; renumbered and amended, issue No 89 of 1997, amended, issue No 39 of 1998 and issue No 12 of 1999) Ninety-six per cent of any proceeds from the privatization of any state-owned enterprise on the list pursuant to Art 2, Para 10 herein shall be credited to the central government budget Revenue and shall be used for reduction of the public debt. The balance of 4 per cent of the said proceeds shall be credited to the funds covering the expenses incurred for the privatization of state-owned enterprises. (5) (Added, Official Gazette issue No 39 of 1998, repealed issue No 12 of 1999) (6) (Added, Official Gazette issue No 39 of 1998, repealed issue No 12 of 1999)

Art 6 A.

(Added, Official Gazette issue No 89 of 1997, amended, issue No 39 of 1998 and issue No 12 of 1999)

(1)

Any proceeds from any activities accompanying the privatization process of state-owned enterprises, as well as any damages paid pursuant to contracts for privatization of any such enterprises, shall be distributed as follows:

1.

(amended, Official Gazette issue No 39 of 1998 and issue No 12 of 1999) any proceeds from memoranda, auction and competitive tender documentation, advertising and publishing, deposits retained as penalty for defaulted contracts in case of participation in auctions or negotiations with potential buyers and from other similar sources shall be credited to the funds used to cover the expenses accrued in the course of the privatization of state-owned enterprises;

2.

(repealed, Official Gazette issue No 12 of 1999);

3.

(amended, Official Gazette issue No 39 of 1998 and issue No 12 of 1999, repealed issue No 12 of 1999);

4.

(amended, Official Gazette issue No 12 of 1999) any agreed damages for any other obligations on investments, number of jobs and others which obligations had been assumed but unfulfilled, as included in the contracts for privatization, shall be credited to Central Government Revenue.

(2)

Any proceeds from any activities accompanying the privatization process of municipal-owned enterprises, as well as any damages under the contracts for privatization of any such enterprises, shall be distributed as follows:

1.

any proceeds from memoranda, particulars and conditions of sale and bidding dossiers, advertising and publishing, deposits retained as penalty for unconcluded contracts upon entry in an auction, competitive bidding or negotiated placement with potential buyers and other such shall be credited to the fund covering the expenses incurred for the privatization of municipal-owned enterprises;

2.

any other damages for obligations assumed but unfulfilled under the contracts for privatization shall be credited to the special fund at the disposal of the competent municipal council, as established according to the procedure of Art 6, Para 2, Indent 3 herein.

Art 7.

 

(1)

(Amended, Official Gazette issue No 89 of 1997and issue No 39 of 1998) There shall be established funds with the competent authorities pursuant to Art 3, Para 1, Indents 1 and 2 herein to cover the expenses incurred for the privatization of state-owned enterprises. The distribution and the moneys in the said funds shall be spent according to terms and a procedure established by the Council of Ministers.

(2)

The moneys in the funds shall be sourced from:

1.

(Repealed, Official Gazette issue No 39 of 1998)

2.

(Amended, Official Gazette issue No 51 of 1994) the moneys pursuant to Art 6, Para 1, Item 1, and Para 4 herein;

3.

(Added, Official Gazette issue No 89 of 1997) the moneys pursuant to Art 6A, Para 1, Item herein;

Art 8.

(Amended, Official Gazette issue No 51 of 1994; supplemented, issue No 109 of 1995; amended, issue No 55 of 1997; repealed, issue No 89 of 1997).

Art 9.

 

(1)

The terms and procedure for privatization of state-owned enterprises shall apply, mutatis mutandis, to municipal-owned enterprises, save as otherwise provided hereby.

(2)

(Added, Official Gazette issue No 51 of 1994) The municipal administrations shall submit to the Privatization Agency quarterly statements on any sales made according to the procedure hereby established, as well as on any proposals received and decisions made on privatization.

Art 9 A.

(Added, Official Gazette issue No 89 of 1997)

(1)

Upon privatization of any state-owned and municipal-owned enterprises, as well as of transformed commercial partnership which are assigned tasks for preparation of the country for work in wartime and in critical situations, the buyer shall undertake to ensure the fulfillment of the said tasks until such time as they may be revoked.

(2)

Any obligations covered under Para 1 shall be revocable solely by the assigning competent state (municipal) authority.

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