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Law
on Foreign Investment
Published in the State Gazette issue No 97, of 1997; corrected,
SG No 99, of 1997;
supplemented, SG No 29 of 1998; amended and supplemented,
SG No 153 of 1998, No 110 of 1999 |
Chapter
One
General Provisions
ART. 1 This law shall govern the terms and procedures
for making investments by foreign persons in the country
and the protection of those investments, as well as the
conditions and procedures for the implementation of priority
investment projects.
ART. 2 A foreign person shall make investments in the
country under the terms set out for Bulgarian persons
and shall have equal rights with them, unless otherwise
provided by law.
ART. 3 (1) Where an international agreement, to which
the Republic of Bulgaria is a party, provides for more
favorable terms for undertaking of economic activities
by foreign persons, the more favorable terms under the
international agreement shall apply.
(2) The provisions of this law shall not apply, in whole
or in part, for investments by discriminatory measures
are applied with regard to Bulgarian companies or nationals.
ART. 4 With regard to foreign investments made prior to
changes in the Law, introducing regulatory restrictions
solely on foreign investments, the legal regulations in
force at the moment the investments were made shall apply.
ART. 5 (1) For the purposes of this law, a foreign person
shall be:
1. a legal person which is not registered in the Republic
of Bulgaria;
2. a company which is not a legal person and is registered
abroad;
3. a natural person - a foreign national with a permanent
residence abroad.
(2) A Bulgarian national with permanent residence abroad,
who holds another nationality, shall choose whether to
avail himself of the status of a Bulgarian or foreign
national under this law.
ART. 6 (1) Foreign persons, who have the right to carry
on business activities under their national legislation,
may open in the country trade representation offices,
which must be registered at the Bulgarian Chamber of Commerce
and Industry.
(2) The representation offices under paragraph 1 hereinabove
are not legal persons and may not carry on economic activities.
(3) Transactions of foreign persons with local persons
for the needs of representation office registered under
paragraph 1 hereinabove shall be subject to the rules
on transactions between local person.
ART. 7 A foreign natural person or a company which is
not a legal person may open a branch, provided it (the
person/the company) is registered with the right to carry
on business activities under its national law. The branch
shall be entered into the commercial register at the district
court, where the branch's seat is located.
ART. 8 (1) A company with foreign participation shall
have all the rights of acompany without foreign participation,
except for the cases provided for in this law.
(2) The amount of foreign participation in newly-formed
or existing companies shall not be limited.
ART. 9 (1) A foreign natural person must hold a permit
for permanent residence in the cases where, for the purpose
of carrying on economic activities:
1. he registers as a sole trader;
2. he participates in a co-operative;
3. he participates in a general partnership;
4. he participates as a partner with unlimited liability
in a limited partnership or in a limited partnership with
shares.
(2) (Amended SG No 153 of 1998) The right to a permanent
residence of a foreign person under paragraph 1 may be
withdrawn by the Minister of Interior or by authorised
by him officials only in the cases provided for by Law.
The administrative act, by virtue of which the right to
a permanent residence is being revoked, shall be subject
to appeal before the Court in accordance with the Law
on Administrative Proceeding.
Chapter Two
FOREIGN INVESTMENT AGENCY
ART. 10 (1) The Foreign Investment Agency shall be a State
body with the Council of Ministers for co-ordination of
the activities of State institutions in the field of foreign
investments and for encouragement of foreign investments
and of priority investment projects.
(2) The Agency shall be a legal person, financed by the
State budget, seated in Sofia and shall have regional
divisions.
ART. 11 (1) The Agency shall set up and maintain a Unified
Information System, where data about all foreign investments
in the country shall be compiled.
(2) The Ministry of Finance, the National Statistical
Institute, the Central Depository and the Bulgarian National
Bank shall submit at the end of each calendar quarter
summarized data concerning the type and volume of foreign
investments, for the purposes of the Unified Information
System for Foreign Investments. Other central and local
authorities shall provide information at the request of
the Foreign Investment Agency.
(3) The Foreign Investment Agency shall provide with information
from the Unified Information System for Foreign Investments
state bodies and other interested parties on the terms
set out in the Regulations on the Structure and Activities
of FIA.Chapter Three
FOREIGN INVESTMENTS
ART. 12 (1) For the purpose of this law, a foreign investment
shall be any investment by a foreign person or its branch
in:
1. shares and stakes in commercial companies;
2. ownership title over buildings and limited ownership
title over property;
3. ownership title and limited ownership title over movable
property where considered long-term tangible assets;
4. ownership title over an enterprise, or detached parts
thereof, within the stipulations of the Law on Restructuring
and Privatisation of State-Owned and Municipal Enterprises;
5. securities, including debentures and Treasury bonds,
as well as their derivative instruments issued by the
State, by the municipalities or by other Bulgarian legal
persons, with a remaining term until maturity not shorter
than 6 months;
6. loans, also in the form of financial leasing, for a
term not shorter than 12 months;
7. intellectual property title - articles of copyright
and kindred rights, patentable inventions, utility models,
trade marks, service marks and industrial designs;
8. rights stemming from concession contracts and contracts
for the assigning of management.
(2) The foreign investment shall also include the increase
in the value of the investment under paragraph 1 hereinabove.
ART. 13 The branches of foreign persons and the companies,
in which foreign persons participate directly or through
other companies with foreign participation,shall submit
to the National Statistical Institute summarised data
about foreigninvestments, in accordance with the Law on
Statistics.
ART. 14 (Repealed SG No 153 of 1998)
ART. 15 (Repealed SG No 153 of 1998)
ART. 16 (Repealed SG No 153 of 1998)
ART. 17 (Repealed SG No 153 of 1998)
ART. 18 (Repealed SG No 153 of 1998)
ART. 19 (Repealed SG No 153 of 1998)
ART. 20 (Repealed SG No 153 o 1998)
ART. 21. (Amended SG No 153 of 1998) At the request of
the investor, the Foreign Investment Agency may propose
to the Council of Ministers to form an interministerial
group, comprising representatives of ministries and agencies
concerned, in order to provide institutional support for
appointed investment projects and which projects may be
acknowledged by the Council of Ministers as priority ones.
ART. 22. (1) At the request of the investor, the Foreign
Investment Agency may propose to the competent authorities
to transfer limited property rights on real property which
is private State or municipal property, with the view
of the implementation of a priority investment project.
(2) The proposed investment project shall be deemed an
integral part of the contract for transfer of the limited
ownership right . In that case, Art. 57, paragraph 1 of
the Law on State Property and Art. 40, paragraph 1 of
the Law on Municipal Property shall not apply.
Chapter Five
PROPERTY RIGHTS
ART. 23. (1) A foreign person may acquire ownership titles
and limited ownership titles over property.
(2) A foreign person may not acquire an ownership title
over land, including such acquisition through a branch
or in a sole trader capacity.
ART. 24. (1) A foreign person must obtain a permit for
the acquisition of ownership title over buildings and
limited ownership titles on properties in the area of
border zones and other areas as determined by the Council
of Ministers, related to the national security.
(2) A company with foreign participation must obtain a
permit for the acquisition of the right to ownership and
limited ownership property titles in the area of border
zones and in other areas as determined by the Council
of Ministers, related to the national security.
(3) Permits under paragraphs 1 and 2 hereinabove shall
be issued by the Council of Ministers or its authorised
body, which shall make a pronouncement on the application
within 45 days. Refusal to grant a permit shall be motivated.
ART. 25. Transactions made in breach of articles 23 and
24 hereinabove, or through a proxy, shall be declared
null and void by means of a court ruling after a motion
brought by the Public Prosecutor or by the parties concerned.
ART. 26. (1) Properties owned by a foreign person may
only be alienated on the grounds of a law for particularly
important needs of the State, which cannot be satisfied
in any other way, and only after an advance and equitable
compensation at market prices.
(2) Properties for indemnification must be equal to the
alienated property and must be located in its vicinity,
or, with the consent of the owner - at a different place.
Where compensation consists in property, the difference
in values shall be covered by the owner or by the State.
(3) If the foreign person so agrees, the compensation
may be pecuniary.
(4) To the extent that the present section does not contain
special provisions, the provisions of Chapter Three of
the Law on State Property shall apply.
Chapter Six
SPECIAL PROVISIONS
ART. 27. (1) A foreign person may transfer and/or buy
in order to transfer foreign currency abroad, after submission
a certificate for paid taxes, in the following cases:
1. income generated through an investment;
2. property alienation driven indemnification proceeds,
when for State needs;
3. liquidation quota resulting from the termination of
the investment;
4. proceeds from the sale of the investment good;
5. a sum received after the enforcement of a writ of execution.
(2) The right under paragraph 1 hereinabove may also be
exercised by foreign nationals working in the country,
in respect of the remuneration received by them, and by
foreign natural persons under Art. 9, paragraph 1, after
a certificate for paid taxes is submitted.
ART. 28. (1) A foreign person may open accounts, make
deposits in foreign currency and in Levs in banks, as
well as dispose of shares, debentures and other securities.
(2) The claims of a foreign person in Levs and in foreign
currency may be secured by means of a pledge or mortgage.
No permit from a State authority shall be required to
enlist a mortgage.
(3) The transactions of a foreign person entered into
through a branch, shall be subject to the rulings valid
for local persons.
(4) Where local persons have the right to make payments
in foreign currency abroad in favour of foreign persons,
those payments may also be effected in the country, including
by means of cheques, promissory notes and bills of exchange.
ART. 29. The labour relations between a company with foreign
participation, as well as a branch or representation office
of a foreign person, and the employees who are foreign
nationals, shall be governed by the contracts of employment.
The contract of employment cannot derogate from Bulgarian
labour legislation in respect of the following elements:
1. written form of the contract;
2. maximum duration of working time, minimum duration
of rests in-between two days and in-between two weeks,
and duration of the annual full-pay leave;
3. minimum wage established for the country;
4. minimum time-limit for the notice of termination of
the contract of employment, where this is negotiated or
is required by the law, as well as the minimum amount
of indemnity where the contract of employment is terminated
with or without advance notice;
5. liability of the employer for damages inflicted as
a result of an labour accident or professional illness;
6. rules of hygiene and safety at work.
ART. 30. (Amended SG No 110 of 1999) Employees who are
foreign nationals shall be insured in accordance with
the Bulgarian legislation.
ART. 31. Labour disputes between employers under Art.
29 and employees who are foreign nationals shall be resolved
in accordance with the contract of employment.
ART. 32 (Amended SG No 110 of 1999) On all matters pertaining
to the labour relations with an employer under Art. 29,
which are not explicitly governed by the contract of employment,
Bulgarian legislation shall apply.
Chapter Seven
ADMINISTRATIVE PENAL PROVISIONS
ART. 33 (1) Any bank which effects a transfer of foreign
currency, where the certificates required under Art. 27
above have not been submitted, shall be liable to a pecuniary
sanction equal to the amount of the transfer made.
(2) Where the offence under subsection 1 above is repeated,
the pecuniary sanctionshall be imposed in a double amount.
ART. 34. (1) The penal acts for recorded offences under
Art. 33 shall be drafted by persons authorised by the
Deputy Governor of the Bulgarian National Bank in charge
of the Banking Supervision Department, and the penal orders
shall be issued by the Deputy Governor or by a person
authorised by him.
(2) The drafting of acts, the issuance, the appeal against
and the enforcement of penal orders shall be made in accordance
with the Law on Administrative Violations and Penalties.
FINAL PROVISIONS
1. This Law repeals the Promotion and Protection of Law
on Foreign Investments (published, State Gazette, issue
8 of 1992; amended, issues 92 and 102 of 1995, issue 109
of 1996; corrigendum, issue 110 of 1996; amended, issues
55 and 58 of 1997).
2. The Law onStatistics (published, State Gazette, issue
25 of 1991; amended, issue 64 of 1991 and issue 60 of
1992) is amended as follows:
1. In Art. 21, the words "five hundred to one thousand"
are replaced with "80 000 to 600 000".
2. In Art. 22, the words "from one thousand to one-thousand
and five hundred" are replaced with "600 000
to 2 000 000".
3. In Art. 23, the words "one thousand to two thousand"
are replaced with "1 000 000 to 2 000 000".
4. In Art. 24, the words "five thousand to ten thousand"
are replaced with "from 1 000 000 to 3 000 000".
3. Within two months after the entry into force of this
law the National Statistical Institute shall develop a
methodology in accordance with which statistical information
shall be produced about foreign investments and which
shall be in conformity with international standards.
4. Companies with foreign participation which have made
imports under the conditions of Art. 15a of the Law on
Promotion and Protection of Foreign Investments, as prescribed
by § 1, shall submit to the customs authorities a
court ruling for inclusion of the contribution in kind
in the company's capital within 6 months from the of entry
of the law into force.
4a. (Supplemented, Official Gazette issue No 51 of 1998)
Beyond the cases of the precedent paragraph, Art. 14,
15 and 17 of this Law do not apply to goods imported under
the conditions of temporary import as of 24.10.1997.
5. In cases where a tax relief is used under other laws,
the provision of Art. 20 above shall apply for the remainder
of the 10-year period.
6. Within two months from the date of entry of the law
into force the Council of Ministers shall adopt Rules
for the Organisation and Activities of the Foreign Investment
Agency.
7. Within one month as from the entry of the law into
force the Council of Ministers shall publish a list under
Art. 18, subparagraph 3 which shall be updated annually.
8. The implementation of this law is entrusted to the
Council of Ministers. The Minister of Finance shall exercise
supervision as regards the implementation of sections
14 to 17.
9. The law shall come into effect as from the date of
its promulgation in the State Gazette.
The law was passed by the XXXVIIIth National Assembly
on 16 October 1997 and the State seal is affixed hereto.
Chairman of the National Assembly
Yordan Sokolov |
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