LAW ON THE FOREIGN INVESTMENTS

LAW ON THE FOREIGN INVESTMENTS

Prom. SG 97 1997; Corr. SG 99 1997; Suppl. SG 29 1998; Amend and Suppl SG 153 1998; Amend and Suppl SG 110 1999; Amend. SG 28 2002;

Chapter I. GENERAL PROVISIONS

Art. 1. This law settles the conditions and the order of making investments in the country by foreign persons and the protection of these investments, as well as the conditions and the order of carrying out priority investment projects.

Art. 2. A foreign person can make investments in the country by the order stipulated for Bulgarian citizens, having equal rights with them, inasmuch as this law does not provide otherwise.

Art. 3. (1) If an international agreement, party to which is the Republic of Bulgaria, stipulates more favourable conditions for carrying out economic activity by foreigners the more favourable conditions shall apply according to the international agreement.
(2) The provisions of this law shall not apply entirely or partially for the investments of foreigners from countries specified by the Council of Ministers where, discriminating measures are applied regarding Bulgarian companies or citizens.

Art. 4. For foreign investments, made before changes in the legislation, which establish normative restrictions only for foreign investments, shall apply the legal provisions which have been effective by the moment of making the investments.

Art. 5. (1) In the context of this law foreign persons is:
1. a corporate body which is not registered in the Republic of Bulgaria;
2. a company which is not a corporate body and which is registered abroad;
3. a physical person - foreign citizen with permanent residence abroad.
(2) Bulgarian citizens with permanent residence abroad, who also has another citizenship, shall choose whether to use the statute of Bulgarian or foreign citizens according to this law.

Art. 6. (1) Foreign persons who have the right to carry out commercial activity according to their national legislation can open in the country trade representations which must be registered in the Bulgarian Chamber of Commerce and Industry.
(2) The representations under para 1 shall not be corporate bodies and cannot carry out commercial activity.
(3) The transactions, which the foreign person concludes with local persons for the needs of the representation under para 1 registered by him, shall observe the order of carrying out transactions between local persons.

Art. 7. A foreign physical person or a company which is not a corporate body can open a branch, if registered with the right of carrying out commercial activity according to their national law. The branch shall be entered in the commercial register in the court in whose region the headquarters is located.

Art. 8. (1) A company with foreign holding shall have all rights as a company without foreign holding, except in the cases stipulated by this law.
(2) The amount of the foreign holding in newly founded or existing companies shall not be restricted.

Art. 9. (1) A foreign physical person must also have a permit for permanent residence in the cases when, for carrying out economic activity:
1. he is registered as sole entrepreneur;
2. he participates in a co-operation;
3. he participates in a partnership;
4. he participates as unlimited liability partner in a limited joint-stock company or in a limited joint-stock companies with shares.
(2) The right of permanent residence of foreign person under para 1 can be withdrawn by the Minister of Interior only in cases stipulated by the law. The administrative act, by which the right of permanent residence is withdrawn shall be subject to appeal before the court by the order of the Law for the administrative proceedings.

Chapter II. FOREIGN INVESTMENTS AGENCY

Art. 10. (1) The foreign investments agency is a state body at the Council of Ministers for co-ordination of the activity of the state bodies in the sphere of foreign investments and for promotion of foreign investments and priority investment projects.
(2) The agency is a corporate body at budget support with headquarters in Sofia and has regional divisions.

Art. 11. (1) The agency shall keep and maintain unified informational system collecting data about all foreign investments in the country.
(2) The Ministry of Finance, the National Institute of Statistics, the Central depository and the Bulgarian National Bank shall submit, at the end of every calendar trimester, summarised information about the type and the volume of the foreign investments for the Unified informational system for foreign investments. Other central and local bodies shall submit information upon request by the foreign investments agency.
(3) The foreign investment agency shall submit information from the Unified informational system for foreign investments to state bodies and to other interested persons by an order determined by the regulations for its structure and activity.

Chapter III. FOREIGN INVESTMENTS

Art. 12. (1) In the context of this law foreign investment is every investment made by a foreign person or its branch in:
1. stock and shares of trade companies;
2. right of ownership of buildings and limited real rights over real estates;
3. right of ownership and real rights on chattel with the nature of long-term material assets;
4. (amend. SG 28/02) right of ownership of detached parts of commercial companies with more than 50 percent state or municipal participation in the capital in the sense of the Law for privatisation and post-privatisation control;
5. securities, including bonds and security bonds, as well as their derivative instruments, issued by the state, the municipalities or other Bulgarian corporate bodies with a remaining term to maturity not shorter than 6 months;
6. credits, including in the form of financial leasing, for a period not shorter than 12 months;
7. intellectual property - subject of copyright and its related rights, patentable inventions, useful models, trade marks, service marks and industrial samples;
8. rights under concession contracts and under contracts for assignment of management.
(2) The foreign investment shall also include the increase of the value of the investment under para 1.

Art. 13. The branches of foreign persons and companies in which participate foreign persons, directly or through other companies with foreign holding, shall submit to the National Institute of Statistics summarised information about the foreign investments according to the Law for the statistics.

(Art. 14 - 17 repealed SG 153/98)

Chapter IV. PRIORITY INVESTMENT PROJECTS

(Art. 18 - 20 repealed SG 153/98)

Art. 21. At the request of the investor the foreign investments agency can propose to the Council of Ministers to establish inter-administrative group with representatives of the interested ministries and administrative bodies for providing institutional support to the investment projects recognised the Council of Ministers as priority.

Art. 22. (1) At the request of the investor the foreign investments agency shall propose to the competent bodies to grant limited real rights on a real estate - private state or municipal property, with the purpose of realisation of a priority investment project.
(2) The offered investment project shall be considered an integral part of the contract for instituting limited real right. In this case Art. 57, para 1 of the Law for the state property and Art. 40 , para 1 of the Law for the municipal property shall not apply.

Chapter V. RIGHTS OVER REAL ESTATES

Art. 23. (1) A foreign person can acquire right of ownership and limited real rights over real estates.
(2) A foreign person, including through a branch or as sole entrepreneur, cannot acquire ownership of land.

Art. 24. (1) The foreign person must obtain a permit for acquiring right of ownership of buildings and limited real rights over real estates in the region of border zones and other territories determined by the Council of Ministers and related to the national security.
(2) A company with foreign holding must obtain permit for acquiring aright of ownership and limited real rights over real estates in the region of border zones and other territories determined by the Council of Ministers and related to the national security.
(3) The permits under para 1 and 2 shall be issued by the Council of Ministers or by a body authorised by it, who shall decide on the request within 45 days. The refusal to issue permit shall be motivated.

Art. 25. The transactions carried out in violation of Art. 23 and 24 or through a dummy shall be declared void by a decision of the court at the claim of the prosecutor or of the interested persons.

Art. 26. (1) Estates property of a foreign person can only be expropriated on the grounds of a law for especially important needs of the state which cannot be satisfied in any other way and upon a preliminary and adequate compensation at market prices.
(2) The estate ceded as compensation must be equal to the expropriated and close to it, and with the consent of the owner - somewhere else. In cases of compensation with estate the difference of the value shall be paid by the owner or by the state.
(3) If the foreign person agrees the compensation can be in cash.
(4) Inasmuch as this Art. contains no special provisions the provisions of Chapter Three of the Law for the state property shall apply.

Chapter VI. SPECIAL PROVISIONS

Art. 27. (1) A foreign person can transfer and buy, in order to transfer foreign currency abroad after presentation of a certificate for paid due taxes in the following cases:
1. realised income from investment;
2. compensation in cases of expropriation of the subject of investment for state needs;
3. liquidation quota in case of discontinuing the investment;
4. price in cases of sale of the subject of investment;
5. the sum received from compulsory fulfilment.
(2) The right under para 1 shall also be exercised by foreign citizens working in the Republic of Bulgaria for the remuneration received by them and the foreign physical persons under Art. 9, para 1 upon presentation of certificate for paid due taxes.

Art. 28. (1) A foreign person can open accounts, to make deposits in foreign currency and in levs in banks, as well as dispose of stock, bonds and other securities.
(2) The receivables in levs and in foreign currency of foreign persons can be secured by a security or mortgage. A decision of a state body shall not be necessary for registration of mortgage.
(3) The transactions of foreign persons carried out through a branch shall be subject to the order stipulated for local persons.
(4) When local persons have the right to payments in favour of foreign persons in foreign currency abroad these payments can be made in the country, including by checks, promissory notes and drafts.

Art. 29. The legal terms of employment between a company with foreign holding as well as a branch or representation of a foreign person and the workers and employees - foreign citizens, shall be settled by employment contracts. The employment contract cannot differ from the provisions of the Bulgarian employment legislation regarding:
1. the written form of the contract;
2. the maximal duration of the working time, the minimal duration of the daily and weekly recreation and the paid annual leave;
3. the minimal salary established for the country;
4. the minimal term of the preliminary notification about discontinuation of the employment contract if such is agreed upon or it is required by the law, as well as regarding the minimal amount of the compensations in cases of discontinuing the employment contract with or without preliminary notification;
5. the responsibility of the employer for damages caused by labour accident or professional disease;
6. the rules of hygiene and safety of labour.

Art. 30. (amend., SG 110/99) The workers and employees - foreign citizens shall be insured by the order of the Bulgarian legislation.

Art. 31. The employment disputes between employers under Art. 29 and workers and employees - foreign citizens shall be settled according to the provisions of the employment contract.

Art. 32. (amend., SG 110/99) For all issues of the legal terms of employment with an employee under Art. 29 which are not settled by the employment contract shall apply the Bulgarian legislation.

Chapter VII. ADMINISTRATIVE AND PUNITIVE PROVISIONS

Art. 33. (1) A bank which transfers foreign currency without presentation of the certificates under Art. 27 shall be subject to proprietary sanction in the amount of the transfer.
(2) For repeated violation under para 1 the proprietary sanction shall be doubled.

Art. 34. (1) The acts for the established violations under Art. 33 shall be issued by the persons authorised by the under governor of the Bulgarian National Bank, head of department "Bank supervision" and the penalty decrees shall be issued by him or by an official authorised by him.
(2) The issuance of acts, the issuance, the appeal and the fulfilment of the penalty decrees shall be carried out by the order of the Law for the administrative violations and penalties.

Transitional and concluding provisions

§ 1. This law revokes the Law for promotion and protection of foreign investments (prom., SG, No 8 of 1992; amend. and suppl., No 92 and 102 of 1995, No 109 of 1996; corr., No 110 of 1996; amend., No 55 and 58 of 1997).

§ 2. The following amendments are introduced in the Law for the statistics:
1. In Art. 21 the words "five hundred to one thousand" are replaced by "80 000 to 600 000".
2. In Art. 22 the words "one thousand to one thousand and five hundred" are replaced by "600 000 to 2 000 000".
3. In Art. 23 the words "one thousand to two thousands" are replaced by "1 000 000 to 2 000 000".
4. In Art. 24 the words "five thousand to ten thousand" are replaced by "1 000 000 to 3 000 000".

§ 3. Within two months from the enactment of the law the National Institute of Statistics shall work out methodology according to which statistical information regarding foreign investments shall be produced, in compliance with the international standards.

§ 4. The companies with foreign holding, which have carried out import under the conditions of Art. 15a of the Law for promotion and protection of foreign investments, under (1, shall present to the customs authorities court decision for inclusion of the non-monetary deposit to the capital of the company within 6 months from the enactment of the law.
(New - SG 29/98)

§ 4a. In cases other than the cases under the preceding paragraph, Art. 14, 15 and 17 of the law shall not apply for commodities which, by October 24, 1997 have been registered under the regime of temporary import."

§ 5. In cases of using tax relief under other laws the provision of Art. 20 shall apply for the remainder of the 10-year period.

§ 6. Within two months from the enactment of the law the Council of Ministers shall adopt regulations for the structure and activity of the Foreign Investments Agency.

§ 7. Within one month from the enactment of the law the Council of Ministers shall publish a list according to Art. 18, item 3 which shall be updated annually.

§ 8. The fulfilment of the law is assigned to the Council of Ministers. The Minister of Finance shall exercise control over the fulfilment of Art. 14 - 17.

§ 9. The law shall be enacted on the day of its promulgation in the State Gazette.
The law was adopted by the 38th National Assembly on October 16, 1997 and was affixed with the state seal.