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Varadinov & Co.
Legal Bulletin

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State Gazette, issue 20 /March 6th, 2018
The ombudsman’s oversubscribed rights to protect individuals’ rights provide for amendments to the Act of the same name. The legal definition of the Ombudsman as a public defender who promotes and protects human rights and fundamental freedoms is advocated by the legal definition of the Ombudsman when acts or omissions affect or violate the rights and freedoms of citizens by state and municipal authorities and their administrations, the persons entrusted with the provision of public services and private individuals. The requirements for the election of the Ombudsman by the National Assembly are made explicitly in the conditions of publicity and transparency and, together with the high moral qualities, have proven experience in the field of human rights. Proposals for the election of an ombudsman will also be able to make non-profit-making legal entities for public benefit, and the vote in the meeting of the Ombudsman for him and his deputy will be apparent. As regards the Ombudsman assisting administration, requirements for appointment are introduced in accordance with the principles of transparency, efficiency, pluralism and non-discrimination. The terms and conditions for the announcement of the vacant positions and for the appointment of the employees shall be laid down in the rules of organization and activity of the institution.
The Ombudsman’s authority to accept complaints and signals of violations of rights and freedoms by public authorities and their administrations, as well as by those charged with the provision of public services, also adds to the category of individuals. Similarly, the Ombudsman also receives proposals and recommendations to promote and protect citizens’ endangered rights and freedoms. It is the power of the public defender to monitor and promote the effective implementation of signed and ratified international human rights instruments. The requirement for the annual report on the Ombudsman’s activity to be submitted to a public hearing in the National Assembly is introduced. The public defender should be informed when draft legislation that affects his or her powers is preparing.

State Gazette, issue 20 /March 6th, 2018
Increasing control and security of payments targets the new Payment Services and Payment Systems Act. It introduces the requirements of the new - second directive on payment services in the internal market - Directive (EU) 2015/2366. The main changes are in several directions - refining the criteria and conditions for the provision of payment services, which fall outside the scope of the law, which unifies the practice of law enforcement; to achieve a level playing field between payment service providers by complementing the legal framework with two new payment services currently falling outside the scope of the law - payment initiation services and account information services as well as regulation of suppliers’ activities who offer them; approving the regulation regarding the licensing of payment institutions and electronic money companies, the exercise of the right of establishment and freedom to provide payment services within the EU and cooperation between supervisory authorities; fully guarantee the rights of payment service users through changes in the information requirements and the rights and obligations of payment service providers by extending the scope of payment transactions to which they apply, including operations where only one of the suppliers of payment services is on the EU territory and is carried out in addition to the currencies of the EU and all other currencies; introducing harmonized payment security requirements by regulating the requirements for limiting and controlling operational risks, including security risks, as well as payment security requirements by performing deep customer identity when payments are made remotely or in an internet environment.
A number of European provisions are in place concerning payment service providers (banks, payment institutions and electronic money companies). They will be required to limit and control the risks associated with security of payments. In the event of a significant operational or security incident, the liable persons must immediately notify the Central Bank thereof. When the incident affects or is likely to affect the financial interests of payment service users, the provider is also required to notify them immediately of the incident and of any measures it takes to limit the adverse effects. Suppliers are required to establish thoroughly the identity of the payer when accessing an online payment account, ordering a payment, or performing a remote action. Triple consumer protection is provided for such actions - using multiple payment identification elements, categorized as knowledge (something the user only knows), ownership (something the user only has) and feature (something that characterizes user) who are independent. The goal is to violate one element not to affect the reliability of others, and the procedure is developed in a way that protects the confidentiality of identity data. Failure to comply with the provisions provides for fines for payment service providers up to BGN 2 million.

State Gazette, issue 22 /March 22nd, 2018
A combination of new and limitation of the existing powers of bankruptcy trustees in respect of transactions and actions that damage the insolvency bank foresee changes to the Bank Bankruptcy Act. It was forbidden that the temporary administrator and assignee in bankruptcy, until the date of initiation of the procedure for liquidating the property of the bank, to clear collateral established by debtors, except for the cases in which the bank’s claim is fully repaid through a cash payment. Any transaction in which a claim originating from the bank is transferred to a third party regardless of the number of transfers is declared invalid in respect of the bank and bankruptcy creditors if, as a result of that transaction, the patrimony of the person in charge of the claim , a property, cash or an asset other than a receivable at a transaction price, in proportion to the transferred receivable, has not been received within a reasonable time. In the event that such a transaction is declared invalid by the court, the third party loses its status as creditor to other persons if the claim is based on rights acquired as a result of that transaction. Upon the request of the bank or the insolvency creditors, all pending court, enforcement and / or bankruptcy proceedings concerning the claim of the third party shall be suspended pending the entry into force of the court judgment under par. The assignee, the trustee or the Bank Deposit Guarantee Fund may bring actions before the bankruptcy court to declare the transaction invalid or a series of such transactions within 5 years from the initiation of bankruptcy proceedings for the bank. No state fee is collected in advance. If the claim is met, the next state fee is collected from the convicted party, and if the claim is rejected, the state fee is collected from the insolvency estate.

Especially with regard to Corporate Commercial Bank, the group of non-sensitive transactions has been retroactively extended in order for retroactive action to cover actions prejudicial to creditors’ rights. The bankruptcy, temporary and permanent receivers of Corporative Commercial Bank AD - in bankruptcy, during the period between its placement under special supervision and the date of initiation of the procedure for liquidation of the Bank’s assets, which have been erased from institutions established by debtors or third parties persons in favor of the bank collateral are null and void. Established collateral is considered to be valid and retains its order. This rule does not apply in cases where the bank’s claim is repaid in full through a cash payment. For the time when Bankruptcy Corp. has been placed in bankruptcy under special supervision until the expiration of 6 months from the entry into force of this law in respect of all the debts or third parties in favor of the Bank, the deadlines provided for in the respective laws for their operation. “Corporate Commercial Bank AD” - in bankruptcy, may renew until the expiration of 6 months from the entry into force of this Act any new security for a new term. Collateral is against any third party irrespective of the way in which it has acquired the property. Any transfer or series of transfers of shares and / or shares of commercial companies effected by a debtor to the Bank after the date of placing in bankruptcy under the special supervision of Corporate Commercial Bank AD is void with respect to the Bank and the creditors of insolvency. The trustee, the temporary trustee or the fund may, within 5 years from initiating insolvency proceedings, bring actions before the bankruptcy court for a declaration of invalidity of a transfer or of a series of transfers of shares and / or shares. These rules also apply to insolvency proceedings opened up to the date of its entry into force.