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State Gazette, issue 12 /February 12th, 2021
The most serious package of amendments in banking legislation for years introduces in the Credit Institutions Act the increased requirements of Directive (EU) 2019/878 of the European Parliament and of the Council of 20 May 2019. It strengthens the supervisory mechanisms in Directive 2013/36 / EU (on capital requirements) in order to address weaknesses in part of the regulatory framework. The harmonization with the sectoral rules of the European Union also covers provisions in the Markets in Financial Instruments Act, and a number of BNB regulations will have to be adjusted. The amendments envisage: implementation of direct supervision with regard to financial holding companies and financial holding companies with mixed activity; facilitating the supervision of groups from third countries; improving interest rate risk management in bank portfolios; maintenance by the BNB of systematized information on the activity of the branches of banks from third countries in Bulgaria; improving the prudential supervision of them.
The Central Bank will apply a unified approach when imposing additional capital requirements on banks in Bulgaria, as well as will issue recommendations for additional equity - when it deems that a bank should maintain a higher amount of equity to cover losses in stressful situations. . One of the main new regulations is the introduction of a requirement for issuing approval to a financial holding company, a mixed financial holding company and a parent company of a group consisting of a bank or an investment intermediary. The aim is to ensure compliance with the requirements on a consolidated basis throughout the group and the submission of consolidated supervisory reports at the level of holdings, which become directly responsible for compliance with the basic prudential requirements of the law. The BNB will exercise direct supervisory powers over financial holding companies and mixed financial holding companies.
The BNB will issue approval to a financial holding company and a financial holding company with mixed activity in another case - when the central bank is a consolidating supervisory body of the group. For this purpose, an assessment will be made for compliance with certain conditions regarding the requirements on a consolidated basis and transparency of the organizational structure of the group. The BNB’s obligation to approve holdings whose main activity is related to the acquisition of shares in subsidiaries is abolished. As well as if the holdings do not participate in the management, operational or financial decisions affecting the group or the subsidiaries, which are banks, investment intermediaries or financial institutions. A mechanism has been set up for joint decision-making and for cooperation with the competent authorities of the other Member States, exercising supervision on a consolidated or individual basis over group companies.
New rules have been introduced for direct supervision of approved holdings, for the appointment of a consolidating supervisory body of the group, as well as the BNB’s powers to impose penalties and apply specific supervisory measures on financial holdings and mixed financial holding companies. Groups of third countries with assets in the European Union of more than EUR 40 billion must set up a parent intermediate company within the Union in order to facilitate the supervision of the group and the possibilities for its possible restructuring. The intermediate undertaking may be a licensed bank, investment firm, financial holding company or mixed financial holding company approved by the BNB, and the central bank is a consolidating supervisor.
There is also a possibility (as an exception under certain conditions) for groups from third countries to have two parent intermediates from the European Union. Branches of third-country banks will be required to provide the BNB with details of their assets, equity and applicable governance rules. The regime for imposing additional capital requirements on banks has been further developed, making an improved distinction between micro- and macroprudential measures available to the BNB. The additional capital requirement will be imposed on the basis of the supervisory review and assessment, within which the BNB assesses all risks, including those identified in stress tests. The bank must meet the additional capital requirement with regulatory capital of the best quality - mainly with tier 1 capital, three quarters of which should consist of core tier 1 capital. The central bank may require the coverage of the additional capital requirement to be with a larger share given the specifics of the case.
The recommendations for additional equity of a bank, which it must maintain, will require exceeding the minimum capital requirements, the additional capital requirement and the formed capital buffers. If the bank fails to maintain an adequate level of capital in accordance with the recommendation issued by the BNB, a commitment to maintain a higher amount of capital may follow by imposing an additional capital requirement instead of a recommendation. The procedures for taking a joint decision to determine a recommendation for additional equity in the implementation of supervision on an individual or consolidated basis within a group are also regulated in detail.
Supervisory measures may also be imposed in the event of an excessive increase in interest rate risk for a bank. The BNB is entitled to request the immediate replacement of a bank auditor who fails to comply with the law. At the same time, the possibility of placing under special supervision troubled banks that do not meet the condition of public interest necessary to undertake restructuring actions is eliminated. In practice, this means that for troubled but insignificant banks, bankruptcy or liquidation proceedings will be opened directly. The circle of related parties to which banks have exposures has also been expanded. It now includes the persons who manage and represent companies controlled by the bank.
New powers are assigned to the BNB and closer cooperation with SANS in measures against money laundering and terrorist financing. In case of doubts and increased risk in this direction, appropriate supervisory measures will be imposed, and the suitability of the managers and representatives may be reviewed. Moreover, if necessary, the central bank will be able to order their release. A mechanism has been established to provide confidential information to international bodies, such as the International Monetary Fund and the Bank for International Settlements, in order to ensure the performance of their functions. In this regard, the obligations of the BNB and the Financial Supervision Commission are regulated, which will guarantee the use of the information only for specific tasks and by the persons directly involved with a view to the protection of professional secrecy.

At the same time, a law on serious amendments in the Law on Rehabilitation and Restructuring of Credit Institutions and Investment Intermediaries entered into force. The harmonization with the sectoral rules of the European Union introduces in our country the requirements of Directive (EU) 2019/879 of the European Parliament and of the Council of 20 May 2019 amending Directive 2014/59 / EU regarding the capacity to absorb losses and recapitalization of credit institutions and investment firms and of Directive 98/26 / EC (Directive (EU) 2019/879).
The amendments are aimed at creating guarantees that the institutions have sufficient capacity to cover losses and recapitalization. The aim is, in the event of and immediately after restructuring, to remain able to perform critical functions without jeopardizing public finances and financial stability. The main amendments and additions are regarding the minimum capital requirements and eligible liabilities as loss-sharing tools. The different hypotheses in which the Bulgarian National Bank (BNB) or the Financial Supervision Commission (FSC) exercise their function of a restructuring body at the level of a group, a subsidiary or a significant branch are taken into account. The minimum capital requirements and eligible liabilities are defined as a percentage of the total risk exposure and the total exposure measure of the relevant entity, and the subjects of the regulation should comply with the levels resulting from both measures.
The regulation is differentiated according to the type of the entity, as the powers of the restructuring body are established to apply adjustments in the calculation of the percentage, as well as specific requirements for specific groups of entities. In relation to the eligibility criteria included in the scope of the loss-sharing instrument, the terms “loss-sharing liabilities” and “subordinated eligible liabilities” have been introduced and the definition of “eligible liabilities” has been changed. Simplified rules are provided for institutions after restructuring, and they will be exempted from the application of the respective measures for a certain period of time. Enhanced protection of non-professional clients in the sale of subordinate eligible liabilities is also introduced. A requirement has been established for the minimum nominal value of the loss-sharing instrument in the amount of the BGN equivalent of BGN 50,000, when the instruments of the specified category are sold to a non-professional client. The control over the observance of the restrictions is provided to the FSC as a body supervising the market behavior.
Achieving the minimum capital requirements and eligible liabilities will be phased in for the various financial institutions. The Restructuring Authority will set intermediate target levels for accumulation to be achieved in transitional periods within the deadline of 1 January 2024. It is also possible for the restructuring body to set a longer transition period, as well as to change the planned minimum requirements for periods in which they will be reached. The procedure for preparation and adoption of restructuring plans is synchronized with the more precise regulation of the restructuring strategies. The regime for the removal of significant obstacles to the possibility of restructuring has also been specified.
New powers of the restructuring bodies are established. They will be able to prohibit an institution or company from making distributions in excess of the maximum amount to be distributed, as well as take remedial action. Based on them, a joint assessment will be made as to whether the institution is problematic or likely to become one. For the purpose of transparency of financial institutions are established reporting obligations, providing the minimum required information, including public disclosure of part of it. These are the amount of equity, the levels of eligible liabilities and liabilities that share losses, their structure, including their maturity profile and their order in insolvency proceedings.
The amendments are aimed at creating guarantees that the institutions have sufficient capacity to cover losses and recapitalization. The aim is, in the event of and immediately after restructuring, to remain able to perform critical functions without jeopardizing public finances and financial stability. The main amendments and additions are regarding the minimum capital requirements and eligible liabilities as loss-sharing tools. The different hypotheses in which the Bulgarian National Bank (BNB) or the Financial Supervision Commission (FSC) exercise their function of a restructuring body at the level of a group, a subsidiary or a significant branch are taken into account. The minimum capital requirements and eligible liabilities are defined as a percentage of the total risk exposure and the total exposure measure of the relevant entity, and the subjects of the regulation should comply with the levels resulting from both measures.
The regulation is differentiated according to the type of the entity, as the powers of the restructuring body are established to apply adjustments in the calculation of the percentage, as well as specific requirements for specific groups of entities. In relation to the eligibility criteria included in the scope of the loss-sharing instrument, the terms “loss-sharing liabilities” and “subordinated eligible liabilities” have been introduced and the definition of “eligible liabilities” has been changed. Simplified rules are provided for institutions after restructuring, and they will be exempted from the application of the respective measures for a certain period of time. Enhanced protection of non-professional clients in the sale of subordinate eligible liabilities is also introduced. A requirement has been established for the minimum nominal value of the loss-sharing instrument in the amount of the BGN equivalent of BGN 50,000, when the instruments of the specified category are sold to a non-professional client. The control over the observance of the restrictions is provided to the FSC as a body supervising the market behavior.
Achieving the minimum capital requirements and eligible liabilities will be phased in for the various financial institutions. The Restructuring Authority will set intermediate target levels for accumulation to be achieved in transitional periods within the deadline of 1 January 2024. It is also possible for the restructuring body to set a longer transition period, as well as to change the planned minimum requirements for periods in which they will be reached. The procedure for preparation and adoption of restructuring plans is synchronized with the more precise regulation of the restructuring strategies. The regime for the removal of significant obstacles to the possibility of restructuring has also been specified.
New powers of the restructuring bodies are established. They will be able to prohibit an institution or company from making distributions in excess of the maximum amount to be distributed, as well as take remedial action. Based on them, a joint assessment will be made as to whether the institution is problematic or likely to become one. For the purpose of transparency of financial institutions are established reporting obligations, providing the minimum required information, including public disclosure of part of it. These are the amount of equity, the levels of eligible liabilities and liabilities that share losses, their structure, including their maturity profile and their order in insolvency proceedings.

State Gazette, issue 14 /February 17th, 2021
Successive amendments in the Law on Measures and Actions during the State of Emergency update its provisions according to the epidemic situation. Precautionary measures will not be required and enforcement actions will not be carried out within two months after the lifting of the epidemic situation on funds paid to employees as compensation based on an act of the Council of Ministers in connection with overcoming the consequences of COVID. -19. Arrest notices on the receivables of the employees under sentence one, including those received on their bank or other payment accounts, shall not be subject to execution. For the period from January 1, 2021 to two months after the cancellation of the extraordinary epidemic situation no transfer of the transfers to be granted to the municipalities with the non-repaid interest-free loans provided by the central budget of the municipalities under Art. 103 and 130g, para. 1 of the Public Finance Act, and under § 38 of the transitional and final provisions of the Act for amendment and supplement of the Health Act. For the period from January 1, 2021 to two months after the cancellation of the emergency epidemic situation on the unpaid amount of interest-free loans no interest is due under the Law on interest on taxes, fees and other similar government receivables. Transfers with interest-free loans not repaid in time are reversed ex officio by the Ministry of Finance after a written request from the mayor to the Minister of Finance, made by February 28, 2021. of granting transfers in the period and are not reversed ex officio by the Ministry of Finance, the amount of interest due under the Law on Interest on Taxes, Fees and Other Similar State Receivables is calculated until the date on which the offset is made.
Micro, small and medium-sized enterprises, which in pursuance of an order of the Minister of Health in an emergency epidemic have ceased their activities after November 1, 2020, are granted grants amounting to a percentage of their turnover excluding VAT for the same calendar period in within the period from March 1, 2019 to February 29, 2020 inclusive, for a period until the elimination of the respective grounds for termination of the activity. For enterprises that after 1 January 2020 have started / resumed activity, which has been suspended pursuant to an order of the Minister of Health, the grant is equal to a percentage of their turnover excluding VAT for the previous month of the month in which it was suspended the activity. The funds are provided for each of the months until the elimination of the respective grounds for termination of the activity, as for an incomplete month the grants are provided in proportion to the days of the month. With amendments in the additional provisions of the VAT Act, the tax relief under Art. 189b of the Corporate Income Tax Act, representing state aid for farmers, can be used until December 31, 2022, including the corporate tax for 2022. The newly established in 2020 taxpayers do not make advance payments for corporate tax on The Corporate Income Tax Act in 2021, with the exception of the newly established ones as a result of transformation under the Commercial Act, which make quarterly advance payments for corporate tax in 2021. The tax relief under Art. 48, para. 6 of the Personal Income Tax Act, representing state aid for farmers, may be used until December 31, 2022, including the tax on the annual tax base under Art. 28 of the Personal Income Tax Act for 2022.

State Gazette, issue 15 /February 19th, 2021
Corrections in the instance powers and regulation of the procedural actions performed electronically introduce amendments in the Administrative Procedure Code. When the competent court cannot consider an administrative case, it shall be sent to an equally neighboring court, as: 1. if the district court is competent, the case shall be sent by the respective administrative court; 2. if the administrative court is competent, the case shall be sent by the Supreme Administrative Court. Jurisdictional disputes between district courts hearing an administrative case shall be resolved by their common higher administrative court. If they belong to the districts of different higher administrative courts, the dispute shall be resolved by the higher administrative court in whose district the court which last accepted or refused to hear the case is located. When the court rejects the challenge or terminates the proceedings, the defendant is entitled to costs, unless his conduct has given rise to the case, including legal fees, determined in accordance with Art. 37 of the Legal Aid Act. Where the court rejects the challenge or terminates the proceedings, the interested parties to whom the act is favorable shall also be entitled to costs.
Where service is effected by electronic means, the notice containing information for the withdrawal of the summons, the notice or the papers shall be deemed to have been served on the day of its withdrawal by the addressee. In case the message is not downloaded within 7 days of its sending, it is considered delivered on the first day after the download deadline. The court monitors ex officio the proper performance of the procedural actions. It shall indicate to the party the irregularity of the procedural action performed by it and how it can be remedied by setting a time limit for the amendment. The corrected procedural action is considered regular from the moment of its performance. At a court hearing, the parties perform procedural actions orally, and in other cases - in writing. Procedural action taken through obscene words, insults or threats is considered unfulfilled. The hearing is chaired by the chairman of the panel, who may impose fines for: violation of the order in a court hearing; non-compliance with court orders; use of obscene words, insults and threats addressed to the court, a person from the administration and those involved in the court proceedings.
The judge-rapporteur in the court of first instance checks the regularity of the cassation appeal or the protest and if they do not meet the requirements of Art. 212 and 213, by order leaves them without movement and sends a message to the disputant to eliminate the irregularities within 7 days from its receipt. Where the irregularities are not remedied in time, the court of first instance shall return the appeal or protest. The cassation appeal or protest shall be left without consideration by the court of first instance on the grounds under Art. 215. The Court of First Instance shall rule on the requests for restoration of the term for cassation contestation, for exemption from state fee, as well as on the requests made before sending the case for provision of legal aid under the Legal Aid Act and requests under Art. 166 and 167. If the cassation appeal or the protest is regular and the above grounds are not present, the court shall send a transcript together with the appendices to the other parties, who may submit a response within 14 days from their receipt. The answer may not contain obscene words, insults or threats. After the submission of the answer or after the expiration of the term the case is sent to the court of cassation. The chairman of the court of cassation or his deputies, respectively the chairman of the division shall exercise control over the inspection of the regularity and admissibility of the cassation appeal or protest carried out by the court of first instance, such as: if non-fulfillment of the obligations under para. 1, leave without motion the cassation appeal or protest or send the case to the court of first instance with specific instructions; if instructions for elimination of irregularities are not fulfilled in time or any of the grounds under Art. 215, the cassation appeal or the protest shall be left without consideration by an order and the proceedings in the case shall be terminated; the court has the same powers in initiated cassation proceedings. The acts blocking the way of the appeal and the acts by which the exemption from the state fee is refused may be appealed with a private appeal, as a state fee is not due. A transcript of the private appeal shall not be submitted if the judicial act was issued before the service of a transcript of the cassation appeal. The ruling of the court on the appeal is final. When a decision of a three-member panel of the Supreme Administrative Court is challenged by a cassation appeal or protest, the control powers are exercised by the chairman of the respective department.

State Gazette, issue 16 /February 23rd, 2021
Another attempt to introduce rules to ensure appropriate urban planning, as well as to speed up urban planning procedures, is made with amendments to the Spatial Planning Act. The right to appeal against the general development plans is introduced by the citizens before the respective administrative court at the location of the property by property owners directly affected by their predictions. Such are the properties for which it is envisaged to be expropriated, or for which restrictions are introduced are the property in order to protect the public interest. The term for appeal is 14 days and starts from the promulgation of the plan in the State Gazette, and the appeal does not suspend the implementation of the plan. Public car parks have been added to the privately owned sites that can be expropriated for public needs on the basis of effective PUPs. In this regard, the term “social infrastructure facilities” replaces the current “health, social assistance and education facilities”.
An attempt is also made to speed up the administrative proceedings for consideration and ruling on the detailed development plans. If within a month after the request for approval of the PUP has been received, the interested departments delay their opinions or do not attend the expert councils, then the project is considered agreed without remarks. In case of refusal, he must be motivated. If within a year, after the mayor has approved a change in the detailed development plan, no draft for its amendment is submitted, the order loses its legal effect. After the elaboration of a detailed urban plan for a national site or a municipal one of primary importance is allowed or assigned, the terms for the administration are shortened by half compared to the standard ones. The acts approving the detailed urban plan or issuing a construction permit will be able to be appealed before the body that issued it, within 14 days from its promulgation in the State Gazette, and not within 30 days, whatever the regulations. there were so far.
An obligatory condition for issuing a construction permit is the presence of applied street regulation, on the basis of which the site will become municipal property. In addition, a site will be put into operation only if the measures for construction of streets, roads and alleys have already been implemented, which in the mass case will be at the expense of the investor under conditions and order specified in a special ordinance. Provisions have also been introduced in order to cross the possibilities for circumventing the restrictions regarding the norms for maximum height of construction in areas for low and villa construction. Building permits for extensions and superstructures will be issued only after an inspection of the structure of the building. When determining the purpose of a building, the studios are equated with the status of dwellings for which the requirements for distances are higher.