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What eligibility and disclosure requirements apply for primary listing of equity securities on recognised exchanges in your jurisdiction (eg, aggregate share value, free float requirements, trading record, working capital)?
For the Bulgarian Stock Exchange JSC (BSE) premium segment, equities should meet the following requirements:
- to have been previously listed on the standard segment for at least one year or the issuer’s total equity to be at least Lev50 million (the euro to Bulgarian lev exchange rate is fixed at €1 equals Lev1.95583);
- at least a five-year financial history;
- at least a 25% free float or a free float of at least Lev5 million;
- a monthly average turnover on the BSE for the preceding six months of at least Lev300,000, or the existence of a market-making arrangement for the securities;
- a monthly average of at least 150 securities transactions for the preceding six months, or the existence of a market-making arrangement;
- a reporting profit for at least two of the preceding five years;
- ongoing compliance of the issuer with applicable corporate governance standards and disclosure requirements; and
- information disclosure in both Bulgarian and English.
The listing requirements for the BSE standard segment are less strict (ie, a monthly average turnover for the last six months above Lev4,000 and a monthly average of at least five transactions).
Are there any exemptions from the listing requirements?
Exemptions apply where admission on a regulated market is sought in respect of:
- securities fungible with securities already admitted if they represent, over 12-month period, less than 20% of the latter;
- shares resulting from the conversion or exchange of other securities or from the exercise of the rights conferred thereof where the resulting shares are of the same class as these already admitted and represent, over a 12-month period, less than 20% of the latter;
- securities offered in respect of an exchange tender offer, a merger or division, bonus shares or offers directed solely to the managers and employees of the issuer.
Procedure and timeframe
What is the procedure and typical timeframe for listing?
In the absence of an exemption from the prospectus requirement, a listing prospectus must be drafted. The prospectus must conform with the requirements of the Public Offering of Securities Act and the EU Prospectus Regulation. As of 21 July 2019, the new Prospectus Regulation will apply and prospectuses will have to be aligned with it.
The Financial Supervision Commission (FSC)-led prospectus approval procedure typically takes two to three months. The listing on the BSE usually takes another two to three weeks. The equity securities must be registered with the Central Depository and with a FSC special register. When filing for listing, the issuer must attach to the application certain documents, including a copy of the prospectus, the FSC’s approval resolution and the registration certificate from the Central Depository.
What fees apply for an application to list equity securities?
As a supporting measure for the development of the Bulgarian capital market, the initial public offering prospectus approval procedure before the FSC is free of charge until the beginning of 2021. After that the FSC will charge a fee based on the total issue price of the offered equity securities: Lev900 plus 0.1% of the total issue price in excess of Lev200,000.
The BSE charges a listing fee of Lev500, excluding value added tax.
Listing versus admission to trading
Is there a distinction between listing and admission to trading in your jurisdiction?
In theory, equity securities may be listed on a multilateral trading facility organised in Bulgaria. However, multilateral trading facilities in Bulgaria are still underdeveloped. For this reason, standard practice is to list on the BSE regulated market.
Are there any differences in the rules, restrictions and procedures for secondary listings of equity securities?
A prospectus is unnecessary for secondary listing of securities if these have already been admitted to trading on another EEA regulated market for more than 18 months, provided that such admission was made based on a prospectus and that the ongoing obligations for trading on the respective regulated market have been complied with. Nonetheless, a prospectus summary in Bulgarian should be published, stating where the prospectus can be obtained and where the issuer’s published financial information is available.
Bulgarian issuers wishing to make a secondary listing on a foreign stock exchange may choose to offer their securities either by way of a secondary listing on the selected stock exchange or through issuance of depository receipts (eg, global depositary receipts). If the selected stock exchange is EEA domiciled, a prospectus should be filed either with the FSC (in case of listing of equities, unless prospectus exemptions apply) or with the respective home member state of the depositary receipt issuer (in case of issuance of depositary receipts).
Where a Bulgarian issuer is considering a listing in a third country (eg, on NASDAQ), it should meet the applicable foreign listing requirements (eg, produce a prospectus approved by the US Securities and Exchange Commission). It will also have to notify the FSC of its intentions and to provide copies of the draft prospectus and other listing particulars required by the third country`s laws (eg, the US Securities Act 1933), as well as a binding statement that it will present to the FSC copies of all documents made public or otherwise provided under the third county`s securities laws post-listing.
The secondary listing of a Bulgarian issuer abroad requires a careful legal analysis in view of any necessary amendments to the corporate status of the issuer and the unhindered exercise of shareholder rights under the equities, including when serving as underlying for depositary receipts. Ensuring a link between the central securities depositories involved is also important.
Are there any differences in the listing rules and procedures for foreign issuers?
Other EEA issuers can apply for admission to trading under the same terms as local issuers if they have undergone the prospectus passporting procedure under the EU Prospectus Directive. Once listed, ЕЕА domiciled issuers should submit to the BSE all relevant information, reports and other data subject to public or regulatory disclosure under their national law.
Issuers from third countries wishing to list their equities may choose to draft a prospectus in accordance with their national law, if the prospectus complies with the international standards determined by the International Organisation of Securities Commissions and the contents requirements under their national law are equivalent to these under Bulgarian law. If the issuer intends to publicly offer in Bulgaria equities which are not publicly offered or listed on a regulated market in the European Economic Area, the equities must comply with the requirements of Public Offering of Securities Act and the issuer must submit evidence that the offer will not breach its national law and that the exercise of rights of the domestic investors is ensured. Such issuers may apply for admission to trading under the same terms as local issuers. The prospectus must be submitted in Bulgarian.
Under what circumstances can a company be delisted? What rules and procedures apply?
A public company may be delisted in Bulgaria only if it meets one of the following requirements:
- The general meeting of shareholders has passed a resolution for delisting by a majority of two-thirds of the represented capital, provided that:
- the number of shareholders was less than 50 persons 14 days before the day of the general meeting, as well as on 31 December of the two preceding years; or
- the total value of the assets of the company was less than Lev200,000 according to the latest monthly balance sheet, as well as according to the two latest audited annual balance sheets.
- The general meeting of shareholders at which all shareholders were present or represented has passed a unanimous resolution for delisting.
- Following a tender offer, either:
- shareholders owning at least half of the tendered shares have accepted the tender offer; or
- the general meeting of shareholders has passed a resolution on the delisting by a majority of half of the represented capital, where the tender offeror may vote only with any tendered shares acquired.
- A squeeze-out was performed.
- Certain other conditions are present (eg, the issuer is subject to insolvency proceedings or declared insolvent or the FSC has imposed coercive measures ).
In practice, delistings follow mandatory or voluntary tender offers. Tender offer memoranda should be drafted in accordance with FSC Ordinance 41 and are published following FSC approval. The FSC checks whether the calculation of the proposed price is fair according to the calculation methods used. The tender offer must be valid for a period of 28 to 70 calendar days, as the offeror has chosen. After the completion of the tender offer procedure, and provided the company meets one of the above-mentioned requirements, it may apply for delisting before the FSC and delist its shares from the BSE.
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