Due diligence requirements

What due diligence is necessary for buyers?

The necessary due diligence depends on the transaction structure and the specific sector regulations applicable to the target. Fundamental factors to be evaluated include the target’s:

  • corporate history;
  • ownership title;
  • history of insolvency (if any);
  • permits;
  • financial statements;
  • material contracts;
  • loans and credit facilities;
  • tax situation;
  • environmental matters;
  • intellectual property;
  • IT systems; and
  • employment matters. 


What information is available to buyers?

The complete corporate history of the target can be inspected in the publicly available Bulgarian Commerce Register (regarding corporate changes that become effective as of their registration with this authority). Online checks of certain encumbrances over the target’s assets, ownership of intellectual property and real estate, and pending litigation can also be performed.

What information can and cannot be disclosed when dealing with a public company?

The scope of information that can and cannot be disclosed or used with regard to a public company in Bulgaria is regulated by EU Regulation 596/2014. The imposition of measures to combat market abuse with financial instruments is regulated by a primary legislative act – the Act Against Market Abuse With Financial Instruments – which was adopted by the Bulgarian Parliament in order to implement Regulation 596/2014.


How is stakebuilding regulated?

Universally applicable regulation of stakebuilding is provided by the Competition Protection Act, which requires notification to and preliminary approval by the competition regulator for any stakebuilding in a company where the turnover of the concerned enterprises exceeds certain thresholds. Where the process of stakebuilding has community dimensions, the competent authority is the European Commission. 

Various regulations apply to stakebuilding where the target companies operate in a regulated environment (eg, banks and financial institutions, investment intermediaries, insurers and leasing companies).