Банкеръ Weekly

Briefs

COMPANY REGISTER TO BE REMOVED FROM COURT

Is it possible that a company just established in Bulgaria can be registered faster and easier than in the past? The answer to this question may be positive. After almost three years of thinking, at the very end of its mandate the Government of the National Movement Simeon II (NMSII) dared initiate a reform in the Commercial Code. A resolution of the Council of Ministers, issued at the end of last April, approved the already notorious strategy for the establishment of a central register of legal entities. The so-called company cases and dusty files will be taken out of the regional courts records and transferred to the Registry Agency which is part of the Ministry of Justice. The information about acting commercial companies will be kept electronically there and everyone will be given access to it. There is one small detail, however - the laws concerning the practical implementation of the idea have to be developed and adopted by the next government and the next parliament.The removal of the company register from court was first discussed in the spring of 2002, but although there was a draft strategy back then, a political decision for concrete actions was not made until last September. However, the Council of Ministers needed another nine months in order to decide where to start from. Rumours spread in the legal circles that the long delay was mostly provoked by the opposition demonstrated by the Deputy Prime Minister Plamen Panayotov. He was firm that the company register should remain in court. Eventually, just before the elections the rulers voted readily for the start of the commercial law reform in Bulgaria.The news was made public by the Minister of Justice Anton Stankov during a special press conference organized by the Centre for the Study of Democracy on May 17. Experts from the centre were among those who initiated the writing of the governmental strategy for the establishment of the centralized company register. As far as the document shows, the register should start operations within the Registry Agency no later than the end of the current year. In practice, it means that as of January 2006 entrepreneurs willing to create a new company will not need to wait months for the benevolence of the magistrates. As the BANKER weekly has informed, the strategy stipulates that the modernisation of the registration procedure go in four stages. The first one includes the establishment of the above-mentioned central electronic register of all legal entities of the private law (except for churches, political parties and trade-unions). In the second stage, the register will combine with the register of special pledges currently operating at the Ministry of Justice. The motor vehicles files of the Traffic Police, the files of the civil status services and those of the future estate register will be transferred to the central legal entities register in the third and fourth stages.The strategy also stipulates that after being registered each legal entity will be given a uniform identification number that will save time and money for making BULSTAT registration, tax registration, registration at the National Social Security Institute and possibly at the customs if the company is engaged in imports. The Parliament made an important step in that direction adopting the new BULSTAT Act. The document was published by the Official Gazette in early May but will enter into force three months later. It stipulates that the BULSTAT registration be transferred from the National Statistics Institute (where it used to be carried out) to the Registry Agency with the Ministry of Justice. According to the agency's Director Svetlozar Tonev, the transfer will reduce the registration terms several times. The new BULSTAT registration procedure will provide companies with a uniform code which will be used later when the centralized register of legal entities is established.Discussions about the advantages and disadvantages of removing the company register from the court will probably continue for a long time. The panel of experts, formed by the Cabinet for the practical application of the strategy, is still to begin working on the preparation of a draft on the central register. Amendments will also be necessary to the Commercial Code, the Cooperatives Act, the Non-Profit Legal Entities Act, etc. The Civil Procedure Code will need to be repaired in its part dedicated to the protective proceedings which contains detailed description of what the court should do with regards to the registration of new commercial companies or the changes in those already established.According to Minister Anton Stankov, there are several benefits from the transformation proposed. First of all, the time needed for registration will be considerably reduced. The Minister also thinks that passing from legal to administrative registration will significantly restrict the number of illegal payments which are now used to make the procedure go faster. Another reason in favour of the transfer of the register is the expected alleviation of the court activities. According to information provided by the justice ministry, more than 50% of the cases reviewed by regional courts annually relate to companies. Officers of the Registry Agency, required to have legal background, will examine the information that companies provide before registration. In turn, all debates on their actions will be subject to legal control. Themis's deputies will also have the final say when partners or shareholders contest decisions taken by the general meetings.One serious problem relating to the implementation of the strategy for establishment of a centralized electronic register is its financing. The 2005 budget does not provide resources for this kind of investments. The authorities are planning to provide part of the money from the PAL III loan which the World Bank is about to launch. The loan amounts to USD150MN, but it will also be used for financing other initiatives, too. How company cases will be transferred from the court to the Registry Agency is not known yet, either. One of the alternatives discussed is to entrust the implementation to private companies in return to later payment from the collected fees. However, computer experts claim it would be much more relevant to use the currently operating national DELFI information system which is an electronic version of the commercial register and is administered by Information Service AD.

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