Банкеръ Weekly

Briefs

SMALL AND MID-SIZED ENTERPRISES WITH EUROPEAN DEFINITION

A company with up to 250 employees, assets worth no more than BGN84MN and an annual turnover not exceeding BGN97.5MN will be classified as a mid-sized enterprise. This is what the amendments to the Law on Small and Mid-Sized Enterprises that will be reviewed by the Parliament stipulate. The amendments were approved by the Government in the end of April. According to the currently operating legislation, a mid-sized enterprise is the one that employs up to 250 people, has an annual turnover not exceeding BGN15MN or fixed assets worth not more than BGN8MN. Due to the changes, the financial criteria defining small and mid-sized enterprises valid in the European Union will enter into force in Bulgaria, too.
The amendments to the law stipulate that small enterprises are the ones that employ up to 50 people, have an annual turnover not exceeding BGN19.5MN or assets worth up to the same limit. At present, this category includes companies employing up to 50 people and reporting either an annual turnover of up to BGN5MN or a value of the fixed assets not higher than BGN1MN. Micro enterprises employ up to ten people and have an annual turnover and/or value of assets not exceeding BGN3.9MN. The act which is still in operation does not specify the annual turnover a micro company should have. It only limits the number of its employees. If a company exceeds or fails to meet the respective criteria for a micro-, small, or mid-sized enterprise in two years in a row, that will be reflected in a change in its status.
The bill also stipulates a mechanism for calculation of the staff number in small and mid-sized companies. There is no such mechanism in the act that is valid at present. The number will be calculated on the basis of the number of people employed by the company or on behalf of the company on full-time jobs during the whole year. Employees who have not worked during the entire year, those employed part-time regardless of the term of employment, as well as those on seasonal employment, will be added to the fully employed staff. Altogether, the personnel will include people employed under labour contracts, those who don't have a labour contract or equal relations, who have signed agreements with the company and are considered employed, the owners - managers (including sole-proprietors), those who work as cooperation members in accordance with the Cooperation Act, as artisans according to the Crafts Act, or as agricultural producers and partners. The staff will not include trainees, apprentices, students and pupils who carry out their professional training in the company under an agreement, workers absent because of pregnancy, and those absent in order to bring up a child of up to 2 years old.
Besides, the specification of a company's status will take into account whether it is an independent company, a partner or a related entity. These terms are introduced in this legislation for the first time. When defining the number of staff, the annual turnover or the value of the assets, attention is also paid to the data of the partners and the related companies depending on the share in the concrete entity. The bill also includes terms such as equity funds and venture capital funds which will help for defining the terms related enterprise and partner enterprise.
The bill includes regulations that expand the functions of the Executive Agency for Encouragement of Small and Mid-Sized Enterprises. It will operate as an intermediate unit on operating programs of the National Development Plan with regard to the commitments made by Bulgaria on Chapter 21, Regional Policy and Coordination of Structural Instruments. A few non-operating texts of the active law will be removed - they regulate the renting of municipal estates, private municipal property, only to small and mid-sized enterprises.
It is written in the motives to the bill on amendment and supplement of the Law on Small and Mid-Sized Enterprises that it was prepared in accordance with the recommendation of the European Commission for implementation of the commitments made on Chapter 16, Small and Mid-Sized Enterprises. It was explained in the 2005 monitoring report and read that Bulgaria should guarantee full conformity of the definition of small and mid-sized enterprises with the one in the European Union. From the beginning of last year, the European Commission's recommendation dated May 6, 2003 entered into force on the territory of the European Union and Bulgaria will have to adopt it entirely. Therefore, Bulgarian small and mid-sized companies will be able to profit by the regulations on state subsidies for them and particularly in the field of scientific work and innovations. With this classification, companies will be able to apply for financing from the EU structural and cohesion funds, too.

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