Law on the Activity of Collective Investment Schemes and Other Collective Investment Undertakings

LAW on the Activity of Collective Investment Schemes and Other Collective Investment Undertakings

Pub. - State Gazette, No. 77 of 04.10.2011; amended, No. 21 of 13.03.2012; amended, No. 109 of 20.12.2013, effective from 20.12.2013; amended, No. 27 of 25.03.2014; amended, No. 22 of 24.03.2015, effective from 24.03.2015; amended, No. 34 of 12.05.2015; amended, No. 42 of 03.06.2016; amended, No. 76 of 30.09.2016, effective from 30.09.2016; amended, No. 95 of 29.11.2016; amended, No. 62 of 01.08.2017; amended, No. 95 of 28.11.2017, effective from 01.01.2018; amended, No. 103 of 28.12.2017, effective from 01.01.2018; amended, No. 15 of 16.02.2018, effective from 16.02.2018; amended, No. 20 of 06.03.2018, effective from 06.03.2018; amended, No. 24 of 16.03.2018, effective from 16.02.2018; amended, No. 27 of 27.03.2018; amended, No. 77 of 18.09.2018, effective from 01.01.2019; amended, No. 83 of 22.10.2019, effective from 22.10.2019; amended, No. 94 of 29.11.2019; amended, No. 102 of 31.12.2019; supplemented, No. 26 of 22.03.2020; affected by the Law on Measures and Actions During the State of Emergency, No. 28 of 24.03.2020, effective from 13.03.2020; supplemented, No. 34 of 09.04.2020, effective from 09.04.2020; affected by the Supplementary Amendment to the Health Act, No. 44 of 13.05.2020, effective from 14.05.2020; amended, No. 64 of 18.07.2020, effective from 21.08.2020; amended, No. 12 of 12.02.2021, effective from 12.02.2021; amended, No. 21 of 12.03.2021; amended, No. 16 of 25.02.2022; amended, No. 25 of 29.03.2022, as the amendments by the Supplementary Amendment to the CISCU come into force from 29.03.2022, and the amendments by the CISCU come into force from 08.07.2022; amended, No. 51 of 01.07.2022; amended, No. 65 of 28.07.2023; amended, No. 84 of 06.10.2023; amended, No. 85 of 10.10.2023, effective from 10.10.2023; amended, No. 106 of 22.12.2023, effective from 01.01.2024; amended, No. 70 of 20.08.2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU; amended, No. 79 of 17.09.2024; amended, No. 49 of 17.06.2025; amended, No. 54 of 04.07.2025; amended, No. 64 of 05.08.2025; amended, No. 99 of 21.11.2025; amended, No. 25 of 10.03.2026

PART ONE
GENERAL PROVISIONS

Art. 1. (Amended - State Gazette, No. 109 of 2013, effective from 20.12.2013.) This Law regulates:

1. the activity of collective investment schemes and management companies;
2. the activity of other collective investment undertakings;
3. (new - State Gazette, No. 109 of 2013, effective from 20.12.2013) the activity of persons managing alternative investment funds;
4. (previous item 3, amended - State Gazette, No. 109 of 2013, effective from 20.12.2013) the requirements for persons who manage and control the persons referred to in items 1-3, as well as for persons who hold a qualifying holding in management companies and persons managing alternative investment funds;
5. (previous item 4 - State Gazette, No. 109 of 2013, effective from 20.12.2013) state supervision to ensure compliance with this Law.

Art. 2. The purpose of this Law is:

1. to ensure the protection of the rights and interests of investors, including by creating conditions for increasing their awareness of the market for units of collective investment undertakings;
2. to create conditions for the development of a fair, open, and efficient market for units of collective investment undertakings;
3. to maintain stability and public trust in the capital market.

Art. 3. (Amended - State Gazette, No. 99 of 2025.) Regulation and supervision over the activities and persons referred to in Art. 1 are carried out by the Financial Supervision Commission, hereinafter referred to as "the Commission", and by the Vice-Chairman of the Commission heading the "Supervision of Investment Activity" Directorate, hereinafter referred to as "the Vice-Chairman".

Art. 3a. (New - State Gazette, No. 16 of 2022.) (1) The Commission takes decisions on the application in its supervisory practice of recommendations and guidelines of the European Securities and Markets Authority and the European Banking Authority in accordance with Art. 13(1)(26) of the Law on the Financial Supervision Commission, which are published on the Commission's website in Bulgarian. (2) The Commission adopts regulations for the implementation of this Law and issues instructions or other acts to introduce requirements, criteria, and conditions arising from the recommendations and guidelines referred to in paragraph 1, applicable to the persons referred to in Art. 1.

PART TWO
COLLECTIVE INVESTMENT SCHEMES
CHAPTER ONE
CONDITIONS FOR CARRYING OUT ACTIVITY BY A COLLECTIVE INVESTMENT SCHEME

Chapter One
GENERAL PROVISIONS

Art. 4. (Supplemented - State Gazette, No. 109 of 2013, effective from 20.12.2013; amended, No. 42 of 2016; supplemented, No. 76 of 2016, effective from 30.09.2016; supplemented, No. 102 of 2019.) (1) A collective investment scheme is a collective investment undertaking that meets the following conditions:

1. (supplemented - State Gazette, No. 76 of 2016, effective from 30.09.2016) its sole objective is collective investment in transferable securities or other liquid financial assets referred to in Art. 38(1), in funds raised through public offering and, in the cases referred to in Art. 21(8), in financial instruments, and it operates on the principle of risk spreading;
2. its units are dematerialized and subject to repurchase, directly or indirectly, based on their net asset value upon request by the unit holders.
   (2) Actions taken by the collective investment scheme with the aim of ensuring that its market value does not differ significantly from the value determined on the basis of its net asset value are deemed equivalent to actions under repurchase.
   (3) The collective investment scheme has no right to carry out any other activity outside that specified in paragraph 1, unless this is necessary to carry out the activity under paragraph 1 and the actions under paragraph 2.
   (4) (New - State Gazette, No. 109 of 2013, effective from 20.12.2013; amended, No. 42 of 2016.)
   The collective investment scheme may consist of separate investment sub-funds, the assets of which are invested in accordance with different investment strategies, without allowing the mixing of assets, liabilities, and results of the separate sub-funds. A separate class of units is created for each investment sub-fund.
   (5) (New - State Gazette, No. 102 of 2019.) The net asset value of each sub-fund in the collective investment scheme shall meet the requirements of Art. 9(1).
   (6) (New - State Gazette, No. 102 of 2019.) The collective investment scheme or its sub-fund may have separate classes of units with a common investment policy and specific characteristics, which must not adversely affect other unit classes of the same fund or sub-fund.

Art. 5. (1) The collective investment scheme is established as a contractual fund or as an investment company.
(2) The contractual fund is a distinct property and is deemed established upon its registration in the register referred to in Art. 30(1) of the Law on the Financial Supervision Commission. The provisions of Section XV "Company" of the Obligations and Contracts Act apply to the contractual fund, except for Art. 359(2) and (3), Art. 360, 362, Art. 363, letters "v" and "g", and Art. 364, insofar as this Law or the rules of the contractual fund do not provide otherwise. (3) The investment company is a joint-stock company with a one-tier management system and its seat in the Republic of Bulgaria, which is established only at an inaugural meeting. (4) The activity of the collective investment scheme is managed solely by a management company under a concluded contract, respectively under the rules of the contractual fund. (5) The collective investment scheme cannot be transformed into a collective investment undertaking that is not a collective investment scheme within the meaning of this Law.

Art. 6. (Supplemented - State Gazette, No. 109 of 2013, effective from 20.12.2013; amended, No. 15 of 2018, effective from 16.02.2018; amended, No. 102 of 2019; supplemented, No. 54 of 2025.) (1) To carry out activity as a collective investment scheme, a license to carry out activity as an investment company, respectively a permit to organize and manage a contractual fund, must be issued by the Commission. The obtained license, respectively permit, entitles the collective investment scheme to carry out activity on the territory of all Member States. (2) No one has the right to carry out activity under Art. 4(1) without having obtained a license, respectively permit. (3) A person who does not possess a license, respectively permit to carry out activity under Art. 4(1), cannot use in its name, advertising, or other activity the words "investment company", respectively "contractual fund", "mutual fund", "investment fund", or other equivalent words in Bulgarian or in a foreign language, meaning the carrying out of such activity. (4) (New - State Gazette, No. 109 of 2013, effective from 20.12.2013; amended, No. 102 of 2019.) A collective investment scheme may include in its name the designation "money market fund", "MMF", or another designation in Bulgarian or in a foreign language, which implies that it is a money market fund, only if it meets the requirements of Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds (OJ, L 169/8 of 30 June 2017), hereinafter referred to as "Regulation (EU) 2017/1131". (5) (New - State Gazette, No. 109 of 2013, effective from 20.12.2013; amended, No. 15 of 2018, effective from 16.02.2018; amended, No. 102 of 2019; supplemented, No. 54 of 2025.) A collective investment scheme may include in its name the designation "exchange-traded fund", "exchange-traded investment company", or another concept implying trading of issued shares or units on a regulated market under Art. 152(1) and (2) of the Capital Markets Act or on a multilateral trading system under § 1(1)(17) of the Additional Provisions of the Capital Markets Act, only if it meets the requirements of this Law and the implementing acts thereof regarding exchange-traded funds. (6) (New - State Gazette, No. 109 of 2013, effective from 20.12.2013.) Additional requirements and restrictions regarding the names of collective investment schemes may be determined by regulation.

Art. 7. (Supplemented - State Gazette, No. 76 of 2016, effective from 30.09.2016; amended, No. 70 of 2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU.) (1) (Amended - State Gazette, No. 70 of 2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU) The subscribed capital of the investment company is not less than 300,000 euros. The capital with which the company is established is entered in the commercial register. (2) (New - State Gazette, No. 76 of 2016, effective from 30.09.2016; amended, No. 70 of 2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU) If for 6 consecutive months the average monthly net asset value of the company is less than 300,000 euros, the management company must within 10 working days disclose the reasons for this, the measures it will take to attract new investors, and the period in which these measures will be applied and in which it is expected for the company to restore the size of its net asset value. (3) (New - State Gazette, No. 76 of 2016, effective from 30.09.2016.) The disclosure under paragraph 1 is carried out on the website of the management company and by other suitable means taking into account the established means of contact with investors. The management company submits to the Commission a copy of the disclosed information by the end of the next working day after its disclosure and information on the results of the measures taken by the 10th day of each month until the minimum size under paragraph 1 is reached. (4) (Previous paragraph 2, supplemented - State Gazette, No. 76 of 2016, effective from 30.09.2016.) Contributions to the capital can only be made in money, except for the cases under Art. 21(8). (5) (Previous paragraph 3 - State Gazette, No. 76 of 2016, effective from 30.09.2016.) Not less than 25 percent of the capital under paragraph 1 must be contributed upon submission of the application for issuance of a license to carry out activity as an investment company, and the remaining part - within a 14-day period from receiving written notification from the Commission that it will issue the license after the full amount of capital is contributed. (6) (Previous paragraph 4 - State Gazette, No. 76 of 2016, effective from 30.09.2016; amended, No. 70 of 2024, effective from the date
determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU) From the entry of the company in the commercial register, its capital is always equal to the net asset value. It cannot be less than 300,000 euros. (7) (Previous paragraph 5 - State Gazette, No. 76 of 2016, effective from 30.09.2016.) The capital of the investment company is increased or decreased in accordance with the change in the net asset value, including as a result of sold or repurchased units. The provisions of Arts. 192-203 and 246 of the Commerce Act do not apply. (8) (Previous paragraph 6 - State Gazette, No. 76 of 2016, effective from 30.09.2016.) The investment company issues only dematerialized non-preferred shares with one vote. Except upon the establishment of the company, its shares are acquired at the issue price, determined on the net asset value. The provisions of Art. 176(2) and (3) and Arts. 188-191 of the Commerce Act do not apply. (9) (Previous paragraph 7 - State Gazette, No. 76 of 2016, effective from 30.09.2016.) The company cannot issue bonds and other debt securities.

Art. 8. To the extent that this Law does not provide otherwise, regarding the procedure for convening and holding the general meeting of shareholders of an investment company and the distribution of dividends, the respective provisions of Chapter Eight of the Public Offering of Securities Act apply.

Art. 9. (Amended and supplemented - State Gazette, No. 76 of 2016, effective from 30.09.2016; amended, No. 70 of 2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU) (1) (Amended - State Gazette, No. 76 of 2016, effective from 30.09.2016; amended, No. 70 of 2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU) The net asset value of the contractual fund must be at least 250,000 euros, and this minimum size must be reached within two years from receiving the permit to organize and manage the fund. If the net asset value of the contractual fund does not reach 250,000 euros within the period in the first sentence or for 6 consecutive months the average monthly net asset value of the contractual fund is less than 250,000 euros, the management company must within 10 working days disclose the reasons for this, the measures it will take to attract new investors, and the period in which these measures will be applied and in which it is expected for the contractual fund to restore the size of its net asset value. The 10-working-day period in the second sentence begins to run from the expiration of the two-year period in the first sentence, respectively from the expiration of 6 consecutive months in the second sentence. (2) (New - State Gazette, No. 76 of 2016, effective from 30.09.2016.) The disclosure under paragraph 1 is carried out on the website of the management company and by other suitable means taking into account the established means of contact with investors. The management company submits to the Commission a copy of the disclosed information by the end of the next working day after its disclosure and information on the results of the measures taken by the 10th day of each month until the minimum size under paragraph 1 is reached. (3) (Previous paragraph 2 - State Gazette, No. 76 of 2016, effective from 30.09.2016.) The contractual fund is deemed the issuer of the units into which it is divided. The units give the right to a corresponding part of the fund's property, including upon liquidation of the fund, the right to repurchase, as well as other rights provided for in this Law and in the rules of the contractual fund. (4) (Previous paragraph 3 - State Gazette, No. 76 of 2016, effective from 30.09.2016.) Contractual funds may issue fractional units based on their net asset value against a monetary contribution of a certain size, if a whole number of units cannot be issued against the contributed amount. (5) (Previous paragraph 4 - State Gazette, No. 76 of 2016,
effective from 30.09.2016.) Contractual funds may distribute income proportionally to the held units under conditions and in a manner determined by the rules of the contractual fund. (6) (Previous paragraph 5 - State Gazette, No. 76 of 2016, effective from 30.09.2016.) The conditions for participation in the contractual fund, its organization, management, and termination are determined by the rules of the contractual fund.

Art. 10. (Amended and supplemented - State Gazette, No. 103 of 2017, effective from 01.01.2018.) (1) A person elected as a member of the board of directors of an investment company must not be:

1. convicted of crimes against property, against the economy, or against the financial, tax, and insurance system, committed in the Republic of Bulgaria or abroad, unless rehabilitated;
2. a member of a management or supervisory body or an unlimited partner in a company for which insolvency proceedings have been opened, or in a company terminated due to insolvency, if creditors remain unsatisfied;
3. declared insolvent or undergoing proceedings for declaration of insolvency;
4. a spouse or relative by blood or marriage up to the third degree inclusive, or by affinity up to the third degree, with another member of the board of directors of the company;
5. deprived of the right to hold a position of material responsibility.
   (2) The requirements of paragraph 1 also apply to natural persons who represent legal entities - members of the board of directors of the investment company.
   (3) The requirements of paragraph 1 also apply to all other persons who can conclude transactions on behalf of the investment company independently or jointly with another person.
   (4) (Amended - State Gazette, No. 103 of 2017, effective from 01.01.2018.) The circumstances under paragraph 1, item 1 for Bulgarian citizens are established ex officio by the Commission, and for foreign citizens are certified by a certificate of criminal record or an equivalent document, and the circumstances under paragraph 1, items 2-5 for Bulgarian and foreign citizens are certified by a declaration. (5) The persons under paragraph 1-3 notify the Commission of any change in the circumstances declared by them under paragraph 1 within three working days from the change. (6) (New - State Gazette, No. 103 of 2017, effective from 01.01.2018.) The circumstances under paragraph 1, item 1 are required and obtained ex officio by the Financial Supervision Commission upon receiving an application for the issuance of a license under Art. 12.

Art. 10a. (New - State Gazette, No. 102 of 2019.) The investment company ensures and applies adequate and effective internal channels and procedures for the submission of reports by its employees regarding actual or possible violations of this Law and the implementing acts thereof.

Art. 11. The provisions of this Part do not apply to the activity of:

1. collective investment undertakings that raise funds without publicly offering their units for sale within the European Union or in parts thereof;
2. collective investment undertakings whose units, according to the fund rules or the articles of association of the investment company, may be publicly offered only in third countries;
3. collective investment undertakings regulated in Part Three, insofar as this Law does not provide otherwise;
4. holding companies, the funds of which are invested through their subsidiary companies predominantly in assets other than transferable securities under Art. 38(1).

Chapter Two
ISSUANCE AND REVOCATION OF LICENSE OF AN INVESTMENT COMPANY AND PERMIT TO ORGANIZE AND MANAGE A CONTRACTUAL FUND

Art. 12. (Amended - State Gazette, No. 109 of 2013, effective from 20.12.2013; amended and supplemented, No. 102 of 2019; amended, No. 85 of 2023, effective from 10.10.2023.) (1) For the issuance of a license to carry out activity as an investment company, an application is submitted to the Commission in a form approved by the Vice-Chairman, to which the following are attached:

1. the articles of association;
2. data on the subscribed and contributed capital;
3. the data and other necessary documents for the members of the board of directors of the investment company, respectively for the natural persons who represent legal entities, members of the board of directors, or for other persons authorized to manage and represent it, as well as information on their professional qualifications and experience;
4. the contract with the management company and the contract for custodial services;
5. the names or titles and data on persons who directly or indirectly hold 10 or more than 10 percent of the voting shares of the applicant or can exercise control over it, as well as on the number of votes held by them; the persons submit written declarations regarding the origin of the funds from which the contributions against the subscribed shares were made, including whether the funds are not borrowed, and on the taxes paid by them during the last 5 years in a form approved by the Vice-Chairman;
6. the rules for portfolio valuation and determination of net asset value;
7. the prospectus of the investment company and the key investor information document;
8. the risk management rules;
9. other documents and data determined by regulation.
   (2) For the issuance of a permit to organize and manage a contractual fund, the management company submits an application to the Commission in a form approved by the Vice-Chairman, to which the following are attached:
10. the rules of the contractual fund;
11. the decision of the competent body of the management company to organize a contractual fund;
12. the rules for portfolio valuation and determination of net asset value;
13. the contract for custodial services;
14. the prospectus of the contractual fund and the key investor information document;
15. the risk management rules;
16. other documents and data determined by regulation.
    (3) (New - State Gazette, No. 102 of 2019.) For the issuance of a license to carry out activity as an investment company, which will be a money market fund, respectively a permit to organize and manage a contractual...