Law on Special Purpose Investment Companies and Securitization Companies

LAW on Special Purpose Investment Companies and Securitization Companies Pub. - State Gazette, No. 21 of 12.03.2021; amended, No. 25 of 29.03.2022, effective from 08.07.2022; amended and supplemented, No. 51 of 01.07.2022; 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 Council Regulation adopted in accordance with Article 140(3) TFEU; amended and supplemented, No. 50 of 20.06.2025, effective from 20.06.2025; amended and supplemented, No. 67 of 15.08.2025; amended and supplemented, No. 25 of 10.03.2026; amended, No. 67 of 24.07.2026

PART ONE GENERAL PROVISIONS Subject Matter Art. 1. This Law regulates:

1. the establishment, licensing, operation, transformation and termination of special purpose investment companies;
2. the establishment, licensing, operation and termination of special purpose securitization companies;
3. the activities of originators, initial creditors and sponsors in securitizations within the meaning of Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (OJ L 347/35 of 28 December 2017), hereinafter referred to as "Regulation (EU) 2017/2402";
4. the activities of agents verifying compliance with the requirements for simple, transparent and standardised securitisation, hereinafter referred to as "STS compliance agents";
5. state supervision to ensure compliance with this Law.

Purpose Art. 2. The purpose of this Law is:

1. to create conditions for the development of investment in real estate and receivables, as well as for the development of the market for simple, transparent and standardised (STS) securitisation within the meaning of Regulation (EU) 2017/2402;
2. to ensure the protection of the interests of investors in special purpose investment companies and in securitization companies.

Regulation and Supervision Art. 3. (Amended - SG, No. 51 of 2022; 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 Council Regulation adopted in accordance with Article 140(3) TFEU; amended, No. 67 of 2026) (1) Regulation and supervision over the activities and persons under Part Two shall be carried out by the Commission for Financial Supervision, hereinafter referred to as "the Commission", and by the Vice-Chairman of the Commission heading the "Investment Activity Supervision" Department, hereinafter referred to as "the Vice-Chairman". (2) (Amended - SG, No. 51 of 2022; 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 Council Regulation adopted in accordance with Article 140(3) TFEU; amended, No. 67 of 2026) Regulation and supervision over the activities and persons under Part Three shall be carried out by the Commission and by the relevant Vice-Chairmen of the Commission, except for the cases under Art. 1(2)(3) of the Credit Institutions Act. (3) (Amended - SG, No. 51 of 2022) The Commission exercises the powers of the competent authority within the meaning of Art. 29 of Regulation (EU) 2017/2402, except in cases where the relevant Vice-Chairmen, determined according to paras. 4-6, exercise the powers of the competent authority. (4) With regard to compliance with the requirements of Arts. 5-9 of Regulation (EU) 2017/2402 and the delegated acts for its implementation by supervised entities, the relevant Vice-Chairman is determined as follows:

1. for insurers and reinsurers under the Insurance Code, it is the Vice-Chairman of the Commission heading the "Insurance Supervision" Department;
2. for investment intermediaries under the Financial Instruments Market Act, for management companies and persons managing alternative investment funds under the Act on the Activity of Collective Investment Schemes and Other Collective Investment Undertakings, with regard to undertakings for collective investment managed by them, it is the Vice-Chairman of the Commission heading the "Investment Activity Supervision" Department;
3. for additional pension insurance companies managing a fund for additional voluntary pension insurance under professional schemes under the Social Security Code, it is the Vice-Chairman of the Commission heading the "Insurance Supervision" Department. (5) With regard to compliance with the requirements of Arts. 5-9 of Regulation (EU) 2017/2402 and the delegated acts for its implementation by persons who are not supervised by the Commission and the Bulgarian National Bank, the relevant Vice-Chairman is the Vice-Chairman of the Commission heading the "Investment Activity Supervision" Department. (6) With regard to compliance with the requirements of Arts. 18-28 of Regulation (EU) 2017/2402 and the delegated acts for its implementation by supervised entities, the relevant Vice-Chairman is the Vice-Chairman of the Commission heading the "Investment Activity Supervision" Department. (7) The provision of information and all notifications to the competent authority for the fulfilment of the requirements under Regulation (EU) 2017/2402 and the delegated acts for its implementation shall be made to the relevant Vice-Chairman determined according to paras. 4-6.

PART TWO SPECIAL PURPOSE INVESTMENT COMPANIES Chapter One GENERAL PROVISIONS Definition Art. 4. (1) A special purpose investment company is a joint-stock company which, under the conditions and in the manner prescribed by this Law, invests the funds raised through the issuance of securities in real estate or in receivables. (2) The name of the special purpose investment company shall include the designation "joint-stock company with special investment purpose" or the abbreviation "SPIC". (3) A person who does not meet the requirements of this Part may not include the designation "joint-stock company with special investment purpose" or the abbreviation "SPIC" in its name. Subject Matter of Activity Art. 5. (Amended and supplemented - SG, No. 67 of 2025) (1) A special purpose investment company may carry out the following activities:

1. raising funds through the issuance of securities;
2. purchase of real estate and property rights over real estate, carrying out construction and improvements with a view to providing them for management, leasing, hire-purchase or rental and their sale or purchase-sale of receivables. (2) A special purpose investment company may not carry out other activities outside those specified in para. 1 and directly related to their implementation, unless permitted by this Law. (3) A special purpose investment company may invest only in real estate or only in receivables. (4) A special purpose investment company may not acquire real estate or receivables that are the subject of a legal dispute. (5) (Amended and supplemented - SG, No. 67 of 2025) The real estate acquired by the special purpose investment company must be located in the territory of the Republic of Bulgaria, in another Member State, or in a country that has acceded to the OECD Code of Liberalisation of Capital Movements. (6) The receivables acquired by a special purpose investment company must:
3. be owed by local persons;
4. not be subject to forced execution. (7) At least 70 per cent of the assets of a special purpose investment company investing in real estate at the end of each quarter shall be the result of the activity under para. 1(2). (8) When raising funds under para. 1(1), the company shall bring its assets into compliance with the requirement of para. 7 within a period of 6 months from the registration of the securities issue in the Central Securities Register. (9) At least 70 per cent of the gross revenues for the relevant financial year of a special purpose investment company investing in real estate shall be the result of the activity under para. 1(2). (10) A special purpose investment company investing in real estate shall bring its activities into compliance with the requirements of paras. 7 and 9 within a period of two years from the issuance of the license under Art. 11.

Chapter Two ESTABLISHMENT, LICENSING AND MANAGEMENT OF A SPECIAL PURPOSE INVESTMENT COMPANY Establishment Art. 6. (1) A special purpose investment company shall be established in accordance with Art. 163 of the Commerce Act. The founders may be no more than 50 persons. (2) Upon the establishment of a special purpose investment company, the founding assembly shall unanimously decide on the initial increase of the company's capital with the same class of shares as those subscribed at the founding assembly from the moment the license is issued to the company under Art. 11. The increase must be in an amount not less than 30 per cent of the company's capital. (3) The special purpose investment company shall notify the Commission of its registration in the Commercial Register within a 7-day period from registration. Capital and Shares Art. 7. (Amended - SG, 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 Council Regulation adopted in accordance with Article 140(3) TFEU) (1) (Amended - SG, 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 Council Regulation adopted in accordance with Article 140(3) TFEU) A special purpose investment company must have an initial capital of not less than 250,000 euros. (2) A special purpose investment company must maintain own capital at least equal to the amount under para. 1. (3) The capital subscribed at the founding assembly must be fully paid in by the time of submitting the application for registration of the special purpose investment company in the Commercial Register. (4) Contributions to the capital of a special purpose investment company may only be monetary. (5) The shares of a special purpose investment company are dematerialized. Article 185(2), second sentence of the Commerce Act shall not apply. (6) A special purpose investment company may not issue preferred shares giving the right to more than one vote. (7) The capital of a special purpose investment company may not be reduced through forced cancellation of shares. (8) Increase of capital under Art. 197 of the Commerce Act is not permitted. Raising of Funds Art. 8. The funds raised through the issuance of securities shall be paid by the persons who purchased the securities into a bank account specially opened by the special purpose investment company. Articles of Association and Rules Art. 9. (Amended - SG, No. 67 of 2025) (1) In addition to the data provided in Art. 165(1)(3) - regarding the size of the capital and the nominal value of each share, (4) and (8)-(10) of the Commerce Act, the articles of association of the special purpose investment company must also contain:

1. the subject matter of activity and the period for which the company is created;
2. the type of assets in which the company will invest;
3. the investment objectives of the company, respectively the company's intention to participate in the establishment or acquisition of shares or stakes in specialized companies under Art. 28(1);
4. restrictions on the type of real estate in which the company may invest, respectively on the type of receivables and their security, if provided;
5. the maximum amount of annual management expenses of the company, with explicit indication of the maximum amount of annual expenses for remuneration of third parties under Art. 27(3), where applicable;
6. (amended - SG, No. 67 of 2025) information on other countries in which it intends to acquire real estate, where applicable. (2) The maximum amounts of expenses under para. 1(5) shall be determined as a ratio to the value of the assets on the balance sheet of the special purpose investment company. (3) The General Assembly of Shareholders of the special purpose investment company shall adopt risk management rules, in case the company participates in the establishment or acquisition of shares or stakes in one or more specialized companies under Art. 28(1). Management Art. 10. (1) A special purpose investment company shall be managed and represented by a Board of Directors. (2) The members of the Board of Directors of the special purpose investment company, as well as the attorneys-in-fact of the company, must have higher education and must not be:
7. convicted of an intentional crime of general nature;
8. declared insolvent as a sole trader or as an unlimited partner in a commercial company and not undergoing proceedings for declaration of insolvency;
9. members of the management or supervisory body of a company or cooperative, terminated due to insolvency during the two years preceding the date of the decision declaring insolvency, if there are unpaid creditors;
10. deprived of the right to hold a position of material responsibility;
11. spouses or relatives up to the third degree inclusive, by line or by affinity, among themselves or of a member of the management or supervisory body of a third party under Art. 27(4), where applicable. (3) The members of the Board of Directors of the special purpose investment company and the attorneys-in-fact of the company must be persons of good reputation, with the necessary knowledge and skills, with qualifications and minimum professional experience of three years, corresponding to the activity carried out by the company. (4) The requirements of paras. 2 and 3 shall also apply to natural persons who are representatives of legal entities - members of the Board of Directors of the special purpose investment company. (5) The circumstances under para. 2(1) shall be certified by a certificate of criminal record. When the state of which the person is a citizen does not issue a certificate of criminal record, it may be replaced by an analogous document proving compliance with this requirement, issued by a competent judicial or administrative authority in that state or in the Republic of Bulgaria. (6) To establish the circumstances under para. 2(2)-(5), a declaration signed by the respective person under para. 2 or 4 shall be submitted. (7) To establish the circumstances under para. 3 for the persons under paras. 2 and 4, the following shall be submitted:
12. a biographical reference;
13. a copy of a diploma for higher education obtained in the Republic of Bulgaria, respectively a copy of a diploma for higher education obtained from a higher education institution outside the Republic of Bulgaria, accompanied by a legalized translation of the diploma;
14. other relevant documents, including recommendations. Issuance of License Art. 11. (1) A special purpose investment company shall, no later than 6 months from the date of its registration in the Commercial Register, submit to the Commission an application for the issuance of a license to carry out activity as a special purpose investment company in the form determined by the Commission, to which the following shall be attached:
15. the articles of association;
16. the prospectus for the mandatory increase of capital through public offering of shares under Art. 6(2) and for their admission to trading on a regulated market;
17. documents certifying compliance with the requirements of Art. 10(2)-(4); the circumstances under Art. 10(2)(1) for Bulgarian citizens shall be established ex officio by the Commission;
18. the contract with the depositary bank;
19. a list of names or designations and data on persons who directly or through related persons hold 5 or more than 5 per cent of the shares with voting rights; written declarations regarding the origin of the funds with which contributions against the subscribed shares were made, including whether the funds are not borrowed, and for taxes paid by them during the last 5 years, in a form approved by the Vice-Chairman;
20. the risk management rules, in case the company participates in the establishment or acquisition of shares or stakes in one or more specialized companies under Art. 28(1);
21. evidence of the presence of the necessary organization and resources of the company for carrying out the activity that will not be outsourced to third parties under Art. 27;
22. a contract for outsourcing activities with third parties under Art. 27(4) and evidence of the presence of the necessary organization, resources and experience of these third parties, when activities are outsourced;
23. in the cases under Art. 27, information regarding the existence of contracts concluded by the third parties under Art. 27(4) with other special purpose investment companies;
24. other data and documents determined by a regulation. (2) When the submitted data and documents are incomplete or additional information or evidence for the accuracy of the data is required, the Vice-Chairman shall send a message to the company and set a deadline for remedying the established deficiencies and discrepancies or for submitting additional information and documents, which shall not be shorter than 10 working days. (3) If the message under para. 2 is not received at the correspondence address indicated by the applicant, the time limit for their submission shall run from the publication of the message on the Commission's website. The publication shall be certified by a protocol drawn up by officials determined by order of the Vice-Chairman. (4) The Commission, upon the proposal of the Vice-Chairman, shall decide on the application, by issuing a license under para. 1 and approving the prospectus, or refusing to issue a license under para. 1, within a period of up to one month from receipt of the application, and when additional information and documents are requested - within 15 days from their receipt, respectively from the expiry of the time limit under para. 2. The Commission may once require the remedying of irregularities and/or the provision of additional information. (5) The Commission, upon the proposal of the Vice-Chairman, shall refuse to issue a license under para. 1 if:
25. the prospectus under para. 1(2), the depositary bank or the contract under para. 1(4) do not comply with the requirements of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (OJ L 168/12 of 30 June 2017), hereinafter referred to as "Regulation (EU) 2017/1129", this Law, the Act on Public Offering of Securities, the Act on the Activity of Collective Investment Schemes and Other Collective Investment Undertakings or the implementing acts thereof;
26. the third parties under Art. 27(4) do not meet the requirements of this Law, where applicable;
27. the persons who directly or through related persons hold 5 or more than 5 per cent of the shares with voting rights or who can exercise control over the company through their activity or influence over the taking of decisions, may harm the activity of the company;
28. the company does not meet the minimum capital requirements;
29. the persons under Art. 10(2) and 4 do not meet the requirements of Art. 10(2)-(4);
30. the submitted data do not prove the existence of the necessary organization and resources for carrying out the activity that will not be outsourced to third parties under Art. 27;
31. the applicant has submitted incorrect data or documents with false content;
32. the interests of investors are endangered in any other way. (6) The refusal of the Commission under para. 5 shall be motivated in writing. Prospectus Art. 12. (Amended - SG, No. 67 of 2025) (1) The prospectus for the public offering of securities and their admission to trading on a regulated market shall be drawn up and published in accordance with the requirements of Regulation (EU) 2017/1129, the Act on Public Offering of Securities and the implementing acts thereof, and shall also contain:
33. data on the investment objectives and restrictions in the investment policy;
34. a description of the criteria that the real estate, respectively receivables, in which the company will invest, must meet, as well as the characteristics of the acquired real estate, respectively receivables;
35. data on other sources of financing, if provided;
36. the maximum amount of planned external financing relative to the size of the own capital;
37. data on the depositary bank;
38. data on the necessary organization and resources for carrying out the activities that will not be outsourced to third parties under Art. 27;
39. the maximum amounts of expenses under Art. 9(1)(5);
40. data on additional investments and expenses necessary for bringing the assets into operation;
41. the maximum amount of assets that can be invested in specialized companies under Art. 28(1);
42. (amended - SG, No. 67 of 2025) information on other countries in which it intends to acquire real estate, where applicable;
43. other data and documents determined by a regulation. (2) The members of the Board of Directors of the special purpose investment company, its attorney-in-fact, as well as the person guaranteeing the securities, shall be jointly liable for damages caused by incorrect, misleading or incomplete data in the prospectus. The persons under Art. 18 of the Accounting Act shall be jointly liable with the persons under the first sentence for damages caused by incorrect, misleading or incomplete data in the financial statements of the special purpose investment company. When the prospectus includes information from audited financial statements, the registered auditor shall be liable for damages caused by the financial statements audited by him. Initial Increase of Capital Art. 13. (1) The initial increase of capital of the special purpose investment company shall be carried out only on the basis of a prospectus approved by the Commission under Art. 12. (2) Upon the initial increase of capital, rights within the meaning of § 1(3) of the Additional Provisions of the Act on Public Offering of Securities shall be issued. One right shall be issued against each share of the increase. (3) The initial increase of capital shall be serviced by an investment intermediary with a capital of not less than that provided in Art. 10(2) of the Financial Instruments Market Act. The entire issue of rights under para. 2 shall be offered by the investment intermediary for trading on a regulated market. Art. 194 of the Commerce Act shall not apply upon the initial increase of capital. (4) The special purpose investment company shall send a notification to the regulated market on which its shares will be offered. The notification shall contain the start date from which the offering of rights will begin, the deadlines during which it will be carried out, and information on the number and nominal and issue value of the shares that will be subscribed. (5) The notification under para. 4 must be sent no later than 30 working days from the date of issuance of the license under Art. 11. (6) The regulated market shall be obliged to accept the rights under para. 2 for trading. (7) The time limit for subscribing to shares under para. 1 shall be at least 30 days. The start of the time limit for subscribing to shares coincides with the start of the time limit for transferring the rights. The time limit for subscribing to shares expires at least 5 working days after the expiry of the time limit for transferring the rights. (8) The initial increase of capital shall be carried out outside...