LAW OF CREDIT INSTITUTIONS
Prom. SG. 59/21 Jul 2006, amend. SG. 105/22 Dec 2006, amend. SG. 52/29 Jun 2007, amend. SG. 59/20 Jul 2007, amend. SG. 109/20 Dec 2007, amend. SG. 69/5 Aug 2008, amend. SG. 23/27 Mar 2009, amend. SG. 24/31 Mar 2009, amend. SG. 44/12 Jun 2009, amend. SG. 93/24 Nov 2009, amend. SG. 95/1 Dec 2009, amend. SG. 94/30 Nov 2010, amend. SG. 101/28 Dec 2010
Chapter one.
COMMON PROVISIONS
Art. 1. (1) The present law shall regulate the conditions and the procedures for licensing, performance of activities, supervision and winding up of credit institutions with a view to providing stable, reliable and safe bank system and protecting of the interests of depositors.
(2) (revoked – SG 101/10, in force from 30.04.2011)
(3) The present provisions shall also apply to banks where these banks have been under a different law, unless otherwise provided.

Art. 2. (1) (suppl. – SG 101/10, in force from 30.04.2011) The bank (credit institution) is a legal entity, which performs public attraction of deposits and other renewable resources and grants loans or other kind of financing for its own account and at its own risk.
(2) The bank can also perform the following activities provided they are included in its license:
1. (amend. – SG 23/09, in force from 01.11.2009; amend. – SG 24/09, in force from 31.03.2009; amend. – SG 94/10, in force from 31.12.2010) Execution of payment services in the sense of the Law on the Payment Services and Payment Systems;
2. (suppl. – SG 23/09, in force from 01.11.2009; amend. – SG 24/09, in force from 31.03.2009; amend. – SG 94/10, in force from 31.12.2010) Issuing and administration of other means for payment such as (traveller’s cheques and credit letters) as far as this activity does not fall within the scope of Item 1;
3. Acceptance of valuables on deposit;
4. Acting as depository or trustee institution;
5. (revoked – SG 24/09, in force from 31.03.2009)
6. Financial leasing;
7. Guarantees;
8. Trading on own account or on the account of the customers with:
a) (suppl. – SG 24/09, in force from 31.03.2009) Instruments on the money market - cheques, drafts, and deposit certificates, etc., other than those under Item 9;
b) Foreign currency and precious metals;
c) (suppl. – SG 24/09, in force from 31.03.2009) Financial futures, options, instruments connected with currency exchange rates and interest rates as well as with other derivative instruments, other than those under Item 9;
9. (amend. - SG 52/07, in force from 01.11.2007) Trading on its own account or on the account of the customers with transferable securities, participation in emissions of securities as well as other services and activities under Art. 5, paragraph 2 and 3 of the Law on the Markets of Financial Instruments;
10. (amend. – SG 24/09, in force from 31.03.2009) Money brokerage;
11. (amend. – SG 24/09, in force from 31.03.2009) Consultations of companies regarding their capital structure, branch strategy and questions related thereto, as well as consultations and other services regarding transformation of companies and transactions for acquiring undertakings;
12. (amend. – SG 24/09, in force from 31.03.2009; amend. – SG 94/10, in force from 31.12.2010) Acquisition of receivables originating from loans or other forms of funding (factoring, forfeiting, etc.);
13 (new – SG 010/10, in force from 30.04.2011) issuance of electronic money;
14. (previous Para 13- SG 101/10, in force from 30.04.2011) Share acquisition and management;
15. (previous Para 14 - SG 101/10, in force from 30.04.2011) Renting out safe deposit boxes;
16. (previous Para 15 - SG 101/10, in force from 30.04.2011) Collection and provision of information and references relating to the creditworthiness of the customers;
17. (previous Para 16 - SG 101/10, in force from 30.04.2011) Other similar activities determined in a BNB ordinance.
(3) (suppl. - SG 52/07, in force from 03.07.2007) Acquisition, registration, settlement, redemption and trade with securities shall be executed under the conditions and the provisions of the Law of State Debt. Trade of state securities, performed on regulated markets of financial instruments and on multilateral trade systems, shall be carried out under the procedure of the Law on the Markets of Financial Instruments. 
(4) The bank shall not execute by occupation other activities different from the ones provided for in paragraphs 1 and 2 with the exception of the cases when this is necessitated by its operation or in the process of collection of its receivables from granted loans. The bank shall be in a position to establish or acquire companies for provision of subsidiary services.
(5) (amend. – SG 24/09, in force from 31.03.2009) Public attraction of deposits or other renewable resources as well as the services referred to in paragraph 2, items 3 and 4 can be performed solely by:
1. An entity that holds a banking license issued by BNB;
2. A bank headquartered in a non-member country, where this country has obtained an issued by BNB license for taking up and pursuing of business activities in the Republic of Bulgaria through a branch;
3. A bank, which has obtained a banking license issued by the competent authorities of a Member State and which operates in Bulgaria directly or through a branch.
(6) (revoked – SG 94/10, in force from 30.04.2011)

Art. 3. (amend. – SG 24/09, in force from 31.03.2009) (1) A financial institution shall be an entity different from a credit institution and its main business activity shall include the execution of one or more of the activities:
1. (amend. – SG 94/10, in force from 30.04.2011) under Art. 2, paragraph 2, items 1, 2, 6 – 13;
2. acquiring holdings in credit institutions or in other financial institutions;
3. granting of loans with funds that have not been accumulated through public attraction of deposits and other renewable resources.
(2) The financial institutions which are not subject to licensing or registration under another law must be entered in a register of the BNB in order to have the capacity to act. The register shall be public and a certificate shall be issued for the registration in it.

Art. 3a. (new – SG 24/09, in force from 31.03.2009) (1) To be entered in the register referred to in Art. 3, Para 2 every financial institution with commercial registration on the territory of the Republic of Bulgaria shall meet the following requirements:
1. to be associated as a company limited by shares, limited liability company or partnership limited by shares and deposited capital as monetary payments in amount determined in an ordinance of the BNB;
2. the place of primary economic activity to be on the territory of the Republic of Bulgaria;
3. the persons managing and representing the company and the persons holding directly or indirectly qualified share in the capital of the company shall have the necessary qualification, professional experience and reputation.
(2) Any foreign financial institution that will be acting through a branch or directly on the territory of the Republic of Bulgaria shall be entered into the register on the basis of the notification and the attached certificate referred to in Art. 24, Para 2.
(3) The order for entering and removal from the register referred to in Art. 3, Para 2 and the documents required for the entry shall be determined in the ordinance under Para 1, Item 1.
(4) The Bulgarian National Bank shall refuse entry in the register to any local or foreign financial institution failing to meet the requirements for entry or failing to provide the required information and documents, or those provided contain incomplete, contradictory or incorrect information.
(5) The Bulgarian National Bank shall refuse from the register any local or foreign financial institution upon its request or upon finding that:
1. it has ceased meet the requirements of this Article;
2. the entry was based on incorrect information or incorrect documents;
3. it fails to perform its duties under this Law or the acts on its implementation, or other normative requirements for exercising the activity.
(6) The requirements to the activity of the financial institution shall be determined in the ordinance under Para 1, Item 1.

Art. 4. The provisions of the present law shall not apply to:
1. The Bulgarian National Bank, whose activities are regulated by a separate law;
2. Licensed post operators of universal post services – for money operations performed by them; they are characteristic of their scope of business and are regulated in a different law;
3. Mutual savings banks, where these banks grant loans only to members at the expense of the contributions made by them and at their own risk;
4. (new – SG 24/09, in force from 31.03.2009) the persons providing by occupation loans against pledge of articles (pledge houses) under conditions and orders determined by the Council of Ministers.

Art. 5. The prohibition for public attraction of deposits and of other renewable resources shall not be applied in the following cases:
1. Bulgarian state and municipalities or international public organisations having one or more Member States as their members– upon acceptance of renewable resources in the cases determined by law;
2. Activities of entities whereas these activities are expressly regulated by law and supervision intended for the protection of depositors and investors.

Art. 6. (1) An entity, which is not a holder of a banking license, shall not use the word "bank" or any of its foreign language derivatives or another word, where this word means execution of bank activities, in its logo, advertising or other activities.
(2) The prohibition laid down in paragraph 1 shall not apply to an institution, the name of which has been established or recognised by law or by an international agreement, to which the Republic of Bulgaria is a party, and where the meaning of the word "bank" makes it clear that the institution does not have bank deals in the scope of its business activities.
(3) (amend. – SG 24/09, in force from 31.03.2009) The name of a bank shall not resemble the name of another bank operating in the Republic of Bulgaria. The prohibition shall apply also where it resembles the name of a famous bank on the international financial market without its consent.
(4) A bank licensed in a Member State, where this bank intends to perform activities in the Republic of Bulgaria, shall use the same name as in the Member State of its head office. In the event that the name of this bank resembles in any way the name of another bank operating in the Republic of Bulgaria, BNB shall be in a position to require the addition of distinctive marks to the original name.

Chapter two.
BANK INCORPORATION AND MANAGEMENT
Art. 7. (1) The bank shall be incorporated as a commercial company and, unless otherwise provided by the present law, it shall be regulated by the Commercial Code.
(2) The minimal required paid in capital upon bank incorporation shall not be less than BGN 10 mln.
(3) Only monetary contributions shall be made against the registered shares up to the minimal required capital referred to in paragraph 2.
(4) The bank can open more than one branch in separate communities, inclusive of the community of its head office.
(5) The headquarters and the registered office of the bank, which are duly entered in the Trade Register, shall coincide with the place of the bank’s actual management and shall be located in the country where the bank performs its business activities.

Art. 8. The bank shall issue only dematerialised shares. Each share shall be one vote.

Art. 9. The Statute of the bank shall contain not only the data determined in the Commercial Code, but also information of the deals that the bank is going to conclude, the singing and representation authorities as well as information of the way of execution of internal audit.

Art. 10. (1) The bank shall be managed and represented jointly at least by two persons. One of them shall have good command of Bulgarian language. The overall management and representation of the bank shall not be assigned to one of them but they shall be in a position to authorise third persons for the execution of different assignments.
(2) The persons referred to in paragraph 1 shall manage the bank by being present in person at the bank’s registered office.
(3) A legal entity shall not become member of the bank’s Management Board or Board of Directors.

Art. 11. (1) Member of the Management Board, of the Board of Directors as well as procurator, with the exception of the procurator authorised for only a branch of a bank licensed in the Republic of Bulgaria, shall be a person as follows:
1. University education with a degree of "Master" at the least;
2. Enough qualifications and professional banking experience; each person under Art. 10, paragraph 1, sentence one should have at least 5 years of managerial experience at a bank or at an institution or company comparable with a bank in accordance with criteria set by BNB;
3. Has never been convicted for deliberate crime of general character with the exception of the cases of discharge;
4. Has not been during the last two years before the date of the decision for declaration of bankruptcy either a member of a managing or controlling body, or a partner with unlimited liability in a company closed down due to bankruptcy where there are unsatisfied creditors, irrespectively of whether the person has redeemed his rights;
5. Has not been a member of a managing or controlling body of a bank during the last two years before the date of the decision for declaration of bankruptcy;
6. Has not been deprived of rights to hold an accountable for assets position;
7. Is not husband/wife or relative up to third direct or indirect degree to a member of the bank’s managing or controlling body and is not actually living with such member;
8. Is not an insolvent debtor, where this debtor has not been restored to his/her rights;
9. (new – SG 24/09, in force from 31.03.2009) based on the collected information about him there are no grounds to doubt his reliability and suitability and the possibility of arising of conflict of interests.
(2) (new – SG 24/09, in force from 31.03.2009) Member of a supervisory board of a bank or representative of a legal person in the supervisory board may be a person meeting the requirements under Para 1, Items 3 – 8, possessing the reliability and suitability required for occupying the position.
(3) (new – SG 24/09, in force from 31.03.2009) The persons under Para 1 and 2 may be elected or authorized upon a preliminary approval by the BNB. The required information and documents and the order for granting or refusing approval shall be determined in an ordinance of the BNB.
(4) (prev. text of Para 03 – SG 24/09, in force from 31.03.2009) The circumstances referred to in paragraph 1, items 4-8 shall be ascertained in a declaration.
(5) (prev. text of Para 04, amend. – SG 24/09, in force from 31.03.2009) Paragraphs 1 and 3 shall apply to the branch managers of banks having their head office in a non-member country.
(6) (prev. text of Para 05, amend. – SG 24/09, in force from 31.03.2009) Person who fails to meet or no longer meets the requirements laid down in paragraph 1, 2 or 5, for bank managers - also in Art. 10, paragraph 1, shall be released from office by BNB unless the person has been released by the respective authority within the set by BNB term.

Art. 12. (revoked – SG 24/09, in force from 31.03.2009)

Chapter three.
LICENSES AND PERMITS
Section I.
Banking License
Art. 13. (1) A license issued by BNB shall be required for all banking activities.
(2) The license application shall be submitted in writing. The following documents shall be enclosed to it:
1. Statute and other acts of incorporation of the applicant;
2. Documents, which contain information for registered shares and paid up contributions;
3. Plan for the bank’s business activity with detailed description of the activities to be executed, customer and product structure, targets, policy and strategy of the bank, financing prognosis for development for a period of three years;
4. Description of the bank’s management and organisation structure with the activities of the separate organisation units, distribution of responsibility among executive directors and other administrators, organisation and management of the bank’s information system inclusive of the mechanism for information protection;
5. Description of internal audit and risk management systems as well as of the measures against money laundering programme;
6. Name and address of all members of the bank’s Supervisory and Management Boards (Board of Directors) and detailed description in writing of their qualifications and professional experience;
7. Written information about the name and address/headquarters of the persons with direct and indirect subscription to three and above three per cent of voting shares as well as about their professional (business) activities during the last 5 years; natural persons and legal representatives of legal entities shall present declarations in writing as follows:
a) The contributions for the subscribed shares are paid up by own resources;
b) Regarding the origin of the funds used for the payment of the contributions;
c) Regarding paid taxes for the last 5 years;
8. Registration document and written data for the persons owing shares or interest of the capital or the property or exercising supervision – for the legal entities referred to in item 7;
9. Other information and documents specified in an ordinance or requested by the BNB for the purposes of assessment whether the applicant complies with the requirements for issuing of a license or not.
(3) It is accepted that the payment of the contributions shall be realised by the person’s own resources in the following cases:
1. For natural persons - as of the date of payment of the contribution the difference between the disposable funds in bank accounts and the amount of their liabilities shall exceed the size of the contribution;
2. For legal entities - as of the date of payment of the contribution the size of the contribution shall less than both the net value of the capital, determined as a difference between assets and liabilities in the balance sheet, and of the disposable funds in bank accounts.
(4) The Bulgarian National Bank shall make preliminary consultations with the competent bank supervision authority before issuing banking license to:
1. A bank, which is to be a subsidiary of a bank – holder of a license in another Member State;
2. A bank, which is to be a subsidiary of a mother company of another bank - holder of a license in another Member State;
3. A bank, which is to be controlled by persons where these persons supervise a different bank - holder of a license in another Member State.
(5) The Bulgarian National Bank shall make preliminary consultations with the competent supervision authority regarding insurance undertakings or investment intermediaries in another Member State before issuing banking license to:
1. A bank, which is to be a subsidiary of an insurance undertaking or investment intermediary - holder of a license in another Member State;
2. A bank, which is to be a subsidiary of a mother company having as a subsidiary an insurance undertaking or an investment intermediary - holder of a license in another Member State;
3. A bank, which is to be controlled by persons who supervise an insurance undertaking or an investment intermediary - holder of a license in another Member State.
(6) The consultations with the competent supervisory authorities include issues relating to shareholders, reputation and experience of the persons who take part in the management of the companies referred to in paragraph 4 and 5, evaluation of the observation of the supervisory requirements as well as other relevant information for the issuance of the license.

Art. 14. (1) Before approving or rejecting the license application, BNB shall perform investigation for verification of the validity of the submitted documents as well as the applicant’s trustworthiness and financial state.
(2) (amend. - SG 52/07, in force from 01.11.2007) Before deciding on an application for provision of services and performance of activities referred to in Art. 5, paragraphs 2 and 3 of the Law on the Markets of Financial Instruments, BNB shall take into consideration the written stand of the Financial Supervision Commission, which shall presented within one month of the BNB’s written request and enclosed documents.
(3) Banking license is issued where the following requirements are fulfilled concurrently as follows:
1. The Statute and the other acts of incorporation of the applicant comply with the legislation;
2. (amend. – SG 24/09, in force from 31.03.2009) The Statute of the applicant contains no provisions impeding the application of the principles and the best practices for corporate management;
3. The capital of the bank and the paid in portion of it are not less than the required minimum;
4. Upon BNB judgement, the projected activity of the applicant shall ensure his trustworthiness and financial stability;
5. The members of the Management Board (the Board of Directors) and of the Supervisory Board comply with the requirements of the present law and no prohibitions have been laid down against holding of their positions;
6. Upon BNB judgment, the shareholders holding more than 3 per cent of the votes could not harm, with their activities or influence on the decision taking process, the trustworthiness and the stability of the bank and its operations;
7. Upon BNB judgment, the bank cannot be endangered by risks originating from the non-bank activities of its founders;
8. In cases of financial holding or joint venture holding - upon BNB judgment the mother company shall not impede supervision on consolidated basis;
9. The persons with subscribed three and above three per cent of the capital have paid their contributions with their own resources;
10. It has not been found out that the connections between the bank and other persons can in any way hinder the effective bank supervision;
11. Upon BNB judgment, the requirements or the difficulties in the application of separate normative or administrative acts of a non-member country, where these acts regulate one or more legal entity or natural persons, with which the bank has established close connections, will not in any way hinder the effective bank supervision;
12. Upon BNB judgment, the property owned by the persons with 10 or more than 10 per cent of the capital and/or their activities in terms of scope and financial results correspond to the declared share participation at the bank and do not provoke doubts regarding the trustworthiness and the suitability of these persons to support the bank for capital if necessary;
13. The origin of the resources used for the payment of the due contribution by the persons holding three and more than three per cent of the capital is clear and legal;
14. Upon BNB judgment, the business activity plan as well as the management and organisation structure of the bank, the internal audit systems, the risk management systems and the measures against money laundering programme ensure adequate risk management and the necessary reliability and financial stability of the bank;
15. (amend. – SG 24/09, in force from 31.03.2009) The requirements laid down in Art. 6, paragraph 3 have been observed.
(4) Within three months of the receipt of the application form alongside with all the necessary documents, BNB shall decide on the approval of the application under the stipulation that the requirements referred to in Art. 15, paragraph 1 are observed or shall refuse to issue a banking license.

Art. 15. (1) Banking license shall be issued if within three months of the receipt of the notification referred to in Art. 14, paragraph 4, proposal one, the applicant certifies that the following supplementary requirements have been observed:
1. The persons, who have subscribed shares, have paid contributions totalling not less than the minimal required capital for execution of banking activities;
2. (amend. – SG 24/09, in force from 31.03.2009) The members of the Management Board (Board of Directors) and the Supervisory Board meet the respective requirements under Art. 11 and the other administrators have the necessary qualifications and professional experience;
3. Suitable buildings and necessary equipment for execution of banking business;
4. Developed internal audit rules and regulations inclusive of clear administrative and accounting procedures;
5. Establishment of an internal audit office and appointment of employees with adequate qualifications and professional experience;
6. Developed reliable internal management rules and regulations, which include clear structure of organisation with intelligible, transparent and adequate levels of responsibility and efficient procedures for spotting, management and reporting of possible risks.
(2) The rules lain down in paragraph 1, items 4 and 6 shall be catch-all rules and shall correspond to the character, scope and complexity of the banking business as well as to the risks, to which the bank could be exposed under Art. 39, paragraph 2.
(3) Bulgarian National Bank shall be in a position not to include certain activities in the banking license if it judges that the applicant is not qualified enough or that the applicant has not fulfilled certain legal requirements.
(4) Where within the term laid down in paragraph 1, the applicant fails to submit the required documents, BNB shall refuse to issue a license.
(5) The issued licenses shall be entered in a register, which is kept with the BNB.
(6) In the event that the issued license confers rights to the performance of the activities referred to in Art. 2, paragraph 2, item 9, BNB shall send a copy of the license to the Financial Supervision Commission.
(7) The Bulgarian National Bank shall notify the European Commission on the following issues:
1. The requirements for licensing of credit institutions;
2. Every issued license to a credit institution.

Art. 16. (1) With the exception of the cases referred to in Art. 15 paragraph 4, BNB shall refuse to issue a license in the following cases:
1. There are unfulfilled requirements under Art. 14, paragraph 3;
2. The applicant has failed to submit before the set deadline all the required information and documentation referred to in Art. 13, paragraph 2 or the information in the submitted documents is incomplete, contradictory or untrue.
(2) (amend. – SG 52/07, in force from 01.11.2007) In the event that the stand of the Financial Supervision Commission under Art. 14, paragraph 2 is negative, BNB shall refuse to issue a license for services and activities pursuant to Art. 5, paragraph 2 and 3 of the Law on the Markets of Financial Instruments.
(3) The refusal to issue a license shall be motivated.
(4) Irrespectively of the terms laid down in Art. 14 and 15, BNB shall issue or refuse to issue a license within 12 months of the receipt of the application.

Art. 17. (1) A bank with headquarters in a non-member country shall apply for a license for execution of banking activities in the Republic of Bulgaria through a branch by depositing an application with the following documents enclosed to it:
1. Registered copy of the bank’s registration act and a document issued by the registration authority with up-to-date information about the headquarters and the registered office, sphere and scope of corporate activity, size of capital, management system and persons representing the bank;
2. Registered copy of the banking license issued by a competent bank supervision authority according to the location of the bank’s headquarters;
3. Registered copy of the bank’s Statute;
4. Plan of the branch’s activities including description of the projected activities under Art. 2 paragraph 1 and 2;
5. Organisational structure of the branch;
6. Annual financial statements for the last three years;
7. Written consent for opening of a branch issued by the bank supervision authority of the country where the bank’s headquarters are located;
8. Written statement of the bank supervision authority of the country where the bank’s headquarters are located with information of the bank’s financial state and for undertaking of commitment for cooperation with the BNB;
9. Information for the persons who are to manage the branch inclusive of their qualifications and professional experience in banking;
10. Other information and documents as specified in an ordinance or requested by the BNB with a view to establishing whether all the necessary circumstances are available for license approval or refusal.
(2) The license under paragraph 1 shall not authorise the branch for performance of business activities where such activities are not specified in the banking license issued in the country where the bank’s headquarters are located.
(3) License shall be issued only in the following cases:
1. The competent bank supervision authority of the non-member country where the bank’s headquarters are located exercises effective supervision of the bank and its branches abroad;
2. An agreement for supervisory cooperation between BNB and the competent supervision authority has been concluded;
3. The bank’s reputation on the international financial market is good and its financial state is reliable and stable;
4. The organisation structure of the bank is suitable for the intended business activities;
5. The branch managers comply with the requirements of the present law and have the necessary reputation;
6. The legislation of the non-member country creates no obstacles to exercising effective supervision on consolidated basis or to provision of information.
(4) Bulgarian National Bank shall notify the European Commission and the European Bank Committee for every issued license for performance of banking activities through a branch of a bank having its headquarters in a non-member country.
(5) The Bulgarian National Bank shall refuse to issue a license for operation in the Republic of Bulgaria through a branch to a bank having its headquarters in a non-member country in the following cases:
1. Non-fulfilment of some of the requirements laid down in paragraph 3;
2. The competent bank supervision authority in the country of the applicant bank’s headquarters has not given its assent for opening of a branch of this bank in the Republic of Bulgaria or has sent a statement for unsatisfactory financial state or for violations of the requirements for reasonable banking;
3. The competent bank supervision authority in the country of the applicant bank’s headquarters does not apply the principle of reciprocity for access of the banks registered in the Republic of Bulgaria to the respective bank market in the territory of the non-member country.

Art. 18. The trade representation office of a bank in the Republic of Bulgaria shall undertake to present at the BNB a copy of its act of registration at the Bulgarian Chamber of Industry and Commerce within 14 days of its issuing. The trade representation office shall not execute commercial activities.

Art. 19. In case of refusal, the applicant can submit a new banking license application not earlier than 12 months of the validation of the refusal.

Section II.
Mutual Recognition
Art. 20. (1) A bank, which is licensed in a Member State, may operate under the provisions of Art. 2, paragraphs 1 and 2 in the territory of the Republic of Bulgaria through a branch provided that the respective banking activities have been included in its license and after the competent authority - issuer of the license, has duly notified BNB.
(2) For operation through a branch in the territory of the Republic of Bulgaria the bank licensed in the Member State shall establish just a single branch irrespectively of the points of sale.

Art. 21. (1) The Bulgarian National Bank shall undertake the necessary actions relating to branch supervision under Art. 20 within two months of the receipt of the notification of the competent authorities of the county-sender regarding the intentions of the respective bank to operate in the territory of the Republic of Bulgaria. Within the term in sentence one BNB shall be in a position to determine its requirements to the operation of the bank in the territory of the Republic of Bulgaria in accordance with the regulations on protection of public interest.
(2) The bank licensed in a Member State may start operating in the Republic of Bulgaria after being duly notified by the BNB or after the expiration of the term under paragraph 1.

Art. 22. A bank licensed in a Member State, may operate directly in the territory of the Republic of Bulgaria under Art. 2, paragraph 1 and 2 provided that the respective activities are included in its license and after BNB has been duly notified by the competent authority– issuer of the banking license. The bank shall specify the names and the addresses of the persons who are to represent it before BNB.

Art. 23. (1) A bank licensed in the Republic of Bulgaria may operate in the territory of a Member State through a branch provided that such operation is included in its banking license.
(2) The bank under paragraph 1 shall notify BNB in writing on its intention to open a branch in the territory of a Member State. The notification shall contain the following information:
1. Member State, in the territory of which the branch is to be opened;
2. Headquarters and address of registration of the branch as well as the correspondence address;
3. Persons charged with the management and representation of the branch alongside with description of their responsibilities;
4. Activity plan of the branch, which is to include description of the activities referred to in Art. 2, paragraph 1 and 2;
5. Organisation structure of the branch;
6. Other documents specified in a BNB ordinance.
(3) Where BNB judges that the projected activities in the territory of a Member State are in conformity with the organisational structure and financial state of the bank, it shall send, within three months of the receipt of the notification and of all documents referred to in paragraph 2, to the competent authorities of the accepting state the collected information as well as information on the size of the bank’s equity and the coefficient of its capital adequacy. The BNB shall notify the bank-applicant within the above term.
(4) The Bulgarian National Bank shall motivate its refusal to send the information under paragraph 3 in the following cases:
1. The bank intends to execute, in the territory of a Member State, activities that are beyond the scope of its license;
2. BNB judges that the projected activities in the territory of a Member State do not comply with the organisational structure and financial state of the bank;
3. BNB judges that the organisational structure of the branch does not ensure reliable and stable management.
(5) The refusal of BNB under paragraph 4 shall be prepared in writing within three months of the receipt of the notification and of all documents under paragraph 2 and shall be sent to the bank-applicant.
(6) The refusal of the BNB under paragraph 4 as well as its abstention from announcing a decision in due time shall be subject to appeal under Art. 151.
(7) The Bulgarian National Bank shall notify the European Commission of every refusal under paragraph 4.
(8) The bank under paragraph 1 shall notify BNB and the competent authorities of the accepting country on all changes in the declared circumstances under paragraph 2, items 2-6 not later than 30 days before the change gives rise to action.
(9) A bank licensed in the Republic of Bulgaria, where this bank intends to exercise for the first time its right to direct operation in the territory of a Member State shall notify BNB on its intentions and specify the services that are to be provided in the territory of the accepting state. Within one month of the receipt of the notification BNB shall notify the competent authorities of the accepting state.
(10) The bank under paragraph 9 may operate directly on the territory of a Member State provided that these activities are included in its banking license.

Art. 24. (1) The financial institution headquartered in a Member State may operate in the territory of the Republic of Bulgaria and perform through a branch or directly one or more of the activities referred to in Art. 3, paragraph 1 only if it is a subsidiary company of a bank or joint ownership of two and more banks licensed in a Member State provided that the act of incorporation or the Statute of the financial institution expressly envisage the performance of the activities under Art. 3, paragraph 1 and in cases of concurrent conditions as follows:
1. The mother bank or the banks that own jointly the financial institution have obtained banking licenses in the respective Member State, within the jurisdiction of which comes the financial institution;
2. The financial institution in reality performs one or more of the activities under Art. 3 in the territory of the sending Member State, within the jurisdiction of which comes the financial institution;
3. The mother bank or the banks that own jointly the financial institution hold at least 90 per cent of the votes in the General Assembly of the financial institution;
4. The mother bank or the banks that own jointly the financial institution satisfy the requirements of the competent supervisory authorities for reasonable management of the financial institution and have declared before BNB, after the approval of the respective competent supervisory authorities, that severally and jointly guarantee the commitments undertaken by the financial institution;
5. The financial institution and the activities that are to be performed in the Republic of Bulgaria are effectively covered by consolidated bank supervision of the mother bank or of any of the banks, which own jointly the financial institution; the effective supervision is executed in accordance with the requirements of the present law inclusive of the requirements for minimal equity capital, control on large exposures and limitations as regards to shares.
(2) The competent authorities in the sending state shall certify for the presence of all the requirements laid down in paragraph 1 in a certificate, which shall be a part of the notification sent to BNB.
(3) Where BNB receives information from the competent authorities of the sending state that the respective financial institution no longer complies with the requirements laid down in paragraph 1, items 1 – 5, the financial institution shall forfeit its rights under paragraph 1 and its activities shall be regulated entirely in accordance with the provisions of the Bulgarian legislation.

Art. 25. (1) A financial institution headquartered in the Republic of Bulgaria may perform one or more activities under Art. 3, paragraph 1 in the territory of a Member State through a branch or directly provided that it is a subsidiary of a bank or a joint ownership of two and more banks licensed in the Republic of Bulgaria and under the following concurrent conditions:
1. The Act of Incorporation or the Statute of the financial institution envisages such services;
2. All requirements laid down in Art. 24, paragraph 1 are observed and the mother bank or the banks that own jointly the financial institution have confirmed this fact in writing.
(2) Where it is established that all the requirements laid down in paragraph 1 have been observed BNB shall issue a certificate, which is sent to the competent authorities in the accepting country.
(3) The procedure for the issuance of certificate shall be determined in a BNB ordinance.
(4) The Bulgarian National Bank shall exercise effective supervision on consolidated basis of the financial institution under paragraph 1 and shall monitor its shareholding structure according to a procedure specified in a BNB ordinance.
(5) In the supervision under paragraph 1 BNB shall work in cooperation with the competent authorities in the Member States observing the requirements for professional secret.
(6) The provisions of the present Art. shall not apply to financial institutions, which under a different law are entitled to performing activities in another Member State directly or through a branch.

Art. 26. (1) The mother bank or the banks, which jointly own the financial institution, shall notify BNB on changes in the circumstances under Art. 25, paragraph 1 within 7 days of their occurrence.
(2) The Bulgarian National Bank shall notify the competent authorities in the respective accepting country if the financial institution under Art. 25 no longer complies with the requirements under Art. 25, paragraph 1.

Art. 27. The provisions of Art. 24 - 26 shall apply to financial institutions-subsidiaries of other financial institutions.

Section III.
Approvals and Permits (Title amend. – SG 24/09, in force from 31.03.2009)
Art. 28. (amend. – SG 24/09, in force from 31.03.2009) (1) Natural persons or legal entities as well as persons acting in consort shall not, without BNB’s preliminary approval, acquire directly or indirectly shares or voting rights in shares in a bank licensed in the Republic of Bulgaria where their participation is to become qualified as a result of the acquisition or where this participation reaches or exceeds thresholds of 20, 33 or 50 per cent of the shares or the voting rights in shares, as well as where the bank is to become a subsidiary.
(2) BNB’s preliminary approval shall also be required when the holding becomes qualified or the thresholds under paragraph 1 are reached or exceeded as a result of acquisition of shares on a stock exchange or on another regulated market of securities.
(3) Where, as a result of objective circumstances unrelated to the will of the persons, their holdings become qualified or the thresholds under Para 1 are reached or exceeded, the acquirers shall not be able to exercise the voting rights in these shares without approval by the BNB, which shall be granted upon application within one month from occurrence of the grounds thereof. If the approval is not requested within the time limit or is BNB may apply the measure under Art. 103, paragraph 2, item 15.
(4) Before the approval by the BNB the shares under Para 3 shall not be taken into account for determining the quorum of the general meeting of the shareholders.
(5) The Bulgarian National Bank shall carry out prior consultations and cooperate with the competent supervisory authority in another Member State, where the applicant under Para 1 – 3 is:
1. A credit institution, an insurer, reinsurer, investment intermediary or managing company licensed in the Member State, or
2. A parent company of another credit institution, insurer, reinsurer, investment intermediary or managing company licensed in the Member State, or
3. A person exercising control in a credit institution, insurer, reinsurer, investment intermediary or managing company licensed in a Member State.
(6) Where the applicant under Para 1 – 3 is a person licensed by the Commission for Financial Supervision, the BNB shall conduct the preliminary consultations and shall cooperate with it.
(7) The Bulgarian National Bank shall provide timely, upon request by the authorities under Para 5 and 6 the information required to assess the acquisition applied for, which is necessary to the exercising their supervisory functions. The Bulgarian National Bank may provide the information considered essential also without explicit request by these authorities.

Art. 28a. (new – SG 24/09, in force from 31.03.2009) (1) To be granted approval each person or the persons acting in consort shall notify the BNB in a written application of their decision for acquisition in the sense of Art. 28, Para 1 or 2 or of the presence of the grounds under Art. 28, Para 3 and shall enclose the necessary documents determined in an ordinance of the BNB.
(2) The BNB shall decide on the basis of the documents and the information provided by the applicant and on the basis of other information and documents available to it.
(3) Approval shall be granted taking into account the potential influence of the applicant on the credit institution in terms of guaranteeing its future sound and reasonable management and if the assessment shows that the applicant is suitable and financially sound. The assessment shall be based on each of the following criteria:
1. the reputation of the applicant;
2. the reputation and experience of each person to be managing the bank after the fulfilment of the applied acquisition;
3. the financial soundness of the applicant in view of the specifics of the activity carried out or to be carried out by the bank;
4. compliance by the bank at the moment of acquisition and after that with the supervision requirements established by the effective normative regulations, taking into account whether the structure of the group, of which the bank is to become part, permits effective supervision, whether there are obstacles to the exchange of information between the competent authorities and whether there is clear allocation of the responsibilities between them;
5. lack of reasonable grounds to suspekt that money laundering or financing of terrorism is performed or attempted in relation to the applied acquisition or that the realization of the acquisition would increase the risk thereof.
(4) The Bulgarian National Bank shall refuse to grant an approval, if it finds that the applied acquisition does not meet any of the criteria under Para 3 or that the information provided by the applicant is incomplete despite performing the procedure under Art. 28b, Para 3 and 4.

Art. 28b. (new – SG 24/09, in force from 31.03.2009) (1) Where all required documents have been enclosed with the application under Art. 28a, Para 1, the BNB shall send a confirmation in writing of its receipt within two working days. The confirmations shall contain the date on which the time limit for delivery of decision on the application expires.
(2) The Bulgarian National Bank shall consider the application under Art. 28, Para 1, 2 or 3 within 60 working days from the date of sending the confirmation in writing referred to in Para 1.
(3) If required for the decision, the BNB may request in writing additional information by the 50th working day from the time limit referred to in Para 2. The term under Para 2 shall be suspended for the period between the date of requesting the information and the date of receiving it.
(4) The suspension under Para 3 may not exceed 20 working days. Within the time limit under Para 2, without its further suspension, the BNB may make additional requests for clarification or supplementation of the provided information.
(5) Where the applicant under Art. 28, Para 1, 2 or 3 is a person with seat in a third country or is supervised by a third country, or is a person from a Member State other than a credit institution, investment broker, insurer, reinsurer and a collective investment undertaking as referred to in Art. 77x, Para 1, Item 8 of the Law on Public Offering of Securities, the suspension of the term for the decision under Para 3 may be extended by the BNB up to 30 working days.
(6) The Bulgarian National Bank shall decide on the application within the time limit for the decision in a reasoned act in writing. Where the applicant is under the supervision of a competent authority under Art. 28, Para 5 or 6, the reasons to the act shall objectively represent the opinion of this authority regarding the decision for the applied acquisition.
(7) The Bulgarian National Bank may specify a time limit for fulfilment of the acquisition upon expiration of which the approval shall be invalidated.
(8) The granted approval or refusal shall be notified to the applicant within the time limit referred to in Para 2, but still within two working days from delivery of the decision. Upon request of the applicant or upon decision of the BNB the refusal and the reasons thereof may be announced to the public in an appropriate manner.
(9) If the BNB fails to deliver a decision on the application within the time limit referred to in Para 2, the applied acquisition shall be deemed approved.
(10) Where two or more applications for approval of acquisitions in he same bank have been submitted, the BNB shall consider them independently from each other according to the criteria under Art. 28a and in compliance with the procedure under this Art..
(11) The requirements to the applicant, the information and the documents for assessing the compliance with the criteria under Art. 28a, Para 3 shall be determined in an ordinance of the BNB.

Art. 29. (amend. – SG 24/09, in force from 31.03.2009) (1) Not having a written permit issued by BNB the bank shall not:
1. Open a branch in a third country;
2. Change the name, which is entered in its license;
3. Transform itself;
4. Conclude bank deals beyond the scope of the issued license;
5. Raise its capital by non-monetary contributions;
6. Buy back issued shares;
7. Reduce its capital;
8. Establish or acquire control of a bank headquartered abroad.
(2) The Bulgarian National Bank shall examine the permit application under Para 1 within three months of its receipt. In the cases under Para 1, Item 3 the BNB shall examine the application if it is accompanied by a permit issued by the Commission on Protection of Competition where the issuance of such permit is mandatory.
(3) The terms and the procedures for the issuance of the permits under Para 1 as well as the reasons for the refusal shall be determined in a BNB ordinance.

Art. 29a. (new – SG 24/09, in force from 31.03.2009) (1) The transactions, decisions and acts performed without the preliminary approval in the cases under Art. 28, Para 1 and 2 or without the preliminary permit under Art. 29, Para 1 shall be null and void.
(2) The Central Depositary shall enter into the shareholder’s book of the bank any acquisition of shares, of which an approval under the order of Art. 28, Para 1 and 2 is required, upon presentation of the approval, and in the cases of Art. 28b, Para 9 – upon receiving a confirmation for it by the BNB.

Art. 29b.( new – SG 94/10, in force from 31.12.2010) (1) Transformation of a bank by way of consolidation shall be admitted only with another bank. Permission shall be issued only if the newly established company receives a bank license.
(2) Transformation of a bank by way of a merger shall be admitted only if the acquiring company is a bank. Into a bank another bank, payment institution, investment intermediary or a financial institution may be merged.
(3) Permission to merge as per Para 2 shall not be issued, if the license of the acquiring bank does not allow to perform the activities of the merged company.
(4) Permission for transformation by change in the legal form of by transfer of the net company property, shall not be issued to a bank, licensed by the BNB.
(5) For the issuance of a permission for a split or spin off, the acquiring, respectively the newly established companies shall have the respective license, in case that as a consequence of the succession rights and obligations, arising from performance of activities for which a license is needed were transferred to them.

Art. 30. (1) In cases of voting on capital raise by contributions of shareholders, the General Assembly, respectively the Management Board (the Board of Directors) shall fix a term for payment of the contributions and this term shall not exceed 6 months of the date of registration of the capital raise. Where public offering of securities takes place, the initiation of the term shall coincide with the publication of the prospectus.
(2) The shares, for which the due contributions have not been paid or the shares, which have not been sold within the term, shall be invalidated and the respective authority shall undertake actions to reduce the capital to the amount of the actually paid in capital. The decision for the alteration shall be taken not later than three months of the expiration of the term under paragraph 1.
(3) Where the decision under paragraph 2 is not taken in time, the alteration shall be entered into the trade register upon BNB request.
(4) (amend. – SG 24/09, in force from 31.03.2009) Art. 28, paragraph 3 shall be applied to those shareholders who have to apply for a permit as a result of alterations in the decision.
(5) Paragraphs 2 and 3 shall be applied where BNB finds out that the capital has been raised by non-monetary contributions without permission or the funds of the monetary contributions are not property of the shareholder.

Art. 31. (amend. – SG 24/09, in force from 31.03.2009) (1) Preliminary approval in writing under Art. 28 shall be required also in respect of a shareholder who by way of participating in bank’s capital increase by shareholders’ contributions or by conversion of bonds into shares increases his holdings, provided that this results in qualified holding or provided that this holding reaches or exceeds the thresholds of 20, 33 or 50 per cent of the shares or the voting rights in shares, as well as where the bank becomes a subsidiary.
(2) Art. 28, paragraph 3 shall be applied to those shareholders who have to apply for an approval as a result of capital raise with a sum smaller than the one voted and entered in the capital increase decision.
(3) The necessary documents and information provided by the shareholder for the assessment under Art. 28a shall be determined in a BNB ordinance.
(4) Where the requirement under paragraph 1 is violated, the acquisition of shares shall give rise to legal action but BNB shall be in a position to implement the measure referred to in Art. 103, paragraph 2, item 15.

Art. 32. (1) (amend. – SG 24/09, in force from 31.03.2009) Where a person or an entity acquire three or more than three per cent of the shares or the voting rights in shares in a bank licensed in the Republic of Bulgaria, the Central Depositary shall notify BNB on the name/title and the address/headquarters of the person/entity within 7 days of the registration of the acquisition in the book of shareholders.
(2) The person/entity under paragraph 1 shall undertake, upon BNB request, to submit all the documents under Art. 13, paragraph 2, item 7-9 within a term fixed by BNB.
(3) In case of non-execution of the requirements under paragraph 2 and in case of incomplete or untrue information, BNB shall be in a position to implement the measure referred to in Art. 103, paragraph 2, item 15.
(4) The Bulgarian National Bank shall be authorised to act under paragraph 3 in the following cases:
1. It has been established that the person/entity has submitted untrue data or
2. It has been established that with its activities or with its influence on the decision-taking process the person/entity may harm the reliability and the safety of the bank or the reliability and the safety of its operations, or
3. It has been established that the person/entity has not paid in contribution with own resources.

Art. 33. (1) (amend. and suppl. – SG 24/09, in force from 31.03.2009) Every individual or legal entity that intends to transfer directly or indirectly his qualified interest at a bank licensed in the Republic of Bulgaria or to reduce his qualified interest in a way for his shares or the voting rights in shares to drop down below 20, 33 or 50 per cent of the capital shall notify the BNB as follows:
1. The interest before the transfer;
2. The interest after the transfer.
(2) Where a bank ceases to be a subsidiary of an entity, this entity shall notify BNB.
(3) The notifications under paragraph 1 and 2 shall be made not later than 10 days prior to the occurrence of the respective circumstance.

Art. 34. (1) The banks licensed in the Republic of Bulgaria shall notify the BNB within 7 days of the coming to their knowledge of each acquisition or transfer of shares of their capital, as a result of which the shares of the shareholders exceed or drop below the thresholds referred to in Art. 28, paragraph 1.
(2) The banks shall submit to the BNB in writing the names of the shareholders holding qualified interest as well as the size of the interest not later than the 15th of the month following each quarter.

Art. 35. (amend. – SG 24/09, in force from 31.03.2009) The registration of a bank into the trade register shall be made upon presentation of the license issued by BNB; the registration of the alterations referred to in Art. 29, paragraph 1 - upon presentation of the respective BNB permit.

Section IV.
License Withdrawal
Art. 36. (1) The Bulgarian National Bank shall be in a position to withdraw the issued banking license in the following cases:
1. The bank fails to initiate the performance of the approved banking activities within 12 months of the date of license issuance;
2. In the event of violations under Art. 103, paragraph 1;
3. The bank has submitted untrue information for the issuance of the banking license;
4. The bank has suspended its operation for a period exceeding 6 months;
5. The bank no longer complies with the license requirements;
6. The bank does not have enough equity or it is unlikely for the bank to continue meeting its liabilities to the creditors inclusive of the cases when it fails to keep its custody assets safe.
(2) The Bulgarian National Bank shall withdraw the license of an insolvent bank in the following cases:
1. (suppl. – SG 44/09, in force from 12.06.2009; suppl. – SG 94/10, in force from 31.12.2010) The bank fails to fulfil its due money obligation for more than 7 business days, should this be directly connected with the financial situation of the bank and in BNB consideration repayment of the collectable monetary debts within a reasonable tome period, or
2. Its equity is a negative value.
(3) (new – SG 44/209, in force from 01.09.2009) The decision under par. 2 shall be taken by BNB within 5 work days after identification of the insolvency
(4) (prev. par. 3 – SG 44/09, in force from 12.06.2009) The equity of the bank shall be established according to the supervisory requirements and rules, which are determined by the regulation under Art. 40, paragraph 1.
(5) (prev. par. 4 – SG 44/09, in force from 12.06.2009) By the license withdrawal act BNB shall appoint quaestors unless such quaestors have been appointed beforehand.
(6) (prev. par. 5 – SG 44/09, in force from 12.06.2009) The provisions under Art. 26, paragraph 1 and Art. 34 of the Administrative Procedure Code regarding the explanations and the objections of the interested parties shall not be applied when issuing acts under the present Art.
(7) (prev. par. 6 – SG 44/09, in force from 12.06.2009) By the withdrawal of the license the business activities of the banks shall be suspended and it shall be subjected to compulsory winding-up.

Art. 37. (1) After the license withdrawal pursuant to Art. 36, paragraph 1, the BNB shall forward a request to the Trade Register for registration of the bank’s suspension of business activities and for its declaration into liquidation.
(2) In the cases under Art. 36, paragraph 2, BNB shall forward a request to the competent court for institution of bankruptcy proceedings.
(3) The decisions of the BNB for license withdrawal shall be promulgated in the "Official Gazette". The Bulgarian National Bank shall undertake other measures to inform the society of the withdrawal of the respective license.
(4) The Bulgarian National Bank shall notify the European Commission on every withdrawn banking license.
(5) BNB shall notify the competent supervisory authority in a Member State on the withdrawal of the banking license of a bank, which operates through a branch in this Member State.

Art. 38. (1) The Bulgarian National Bank shall be in a position to withdraw the banking license of a bank of a non-member country for operation through a branch pursuant to Art. 36, paragraph 1.
(2) The Bulgarian National Bank shall withdraw the banking license of a bank of a non-member country for operation through a branch where the banking license of the bank has been withdrawn by the competent authorities in the country of the bank’s headquarters.
(3) After the license withdrawal of a bank of a non-member country BNB shall undertake measures of informing the public of the license withdrawal.

Chapter four.
EQUITY, LIQUIDITY AND OTHER REQUIREMENTS
Art. 39. (1) For the sake of meeting their liabilities to the creditors the banks shall have equity adequate to the undertaken risks.
(2) The banks shall always maintain equity exceeding or equal to the sum of the capital requirements for:
1. Credit risk – for overall banking activities;
2. Position risk, settlement risk and risk of counterparty – for their activities in the trade portfolio;
3. Exchange and commodity risk – for overall banking activities;
4. (amend. – SG 94/10, in force from 31.12.2010) Operational risk - for overall banking activities;
5. Other risks relating to their business.
(3) The share capital of the bank as well as its equity shall never drop below BGN 10 mln.
(4) The bank groups and financial holdings shall have adequate equity in compliance with the requirements applicable to their subsidiaries referred to in paragraph 2.

Art. 40. (1) The equity structure and elements, the capital adequacy requirements, the calculation ways and methods, the requirements for approval or acknowledgement of estimation models and approaches as well as the conditions and the procedures for approval or acknowledgement of persons, who perform risk estimation, shall be determined in a BNB ordinance.
(2) Pursuant to the requirements of Art. 39, BNB shall:
1. Issue permits for inclusion or directions for elimination of certain positions in the equity;
2. Acknowledge agencies for external credit estimation or export insurance;
3. Acknowledge netting agreements;
4. (amend. – SG 94/10, in force from 31.12.2010) Approve and confirm the application for supervisory purposes of:
a) internal ratings – based approaches for the measurement of the credit risk;
b) operational risk advanced measurement approaches;
c) market risk and counterparty credit risk internal measurement models.;
5. Approve the application of alternative approaches and methods;
6. Acknowledge supervisory treatment approved in a different Member State or in a non-member country where this treatment is performed in compliance with the principles of the present law and of the acts on its application.
(3) The BNB ordinance under paragraph 1 shall determine the terms and the procedures for the issuing of the permits referred to in paragraph 2.
(4) (new – SG 24/09, in force from 31.03.2009) In respect of contracts for acquisition of amounts by a bank in order to become secondary components of its capital upon a permit granted by the BNB under the order of Para 2, Item 1 the provisions of the Law on the Obligations and Contracts and of the Law on the Bank Bankruptcy shall not apply, where they provide for a more favourable regime to the rights of the creditors in comparison to those under the contract.

Art. 41. (1) The banks shall not pay off dividends or distribute capital before having allocated the necessary resources to the "Reserves" fund; the banks shall not pay off dividends or distribute capital if these actions would violate the requirements under Art. 40, paragraph 1.
(2) The resources in the "Reserves" fund shall not be used for the distribution of dividends without a permit issued by the BNB.

Art. 42. (1) Each bank shall manage its assets and liabilities in a way as to meet its due liabilities at any time. The bank shall:
1. Approve financial and liquidity plans, which reflect the peculiarities in its activities;
2. Maintain liquidity for meeting the difference between incoming and outgoing money flows;
3. Maintain a system for monitoring and control of the interest risk in all operations;
4. Correct duly the maturity structure of assets and liabilities in cases when the market conditions are changed;
5. Keep up-to-date information for the calculation of its liquidity position at any moment.
(2) The liquid assets, the maturity structure of the assets, the liabilities and the off-balance positions as well as the other requirements for liquidity management shall be determined in a BNB ordinance.

Art. 43. The bank shall perform periodic estimation of its credit and other risk exposures and shall form provisions due to depreciation loss according to criteria determined in a BNB ordinance.

Art. 44. (1) All banks and bank groups shall undertake never to exceed the established ratios of large exposures to equity.
(2) All banks and bank groups shall establish the exposure of one entity or economically related entities as a sum of balance assets and off-balance positions determined in a BNB ordinance.
(3) The exposure to one entity or economically related entities shall be considered as large when it equals or exceeds 10 per cent of the bank’s or the bank group’s equity.
(4) Decision that leads to the formation of a large exposure shall be taken by the Management Board (Board of Directors). The decision should be unanimous where the exposure exceeds 15 per cent.
(5) The exposure to one entity or economically related entities shall not exceed 25 per cent of the bank’s or bank group’s equity.
(6) (revoked. – SG 94/10, in force from 31.12.2010)
(7) (amend. – SG 94/10, in force from 31.12.2010) The Bulgarian National Bank shall determine with an ordinance the terms and the conditions for participation of some of the exposures with reduced size or for their elimination according to the ratios under Paragraph 5.
(8) (new – SG 94/10, in force from 31.12.2010) The exposure to another credit institution or investment intermediary or to economically related entities, one of which is a credit institution or an investment broker, may exceed the envisaged in Para 5 ration under conditions, determined with an ordinance of the BNB.

Art. 45. (1) The bank may form the following exposures only by virtue of unanimous decision of its collective management authority:
1. Exposures to bank administrators;
2. Exposures to holders of shares with more than 10 per cent of all votes in the General Meeting of Shareholders;
3. Exposures to a shareholder whose representative is a member of the bank’s management or supervisory authority;
4. Exposures to husbands, wives, brothers, sisters and direct relatives up to third degree inclusive of the persons/entities referred to in items 1, 2 and 3;
5. Exposures to legal entities where the persons/entities referred to in item 1 – 4 take part in their management;
6. Exposures to commercial companies where the bank or a person/entity referred to in items 1-4 participate or hold qualified shares in their management;
7. Exposures to third persons/entities acting on the account of the persons/entities referred to in items 1-6.
(2) In the cases referred to in paragraph 1, the decision for the formation of the exposure shall determine the relevant terms and conditions.
(3) The procedures under paragraph 1 shall not be applied in the following cases:
1. The size of the exposure to a person/entity under paragraph 1, items1 and 4 does not exceed the person’s/entity’s annual remuneration;
2. The size of the exposure to the person/entity under paragraph 1, items 2, 3, 5, 6 and 7 is smaller than 1 per cent of the bank’s equity but not more than BGN 300 000.
(4) The bank shall not offer preferential terms and conditions regarding the exposures to the persons/entities under paragraph 1 as follows:
1. Conclusion of a deal, which the bank would not normally conclude with clients different from the persons/entities referred to in paragraph 1 due to its nature, purpose, characteristics or risk;
2. Collection of interests, fees and other liabilities or acceptance of collaterals, which are lower than the collaterals required from other clients in similar cases.
(5) (revoked – SG 24/09, in force from 31.03.2009)
(6) (amend. – SG 94/10, in force from 31.12.2010) The total bank exposure to a person/entity under Paragraph 1, who is not a credit institution or an investment intermediary shall not exceed 10 per cent of the bank’s equity.. The total amount of all formed bank exposures to the persons/entities under Sentence One shall not exceed 20 per cent of its equity.
(7) Within the meaning of the present Art. an exposure to a single person/entity shall be the sum of balance assets and off-balance positions determined by the ordinance under Art. 44, paragraph 2.

Art. 46. Administrators, who have extended loans in violation to Art. 44 and 45, shall be liable jointly with the borrower.

Art. 47. (amend. – SG 24/09, in force from 31.03.2009) (1) The total amount of qualifying holdings of the bank in companies that are not credit institutions, financial institutions, companies for assisting services or insurers, shall not exceed 50 per cent of its equity; alongside with the bank’s investments in real estate property and in other long-term fixed assets, which are not subject to a leasing contract, the total sum shall not exceed the bank’s equity.
(2) The size of the qualifying holdings of the bank in a company under Para 1 shall not exceed 10 per cent of its equity.

Chapter five.
SPECIAL REQUIREMENTS TO ELECTRONIC MONEY COMPANIES (REVOKED – SG 101/10, IN FORCE FROM 30.04.2011)
Art. 48. (revoked – SG 101/10, in force from 30.04.2011)

Art. 49. (revoked – SG 101/10, in force from 30.04.2011)

Art. 50. (revoked – SG 101/10, in force from 30.04.2011)

Chapter six.
DISCLOSURE OF CONFLICT OF INTERESTS. CONFIDENTIALITY
Art. 51. (1) Every bank administrator shall undertake to disclose in writing to the management authority the commercial, financial or other business interest that he/she or the members of his/her family have in the signing of a business deal with the bank.
(2) Business interest shall be apparent where the following persons are contracting parties in an agreement with the bank:
1. The administrator or a member of his/her family;
2. A person having economic relations with the administrator or with a member of his family as follows:
a) A person holding directly or indirectly qualified shares;
b) A person being his administrator;
c) A person being a partner in a commercial company, comandite company or limited liability company.
(3) Each administrator shall be required, before entering into his duties, to declare in writing before the Management Board (Board of Directors) the names and the addresses of the economically related to him or to the members of his family persons as well as the business interests that the administrator and the members of his family have with the bank as of the date of submission of the declaration. In the event of alteration of the declared circumstances, the administrator shall submit a new declaration within seven days of the occurrence of the alteration.
(4) Administrator having business interest in the conclusion of a specific deal with the bank, shall not take part in the negotiations, nor in the subsequent discussions or voting.
(5) The administrators and the other employees of the bank shall undertake to place the interest of the bank and of its customers above their own interests when performing their duties.
(6) The banks shall establish such kind of business organisation whereby the administrators or the other employees shall not be allowed to place themselves in any such situation of conflict between their obligations to one customer and their obligations to a different customer or between their own obligations and their obligations to a customer.

Art. 52. The deals concluded by an administrator in violation of Art. 51, shall be deemed invalid. The invalidity may be declared by court at the request of the bank, BNB or of another interested party.

Art. 53. Where it is ascertained that an administrator acts in violation of Art. 51, BNB shall be in a position either to obligate the competent authority of the bank to suspend his powers within a determined period of time or to remove him from office if he has not been removed within the determined period of time.

Art. 54. The banks shall adopt rules, which establish the procedures for disclosure of conflicts of interests and for confidentiality in order not to allow damaging of customer’s interest at the expense of another customer, bank administrator or employee as well as of the interest of the bank at the expense the interest of its administrators or employees.

Chapter seven.
RELATIONS BETWEEN BANKS AND BETWEEN BANKS AND PERSONS ATTENDED BY THEM
Art. 55. The banks may issue bonds, other debt securities and rights relating to them in leva and in foreign currency.

Art. 56. (amend. – SG 24/09, in force from 31.03.2009) (1) The Bulgarian National Bank shall establish and support an information system for money obligations of customers to the banks under Art. 2, Para 5 and to the financial institutions with primary activity as referred to in Art. 2, Para 2, Item 6 or under Art. 3, Para 1, Item 3.
(2) The banks and financial institutions under Para 1 shall be obliged to provide and shall have the right to receive information from the system under Para 1.
(3) Art. 64 shall apply respectively to the access to the information system.
(4) The conditions and the procedures for establishment and functioning of the information system and for providing and receiving information from it shall be determined in a BNB ordinance.

Art. 57. (1) The bank may accept money on deposit only under certain announced terms and conditions, which the bank shall be required to apply to all customers-depositors.
(2) The terms and conditions under paragraph 1 shall contain:
1. Interest rates and method of interest calculation;
2. Periods of interest payments and information whether the interest rate is floating and under what conditions;
3. Minimal amount to be accepted as deposit;
4. Notification term and penalties in case of withdrawal before maturity;
5. (amend. - SG 44/09, in force from 12.06.2009) the applicable system of guaranteeing of deposits, including the amount, to which the deposits shall be guaranteed, the competent body, which shall pay the amounts of the guaranteed deposits, and the term of their payment.
(3) (new – SG 44/09, in force from 12.06.2009) The bank must indicate in the conditions under par. 2 and in the contract the cases, where deposits shall not be guaranteed under the terms and conditions and following the provisions of the Law for guaranteeing of the deposits in banks.
(4) (new – SG 94/10, in force from 31.12.2010) In the cases of a determined period-time deposit with a fixed interest rate, the bank cannot reduce the interest until the elapse of the time-period of the contract.

Art. 58. (1) Where a loan is granted the bank shall provide the customer free of charge and in writing with its terms and conditions regarding the loans, the information minimum being as follows:
1. Information relating to the total loan expenses (fees, commissions and other expenses that are directly related to the loan agreement) as well as to the objective criteria, on the grounds of which these expenses can be altered;
2. Interest rate expressed as an annual interest rate, the method of interest calculation as well as the terms and the conditions for changes in the interest rate until the loan is discharged in full;
3. Additional liabilities connected with the payments;
4. Conditions and expenses where pre-term loan redemption takes place.
(2) The loan expenses shall be determined expressly and exhaustively in the loan agreements inclusive of the cases of pre-term redemption.
(3) (new – SG 94/10, in force from 31.12.2010) In the cases of a change in the interest rate or of a fee, which leads to increasing of the redemption instalment on a lain which is not a consumer loaner, the bank shall notify the client in the agreed between the parties manner about this, before the change becomes effective.
(4) (new – SG 94/10, in force from 31.12. 2010) Where the change in the interest rate arises from a change of a concrete referent interest rate, made through the appropriate means known to the public, and the information about the new interest rate may be found in the commercial premises or on the Internet site of the creditor, Para 3 shall not be applied.

Art. 59. (1) The bank shall announce the deposit and credit terms and conditions in the premises accessible by the customers.
(2) The deposit and credit terms and conditions shall be formulated in clear and understandable way for the customers.
(3) (new – SG 44/09, in force from 12.06.2009) Upon customers’ request the bank shall provide also additional information about the deposits and credits terms and conditions, including those concerning the conditions, the procedure and the terms for repayment of the guaranteed amounts of the deposits.

Art. 60. (1) The bank shall not accept shares issued by it or by related entities as collateral for a loan.
(2) (amend. – SG 59/07, in force from 01.03.2008) Where the loan or separate installments are not paid in time and where the loan has been made pre-term callable due to delayed redemption of one or more installments, the bank may require issuing an order for immediate execution pursuant to the provisions of Art. 418 of the Civil Procedure Code on the grounds of an excerpt from its accounting records books.
(3) In may be envisaged in the loan agreement that the bank is entitled to selling by auction the collateral according to procedures determined in a joint ordinance of the Minister of Justice and the BNB Governor. These procedures shall not be applied to the pledges established under the Law of Special Pledges.
(4) The bank shall be entitled to establishing legal mortgage over the real estate properties and the real rights on them that are acquired wholly or partially through a bank loan.
(5) Where the loan is discharged in full the bank shall delete, respectively release all collaterals within 14 days at the latest of the customer’s request and payment of due fees.

Art. 61. The banks shall be in a position to request reports and other documents relating to the loan and to their activities from all borrowers; the banks shall also be in a position to examine as to determine the accuracy, quality of condition of the collaterals and the purposeful utilisation of the granted loans.

Chapter eight.
BANK AND PROFESSIONAL SECRECY
Art. 62. (1) Bank employees, members of the bank’s management and controlling bodies, BNB officials, liquidators, trustees in bankruptcy as well as all the other persons, who work for the bank, shall not make public, nor take personal advantage (for themselves or for the members of their families) of information, which is deemed bank secrecy.
(2) Bank secrecy shall be facts and circumstances relating to availabilities and operations on bank customers’ accounts and deposits.
(3) Upon entering into their duties, all employees of the bank shall sign a declaration that they will keep the bank secrecy.
(4) The provision under paragraph 1 shall apply to cases where the relations between the respective persons and the bank have been terminated or their activities have been suspended.
(5) With the exception of BNB and for the purposes of Art. 56, the bank shall disclose information under paragraph 2 for its customers only after obtaining their assent or pursuant to court decision.
(6) The court may rule out disclosure of information under paragraph 2 also at the request of the following authorities:
1. Procurator – if data for performed crime is available;
2. The Minister of Finance or a person authorised by him – in the cases referred to in Art. 143, paragraph 4 of the Tax Procedure Code;
3. The director of a territorial directorate of the National Revenues Agency in the following cases:
a) Where there exists proof that the person under investigation has frustrated investigation or revision or that his accounting is incomplete or untrue;
b) Where an act of a competent state authority has established occurrence of an event that have led up to destruction of reporting documentation of the person under inspection;
4. The Commission for determining of property acquired as a result of criminal actions and the directors in its regional directorates;
5. The director of the State Financial Inspection Agency or officials authorised by him where it has been established in an agency’s act that:
a) The management of the organisation under inspection or a person has frustrated supervision executed on behalf of the agency’s bodies;
b) The organisation or the person under inspection has not performed good accounting or it is incomplete or untrue;
c) There exists information for deficiencies;
d) The occurrence of an untoward event has been registered in an act issued by a state authority where this event has led up to destruction of reporting documentation of the organisation or the person under inspection;
6. (amend. – SG 95/09, in force from 01.12.2009) The director of the "Customs" Agency and the heads of customs in the following cases:
а) It has been registered by an act of the customs authorities that the person under inspection has frustrated an inspection of the customs authorities or does not keep the necessary accounting or the accounting is incomplete or untrue;
b) Customs violations have been established by an act of the customs authorities;
c) It is necessary to levy distraint on bank accounts for securing receivables established by the customs authorities as well as for securing of fines, legal interests or others;
d) The occurrence of an untoward event that have led up to destruction of reporting documentation of the site inspected by the customs authorities where this event has been registered in an act issued by a state authority;
7. (amend. – SG 69/08; amend. - SG 93/09, in force from 25.12.2009) The directors of Chief Directorate "Combating Organized Crime", Chief Directorate "Criminal Police" and Chief Directorate "Pre-trial Proceedings" at the Ministry of Interior – for the purposes of investigation and detection of crime;
8. (amend. – SG 109/07, in force from 01.01.2008) The Chairman of State Agency "National Security" – where this is necessary for the protection of the national security.
(7) The Regional Judge shall deliver a judgment on the request under paragraph 6 with a motivated decision voted during a closed session not later than 24 hours of the submission of the request; the Regional Judge shall determine the time span of the information under paragraph 1. The decision of the court shall not be subjected to appeal.
(8) (amend. – SG 109/07, in force from 01.01.2008; amend. – SG 69/08); amend. - SG 93/09, in force from 25.12.2009) The banks shall disclose information regarding the availability and the bank account movements of the companies with 50 percent of state and/or municipal shares upon written request by the director of the National Bureau of Investigation, the Chairman of State Agency "National Security" or the directors Chief Directorate "Combating Organized Crime", Chief Directorate "Criminal Police" and Chief Directorate "Pre-trial Proceedings" at the Ministry of Interior.
(9) The banks shall disclose information, which is deemed bank secrecy, where this information is related to persons under investigation for reliability pursuant to the provisions of the Law of Protection of Classified Information at a written request issued by the Chairman of the State Information Security Commission or by the heads of security bureaus or the public order bureaus. The request shall be accompanied by assent for disclosure obtained by the person under investigation.
(10) Where data on organised crime or money laundering are available, the Chief Prosecutor or a substitute authorised by him shall be in a position to request from the banks information referred from in paragraph 2. The request sent to the banks and the received information shall be entered in a register kept at the Chief Prosecutor’s Office and at BNB.
(11) (new – SG 105/06, in force from 01.01.2007) Banks shall provide information about the incomes from savings to the Executive Director of the National Revenue Agency under the conditions and following the procedure of Part Two, Chapter Sixteen, Section IV of the Tax-insurance Procedure Code.

Art. 63. (1) Professional secrecy shall be the information, which BNB has acquired or created for the purposes of bank supervision or in connection with it and the disclosure of which would damage the commercial interest or the prestige of a bank or of its shareholders. Professional secrecy shall not mean official secret within the meaning of the Law of Protection of Classified Information.
(2) Information, which is subject to publishing or disclosure pursuant to a legislative act, shall not be deemed professional secrecy.
(3) Members of the Management Board, employees, external auditors, experts and other persons working at BNB, shall undertake to keep the professional secrecy both in the course and after the ceasing of their duties at BNB.
(4) The persons under paragraph 3 shall be entitled to using the information deemed as professional secrecy solely for the purposes and the performance of their functions. This information shall neither be disclosed, nor presented to other persons or bodies with the exception of the ones referred to in Art. 64.
(5) The limitations under paragraph 4 shall not apply if the disclosed information is summarised and the bank or persons it refers to cannot be clearly identified.
(6) The information received from a bank or from another person bound by the present law, shall be sent back to them without limitations.

Art. 64. (1) The persons under Art. 63, paragraph 3 shall be in a position to disclose information deemed as professional secret to the following authorities in connection with the performance of their functions or duties:
1. Judicial authorities – in cases of instituted penal proceedings;
2. Court:
a) In the cases of appealing an administrative act issued BNB where this act has been issued pursuant to the provisions of the present law;
b) In connection with a court case as a result of supervisory inspection;
c) In the cases of instituted proceedings for liquidation or insolvency of a bank with the exception of the information related to third parties who wish to acquire the bank’s enterprise;
3. (amend. – SG 109/07, in force from 01.01.2008) Financial supervision authorities in the Republic of Bulgaria, of the Deposit Guarantee Fund and of the State Agency "National Security" – in cases and according to procedures determined by joint instruction or agreements;
4. Trustees in bankruptcy or bank liquidators as well as the authorities that by virtue of law exercise control over a bank in the course of its liquidation or insolvency proceedings;
5. Auditors of the banks’ financial statements or of the financial statements of other financial institutions as well as of the persons who by virtue of the law exercise control over the bank auditors, insurers, investment intermediaries or other financial institutions;
6. Authorities of other Member States charged with the responsibility to supervise financial institutions, insurers, financial markets or payment systems;
7. Authorities of other members states taking part in procedures for liquidation or declaration of insolvency of banks or in other similar procedures as well as the authorities of Member States charged with the control over banks in proceedings of insolvency, liquidation or other similar procedures;
8. Authorities of other Member States charged with auditing banks’ statements and of statements of other financial institutions as provided by law as well as of authorities that by virtue of the law exercise control over bank auditors;
9. Authorities that manage schemes for guaranteeing of deposits in Member States;
10. (suppl. – SG 94/10, in force from 31.12.2010) The European Central Bank and the central banks of the Member States, in their capacity of institutions, executing monetary policy, where this information is needed for the fulfilment of their functions established by a law, including for the conduction of monetary policy and the related provision of liquidity, supervision of the payment systems, the systems for clearing and settlement and for the maintenance of the financial stability, including in event of emergency situation as per Article 93, Para 1. .
(2) (new – Sg 94/10, in force from 31.12. 2010) In event of emergency situation as per Article 93, Para 3, persons envisaged in Article 63, Para 3 may provide information, presenting a professional secrecy, to the authorities of the Republic of Bulgaria and of the other Member States, responsible for the legislation in the filed of credit and financial institutions , of investment intermediaries and insurers supervision, where this is needed for the execution of their functions.
(3) (previous Para 2 – SG 94/10, in force from 31.12.2010) The authorities referred to in paragraph 1 shall undertake to use the obtained information solely for the purposes for which it has been provided, not to disclose it, nor to present it to third parties with the exception of the cases of performance of duties pursuant to a law.
(4) (previous Para 3 – SG 94/10, in force from 31.12.2010)The authorities under paragraph 1, items 3-10 shall receive information from BNB in the event that they are bound by an obligation to keep professional secrecy in analogy to the provisions of the present law.
(5) (previous Para 4 – SG 94/10, in force from 31.12.2010)The provisions in the present law relating to disclosure of bank secrecy shall be applied where the professional secrecy is also deemed as bank secrecy.
(6) (previous Para 5 – SG 94/10, in force from 31.12.2010)The Bulgarian National Bank shall notify the European Commission and the other Member States about the names of the controlling authorities referred to in paragraph 1, items 4 and 5 that are in a position to receive information deemed as professional secrecy.

Art. 65. (1) The provisions of Art. 63 shall apply to information received by BNB from the competent supervisory authorities of the Member States. This information shall be used only in the process of execution of BNB supervisory functions and solely for the following purposes:
1. To check whether the requirements for issuance of banking license pursuant to chapter three have been observed or to facilitate supervision both on consolidated and non-consolidated basis inclusive of monitoring of liquidity, solvency, large exposures, management and accounting procedures as well as of internal audit mechanisms;
2. To implement measures and impose sanctions pursuant to the provisions of the present law;
3. In administrative or court proceedings of appeal against administrative acts issued by the BNB.
(2) The persons referred to in Art. 63, paragraph 3 shall be in a position to disclose information – professional secrecy to the competent supervisory authorities of the Member States under the stipulation that these authorities observe the requirements not to disclose information of the kind of professional secrecy.
(3) The information received by the BNB from the competent supervisory authorities of other Member States shall be disclosed pursuant to the provisions of the present law to the authorities referred to in Art. 64 or to other persons and bodies where the competent supervisory authority of the Member State that has sent the information has granted its express written consent and the conditions, under which the consent has been granted, have been observed,
(4) The information received by BNB employees during an on-the-spot inspection in a Member State shall not be disclosed to other parties without the express written consent of the competent supervisory authorities of the Member State where the inspection has taken place and observing the conditions laid down for granting of consent.

Art. 66. Information – professional secrecy shall be disclosed to the competent supervisory authority of a non-member country on the grounds of an agreement under Art. 88 and under the following conditions:
1. The recipient shall ensure adequate protection of the information pursuant to the provisions of the present law;
2. The recipient has got powers and has agreed to disclose information of similar kind at BNB request;
3. The purpose of the information exchange is to assist in the performance of the supervisory functions of the respective supervisory authority;
4. The recipient’s need for the requested information is justified.

Chapter nine.
KEEPING, PROVISION AND ANNOUNCEMENT OF INFORMATION
Art. 67. The bank shall create, maintain and update its information system which shall contains the following information:
1. The Statute and other internal rules with all amendments and annexes;
2. Data for the shareholders as specified by the BNB;
3. Books with minutes from the sessions of the General Meeting of the Shareholders and of other management bodies;
4. Accounting information, which clearly and truly reflects the type, size and reasons for the signed deals and their reflection on the bank’s financial state; this information can serve as a base for conclusions whether the bank performs its activities in compliance with the provisions of the present law;
5. Information for customers with data for deals signed with them or for their account as well as for credit and debit balances;
6. Other information required by the present law or by the acts of BNB.

Art. 68. The bank shall create and maintain credit files with customer data, reasons, terms and size of loan as well as its collateral, the decision of the competent body for granting of loans as well as all other data relating to the conclusion and the execution of the loan agreement.

Art. 69. (amend. – SG 94/10, in force from 30.04.2011)The banks shall submit to the BNB reports and statements according to approved by the BNB forms, contents and terms.

Art. 70. (1) Each bank shall publish its accounting balance and P&L report in at least one central daily newspaper on semestral basis.
(2) Each bank shall announce other information according to approved by BNB form, content and term.

Art. 71. (1) The banks shall notify BNB in writing for taken decisions within 10 days as follows:
1. Personal changes in the Management Board, Supervisory Boards, Board of Directors as well as regarding authorisation of procurators;
2. Capital increase or decrease;
3. Opening and closing of branches in the Republic of Bulgaria as well as temporary cessation of bank operations in them;
4. Suspension of certain types of deals;
5. Large exposure under Art. 44 or exposure under Art. 45;
6. Alterations to the Statute and to the other internal rules of the bank;
7. Appointment of an auditor under Art. 76.
(2) Where bank insolvency occurs, the persons who manage or represent the bank shall notify BNB without delay.
(3) (amend. – SG 24/09, in force from 31.03.2009) Any changes in the composition of the management board (board of directors), supervisory board, authorisation of procurators, as well as alterations to the Statute shall be entered into the commercial register upon approval by the BNB. The approval shall be regarded as granted if BNB expresses no objections within 10 days of the notification. In case of objection a copy of the act shall be sent to the Registry Agency.

Art. 72. (1) The banks shall submit to BNB copies of their statutes, rules and regulations, instructions and other acts that contain provisions for the scope and the procedures for performance of operations as well as for bank capital and internal bank organisation, within 10 days of their adoption, respectively of the introduction of amendments and annexes.
(2) The banks shall submit to BNB copies of the minutes of the General Meetings of the Shareholders within 10 days of the respective session.
(3) The banks shall keep at BNB a registered and up-to-date list of all persons authorised to represent the bank inclusive of all branches; the list shall be accompanied by description of their powers and by specimens of their signatures.

Chapter ten.
ORGANISATION, INTERNAL AUDIT AND ANNUAL CLOSING OF ACCOUNTS
Art. 73. (1) (amend. – SG 24/09, in force from 31.03.2009) The competent management authority of each bank shall adopt and periodically update in compliance with the best internationally recognized practices for corporate management of banks:
1. Bank’s organisation structure;
2. Procedures for determination and delegation of powers and responsibilities to the administrators;
3. Bank’s strategy and action plan;
4. Risk management and control policy;
5. Procedures for working out and scope of management information;
6. Organisation of operative control inclusive of rules and procedures for approval, execution and reporting of operations;
7. Internal rules and procedures for monitoring of risk and of the efficiency of the control systems as well as for reporting of detected weaknesses in the organisation and activities of structural units;
8. (new – SG 94/10, in force from 31.12. 2010) systems for prevention against the risk of money laundering.
(2) Paragraph 1 shall be applied respectively for branches of banks of non-member countries.
(3) (new – SG 24/09, in force from 31.03.2009) The Bulgarian National Bank may give recommendations and instructions for improvement of the corporate management in compliance with the best internationally recognized practices and shall monitor their performance.
(3) (prev. text of Para 03 – SG 24/09, in force from 31.03.2009) The banks shall adopt rules for their lending activities; the minimal required information in these rules shall be as follows:
1. Information requested from the borrower;
2. Way of estimation of the creditworthiness of the borrower and of his guarantors;
3. Way of estimation of offered collateral;
4. Ways of estimation of the efficiency of the project proposed for crediting;
5. Procedures for loan approval depending on the loan type;
6. Procedures for loan utilisation and redemption;
7. Procedures for control over the purposeful utilisation of the loan, current financial state of the debtor and of his guarantors as well as the sufficiency of the collateral;
8. Types of credit and other sanctions and the ways of their application.

Art. 73a. (new – SG 94/10, in force from 31.12.2010) (1) Banks shall establish reliable, effective and overall strategies and processes of current base for assessment and maintenance of the amount, of the types and distribution of the internal capital, which they consider adequate to cover the nature and the rate of the risks to which they are or could be exposed.
(2) Banks shall execute regular internal review of the strategies and processes envisaged in Para 1 in order to guarantee, that they are overall and proportional to the nature, scope and the complexity of the performed by them activity.

Art. 73b. (new – SG 94/10, in force from 31.12. 2010) (1) Banks shall adopt and apply policy of remuneration of the persons, who work for them.
(2) With regard to the administrators and the other persons, exercising of whose rights and obligations impacts significantly on the risk profile, policy shall be in conformity with the business strategy and the long-term purposes of the bank. Remuneration policy shall encourage the reliable risk management and shall not predispose to taking a risk, which expands beyond the frames of the risk profile of the bank.
(3) Remuneration policy shall be constructed on principles, ensuring its conformity with the largeness, the internal organisation of the bank, as well as with the nature, scope and the complexity of the performed by it activities. Principles and requirements to the remuneration policy and its announcement shall be regulated by an ordinance by the BNB.

Art. 74. (1) Each bank shall establish a specialised internal audit service whose management shall be appointed by the General Meeting of the Shareholders.
(2) The management of the Internal Audit shall notify BNB immediately on detected violations in the management of the bank where these violations have caused or may cause significant damages to the bank.
(3) The banks shall adopt rules for the organisation and the functioning of the internal audit and shall establish control systems according to the volume of performed operations, variety of deals and types of risks originating from them and in compliance with an ordinance issued by BNB.

Art. 75. (1) The banks shall prepare their financial statements on the base of the Law of Accountancy and in compliance with the BNB requirements.
(2) Banks and bank groups shall present at the BNB financial statements, which reflect their financial state both separately and on consolidated basis.
(3) The banks being subsidiaries in a bank group, financial holding or joint venture holding, shall present at the BNB consolidated financial statements of their group or holding.

Art. 76. (1) The annual financial statements of each bank as well as the supervisory reports specified by BNB shall be examined and verified by a specialised audit company – a registered auditor in accordance with the Law of Independent Financial Audit.
(2) Persons having financial interests in a bank, different from the interests of the depositors or being themselves bank employees or bank representatives shall not be appointed bank’s auditors, nor shall they take part in a bank’s audit.
(3) One and the same person shall not be auditor of one and the same bank for a period exceeding 5 years in succession.
(4) Each bank shall coordinate in advance with BNB the selection of an auditor.
(5) Persons/entities or the auditors registered in the entity shall not become auditors where they have not observed the requirements laid down in the abrogated Law of Banks (promulgated in the Official Gazette, issue 52 of 1997; annexed, issue 15 of 1998; amended, issues 21, 52, 70 and 98 of 1998, issue 54, 103 and 114 of 1999, issue 24, 63, 84 and 92 of 2000, issue 1 of 2001, issue 45, 91 and 92 of 2002, issue 31 of 2003, issue 19, 31, 39 and 105 of 2005, issue 30, 33 and 34 of 2006) or the requirements laid down in the present law and the acts on their application over a period of three years before their nomination for auditors.
(6) It shall be accepted that the proposal for selection of an auditor is approved by BNB if within 14 days of the date on the coordination request BNB has not made any objections.
(7) The auditor’s report shall include conclusions relating to the reliable representation of the property and financial state of the bank and the financial results. The auditor shall perform the necessary review and shall express his auditor’s opinion on the following issues:
1. Reliability of internal audit systems;
2. (suppl. – SG 94/10, in force from 31.12.2010) Compliance of the annual financial and supervisory reports prepared by the bank with the requirements of the present law and the acts on its application.
(8) (suppl. – SG 94/10, in force from 31.12. 2010) The results of the examination envisaged in Para 7 of the annual financial statements shall also be included in a separate report for supervisory purposes, which shall be prepared in line with the requirements determined in a BNB ordinance. The report shall be submitted to BNB.

Art. 77. (1) The auditors shall inform immediately and in writing BNB of all circumstances that have come to their knowledge in the course of the inspection as follows:
1. Circumstances in violation of the laws, the acts of secondary legislation as well as of all BNB acts that regulate banking activities;
2. Circumstances that affect or could affect the normal functioning of the bank;
3. Circumstances that lead or could lead to a situation, in which the bank will not be in a position to execute its money obligations;
4. Circumstances that lead to auditor’s refusal to verity the statements or to auditor’s verification of the statements with expression of reservations;
5. Circumstances that are connected with bank administrator’s actions, which cause or could cause significant damages to the bank or to its customers;
6. Circumstances that are connected with untrue or incomplete data in the statements and the reports which the banks submit to BNB on regular basis.
(2) The banks’ auditors shall be obliged, at BNB’s written request, to present the respective documentation regarding the circumstances referred to in paragraph 1 as well as any other kind of information and documents obtained in the course of the audit.
(3) The auditors of companies, with which the bank has established close connections originating from relations of control, shall be obliged to inform BNB in the event they come across circumstances analogous to the ones referred to in paragraph 1 without delay.
(4) The auditors shall not be liable for violating the respective legal and contractual confidentiality terms and conditions where, under the provisions of the present law, they have conscientiously presented information to BNB.

Art. 78. (1) The annual financial statement of an operating in the Republic of Bulgaria branch of a credit institution headquartered in a non-member country shall be examined and verified by a specialised auditing company – registered auditor in accordance with the Law of Independent Financial Audit; the financial statement shall be published in line with the Law of Accountancy.
(2) (suppl. – SG 94/10, in force from 31.12. 2010) Paragraph 1 shall not be applied to branches of credit institutions licensed in a Member State, as well as to branches of credit institutions from third countries, where the accountancy frame is equivalent to the requirements of the Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions and for which treatment on reciprocity base is established.
(3) Credit institution licensed in another Member State or having its headquarters in a non-member country, which operates in the Republic of Bulgaria through a branch, shall publish its annual financial report on separate and consolidated basis as well as the report of the auditors in Bulgarian language and observing the requirements of the Law of Accounting.
(4) The annual financial statements and the report of the credit institution referred to paragraph 3 shall be presented in form and content that are in compliance with the requirements of the country that has issued the license where this country is a Member State or of the country of its headquarters where this country is a non-member country. After their publication the annual financial statement and the report shall be kept at permanent disposal at the branch.

Chapter eleven.
BANK SUPERVISION
Section I.
General provisions
Art. 79. (1) Bulgarian National Bank shall supervise the activities of the banks relating to the observation of the rules introduced by the present law and of the issued acts on its application, to ensuring reliable and safe management of the banks and of the possible risks as well as to maintaining of adequate to the risks equity.
(2) Bulgarian National Bank shall supervise the rules, strategies, procedures and mechanisms introduced by the banks for the purpose of observation of the requirements of the present law and of the acts on its application and shall estimate the possible risks. Basing on the performed supervision and estimation BNB shall conclude whether the rules, strategies, procedures and mechanisms introduced by the banks as well as the way of their application and their equity ensure stable management and risk coverage.
(3) The intervals and the intensity of the supervision and of the estimation referred to in paragraph 2 shall be determined by the size of the bank, by its importance for the system as well as by the character, scope and complexity of its operations. The supervision under paragraph 2 shall be executed once a year at the latest.
(4) The supervision under paragraph 1-3 shall cover the activities of the banks licensed in the Republic of Bulgaria inclusive of the activities of their branches in the territory of a Member State or a non-member country or activities performed directly in the territory of a Member State or a non-member country.
(5) Bulgarian National Bank shall supervise the branches of banks of non-member countries and in the cases specified in the present law – the activities of the branches of banks of Member States.
(6) The activities of a financial holding or of a joint venture holding with a bank as a subsidiary shall be supervised by BNB on consolidated basis unless otherwise provided in the legislative act.
(7) Bulgarian National Bank shall have the powers under Art. 80, paragraphs 1 and 3 also in relation to legal entities where these entities are controlled by a bank when in fact this is necessary for the purposes of supervision under paragraph 1 and 6.
(8) Bulgarian National Bank, its authorities and persons authorised by them shall not be liable for damages when exercising their supervisory functions unless their actions have been deliberate.
(9) Where according to the circumstances it can assumed that enterprises perform banking activities without permission, these enterprises shall be obliged to submit to BNB documents and information upon request. The legally empowered persons shall have the right to perform on-the-spot inspections.
(10) Bulgarian National Bank shall have the right to raise claims in court for cancellation of irregular decisions voted by the General Meeting of the Shareholders of a bank or by its management authorities within one month of the notification sent to the BNB.
(11) The banks and the other persons shall pay to BNB fees for the issuance of permits and documents as well as for administrative services relating to bank supervision; the size of the fees and the procedures for their payment shall be determined by the Board of Governors of the BNB.

Art. 79a. (new – SG 94/10, in force from 94/10, in force from 31.12.2010) In execution of its obligations under this Law, the BNB shall:
1. participate in the activity of the Committee of the European Banking Supervisors (CEBS);
2. follow the guidelines, recommendations and other measures, adopted by the CEBS, except for the cases, where grounded reasons not to apply them exist, which it shall be obliged to implement.

Art. 79b. (new – SG 94/10, in force from 31.12.2010) Where exercising its supervisory functions with regard to a bank, which is licensed in the Republic of Bulgaria, and performs activity in one or more Member States, or with regard to a bank, licensed in another Member State, who performs its activity through a branch in the Republic of Bulgaria, the BNB shall take in view the potential impact of its decisions on the financial stability of these Member States, especially in emergency situations, on the base of the available information to the respective moment.

Art. 80. (1) The Bulgarian National Bank shall have the right to request from the banks and from their shareholders all accounting and other documents as well as information relating to their activities; the Bulgarian National Bank shall have the right to perform on-the-spot inspections through its authorised employees and other persons.
(2) For the purposes of supervision on consolidated basis the BNB shall have the right to request from the mother company and from the bank subsidiaries all the necessary documents and information.
(3) The bank supervision authorities shall have the right to:
1. (suppl. – SG 24/09, in force from 31.03.2009) Free access to the offices and the information systems of the persons who perform banking activities;
2. Request documents and collect relevant information;
3. Appoint external independent experts;
4. Appoint an external for the bank auditor and charge him with the performance of financial or other audit;
5. Perform counter inspections at other bank and non-bank enterprises;
6. Attend the meetings of bank’s management and controlling authorities and express standpoints, which are entered into the minutes of the meeting;
7. (new – SG 24/09, in force from 31.03.2009) Request copies of documents certified by the persons under Art. 10, Para 1 or persons authorized by them, and set the time limit for their submission.
(4) Within the scope of its supervisory powers BNB shall be in a position to request estimation of the bank’s assets by independent experts and to request entering of the estimation results in the bank’s financial or supervisory reports.
(5) (amend. - SG 109/07, in force from 01.01.2008) The on-the-spot inspections may be performed jointly with employees of the State Agency "National Security", the Financial Supervision Commission or with other competent authorities.
(6) The state authorities and the officials shall be obliged to assist the bank supervision authorities in the execution of their functions.

Section II.
Special Rules for Supervision of Banks Licensed in a Member State
Art. 81. (1) The supervision of banks licensed in a Member State and operating on the territory of the Republic of Bulgaria through a branch shall be exercised by the competent supervisory authorities of the sending Member State. In the course of the supervision these authorities shall be in a position to perform on-the-spot inspections exercising their powers referred to in Art. 80, paragraph 3.
(2) The Bulgarian National Bank shall have the right to perform on-the-spot inspections in the branches of banks referred to in paragraph 1 pursuant to the provisions of the present law.
(3) The supervision of the liquidity of the bank branches referred to in paragraph 1 shall be exercised by the BNB in cooperation with the competent bank supervision authority of the sending country.
(4) The branches of banks under paragraph 1 shall observe the requirements for liquidity maintenance pursuant to the provisions of the present law and the regulations on its application as well as with the requirements of the BNB regulations relating to its monetary policy. The bank branches under paragraph 1 shall also implement the measures determined by the European Central Bank after the acceptance of the Euro as legal means of payment in the Republic of Bulgaria.
(5) For the statistic purposes the BNB shall require from the banks of the Member States operating through branches in the Republic of Bulgaria periodic reports on their activities in the country. The form and the contents of these reports shall be specified in ordinances issued by BNB.
(6) The measures determined by BNB as a part of its monetary policy and applied to the branches of the banks referred to in paragraph 1 shall not be stricter than the measures applied to the banks licensed in the Republic of Bulgaria.

Art. 82. (1) Whereas a bank licensed in a Member State and operating in the Republic of Bulgaria through a branch or directly fails to observe the applicable legal provisions on banking activities in the country, BNB shall apply the measure referred to in Art. 103, paragraph 2, item 3.
(2) Whereas the bank referred to in paragraph 1 fails to perform the necessary actions for suspension of the violation, BNB shall notify the competent authority in the sending country in writing and shall send a request to this authority relating to undertaking of all the necessary measures for elimination of the violation. In these cases the BNB shall request notification for the undertaken measures by the competent bank supervision authority of the sending Member State.
(3) Whereas the measures undertaken by the competent supervision authority of the sending Member State prove to be unsuitable or inapplicable and do no lead to the discontinuation of the violation, the BNB, after notifying the competent authority of the sending Member State, shall be in a position to undertake all measures and actions pursuant to the Bulgarian legislation for elimination of the violation and/or to impose sanctions on the bank referred to in paragraph 1. If necessary the BNB shall be in a position to impose full or partial interdict on the deals of the bank referred to in paragraph 1.
(4) The Bulgarian National Bank shall have the powers under paragraphs 1-3 also in the cases when a bank licensed in a Member State and operating in the Republic of Bulgaria violates regulations relating to the protection of the interests of depositors or to other socially significant interest. The BNB shall be in a position to apply all the necessary measures and sanctions and to impose interdict on deals in the territory of the Republic of Bulgaria.
(5) The measures and the sanctions applied by BNB shall be announced in writing through the persons who represent the bank in the Republic of Bulgaria.
(6) In the cases under paragraphs 3 and 4 the bank concerned shall be obliged to execute all measures and sanctions imposed by the BNB.
(7) The Bulgarian National Bank shall notify the European Commission without delay on all cases, to which the measures referred to in paragraph 3 have been applied.

Art. 83. (1) In cases of urgency and where provision of measures for protection of depositors and/or the other clients of the bank referred to in Art. 82, paragraph 1 are demanded by the circumstances, the BNB shall be in a position to apply the necessary measures before the implementation of the procedure referred to in Art. 82. In such cases BNB shall notify the European Commission and the competent authorities of the interested Member States without delay.
(2) The Bulgarian National Bank shall abrogate and amend the measured under paragraph 1 upon its own judgment or on the grounds of a decision of the European Commission taken after due consultations with the competent supervisory authorities of the interested Member States.

Art. 84. Upon receipt of notification from the competent supervisory authority regarding the withdrawal of the license of a bank operating in the Republic of Bulgaria through a branch or directly BNB shall provide measures for immediate discontinuance of the operation of this bank in the country and for protection of the interests of its depositors.

Art. 85. Banks licensed in Member States shall be in a position to advertise freely their bank services in the territory of the Republic of Bulgaria by using all the available means of communication and observing the requirements of the Bulgarian legislation with regard to the content and the form of advertising.

Art. 86. Whilst regulating activities and exercising their supervisory powers BNB shall not impose requirements and limitations leading to the more favourable treatment of branches of credit institutions headquartered in a non-member country than of the branches of banks licensed in a Member State.

Section III.
Supervisory Cooperation
Art. 87. (1) In connection with the execution of its supervisory powers BNB shall cooperate with the respective competent authorities of the Member States in cases when a bank licensed in the Republic of Bulgaria operates through a branch in another Member State or when a bank of another Member State operates through a branch in the Republic of Bulgaria.
(2) For the purposes of the cooperation referred to in paragraph 1, BNB shall exchange information and documents with the respective competent authorities of the Member States as follows:
1. Management and ownership of the credit institutions for the purposes of supervision or for examining the terms and conditions for issuing of licenses;
2. Supervision of the credit institutions exercised separately and on consolidation basis inclusive of their liquidity, solvency, deposit guarantees, limitations on large exposures, risk management, administrative and accounting procedures and internal audit mechanisms.
(3) The competent supervisory authorities of a Member State where these authorities are responsible for supervision of banks with branches in the Republic of Bulgaria shall be in a position, after notifying BNB, to examine independently or through authorised persons the information referred to in paragraph 2 at the branch operating in the Republic of Bulgaria. The on-the-spot inspections shall cover the information and the circumstances referred to in paragraph 2.
(4) Upon receipt of written notification under paragraph 3 BNB shall provide assistance to the foreign supervisory authority.
(5) The Bulgarian National Bank, after being notified in advance by the competent supervisory authorities of the Member States, shall be in a position to perform on-the-spot inspections in the respective Member State relating to the activities of the banks licensed in the Republic of Bulgaria and operating in a Member State through a branch.
(6) At a request of the competent authorities of the sending Member State for the purposes of supervision of the branches of banks from the Member States, which operate in the Republic of Bulgaria, BNB shall perform on-the-spot inspections. A representative of the competent authority of the sending Member State or a duly authorised auditor may take part in the inspection.
(7) The Bulgarian National Bank shall be in a position to request from the competent authorities of the accepting state performance of on-the-spot inspection of the activities of a branch of a bank licensed in the Republic of Bulgaria and operating in the territory of the accepting Member State.

Art. 87a. (new – SG 94/10, in force from 31.12.2010) (1) The Bulgarian National Bank may require from the consolidating supervisory body if such exists, or from the competent authority of the sending State, a concrete bank branch, licensed in a Member State, through which it performs its activity in the Republic of Bulgaria to be considered significant. In the request reasons to consider the branch significant shall be stated and explicitly the following information shall be marked:
1. if the market share of the deposits in the respective branch of the bank exceeds more than 2 per cent in the Republic of Bulgaria;
2. possible impact from stopping or termination of the activity of the bank on the market liquidity, payment systems, clearing and settlement systems in the Republic of Bulgaria, and
3. the size and the importance of the respective branch, taking in view the number of its clients proportionally to the bank or financial system of the Republic of Bulgaria.
(2) The Bulgarian National Bank, in co-operation of the competent authority from the sending state and the consolidating supervisory body, if such exists, shall take a decision to determine a concrete branch as a significant within two months time-period from the entering of the request.
(3) If within the time period envisaged in Para 2, a common decision is not achieved, the BNB shall take alone a decision within the frames of an additional time period of two months. The Bulgarian National Bank shall provide the decision to the consolidating supervisory authority and to the competent authority from the sending country.
(4) Decisions envisaged in Para 2 and 3 shall be reasoned, and their opinions of the consolidating supervisory body and the competent authority of the sending country shall be stated.
(5) Determination of a branch as a significant shall not impact the powers of the Bulgarian National Bank under this Law.

Art.87b. (new – SG 94/10, in force from 31.12.2010) (1) The Bulgarian National Bank shall participate in taking the decision with regard to a request of the competent authority of an accepting country for determination of a branch of a significant, if:
1. the bank is licensed in the Republic of Bulgaria, or
2. the Bulgarian National Bank is a consolidating authority with regard to that bank.
(2) The decision envisaged in Para 1 shall be taken within two months period form the receipt of the request.
(3) Where common decision as per Para 1 is not achieved within two months period and the competent authority of the accepting country has taken alone a decision, it is obligatory for the BNB.
(4) The Bulgarian National Bank shall provide to the competent authority of the accepting country, where a bank licensed in the Republic of Bulgaria is acting through a branch determined as a significant one, the information envisaged in Art. 95, Para 3 and 4 and shall co-operate with it as per Art. 92, Para 1, Item 3.
(5) In event of emergency situation in a bank licensed in the Republic of Bulgaria who has a significant branch and potentially endangers the financial stability in the Republic of Bulgaria or in the accepting Member State, the BNB shall notify the authorities pursuant to Art. 64, Para 1, Item 10 and Art. 64, Para 2.
(6) Determination of a branch as a significant shall not impact the powers of the Bulgarian National Bank under this Law.

Art. 87c. (new – SG 94/10, in force from 31.12.2010) (1) Where Art. 92e cannot be applied and the BNB exercises supervision over a bank with significant branches in other Member States, the BNB shall establish and chair a Supervisory Collegium of competent authorities of these states in order to facilitate the co-operation under Art. 87 and Art. 87b, Para 4 and 5. The Supervisory Collegium shall be established and shall execute its activity on the base of written rules, determined by the BNB after consultations with the respective competent authorities.
(2) The Bulgarian National Bank shall determine the competent authorities, who shall participate in each of the sessions or activities of the Collegium, taking in view the significance of these authorities for the supervisory activity, which shall be planned and co-ordinated, including the possible impact on the financial stability in the respective Member states as per Art. 79b, and the obligations under Art. 87b, Para 4 and 5.
(3)The Bulgarian National Bank shall provide in advance to all of the members of the Supervisory Collegium information about arrangement of the session, the main issues which shall be discussed and about the actions which shall be reviewed. The Bulgarian National Bank shall also provide in time to all members of the Supervisory Collegium all information regarding the taken at these sessions decisions and about the undertaken measures.
(4) Where Art. 92f cannot be applied and in the Republic of Bulgaria is established a significant branch, the BNB shall participate in a Supervisory Collegium, presided by the competent authority of the sending state.

Art. 88. When exercising its supervisory functions BNB shall be in a position to conclude bilateral agreements with other central banks or supervisory authorities of a non-member country for cooperation and information exchange on reciprocal basis; BNB shall undertake the commitment to keep bank and professional secrecy.

Section IV.
Supervision on Consolidated Basis
Art. 89. (1) (prev. text of Art. 89 – SG 52/07, in force from 01.11.2007) The Bulgarian National Bank shall exercise supervision on consolidated basis of banks, bank groups, financial holdings and joint venture holdings under the provisions of the present law and the acts on its application.
(2) (new – SG 52/07, in force from 01.11.2007) Within the scope of the supervision on consolidated bases under this Law shall be included also the managing companies in the way and to the degree the financial institutions are included.

Art. 90. (1) Where the mother enterprise is a mother credit institution in the Republic of Bulgaria or licensed in the Republic of Bulgaria EU mother credit institution, the supervision on consolidated basis shall be exercised mainly by BNB.
(2) Where the mother enterprise of a bank licensed in the Republic of Bulgaria is a financial holding of a Member State or a EU financial holding established in a Member State, the supervision on consolidated basis shall be exercised by BNB.
(3) Where the mother enterprise of credit institutions licensed in two or more countries is one and the same mother financial holding of the European Union established in the Republic of Bulgaria, the supervision on consolidated basis shall be exercised by BNB if one of the subsidiary credit institutions is licensed in the Republic of Bulgaria.
(4) Where the mother enterprises are financial holdings registered in different Member States and their subsidiary credit institutions are licensed in each of these countries, the supervision on consolidated basis shall be exercised by BNB if the credit institution with balance sheet total of the highest value ha been licensed by it.
(5) Where the mother enterprise of credit institutions licensed in different Member States is one and the same financial holding and none of these credit institutions is licensed in the same Member State, which has issued the license of the financial holding, the supervision on consolidated basis shall be exercised by BNB if the credit institution with balance sheet total of the highest value has been licensed by it.
(6) By force of an agreement with the competent authorities of the respective Member States, BNB may not apply the criteria referred to in paragraphs 3, 4 and 5 if their application would be inappropriate taking into account the credit institutions participating in the holding and the relative significance of their activities in the respective Member States. The name of the competent authority that shall exercise supervision on consolidated basis shall be specified in the agreement. In the cases laid down in paragraphs 3, 4 and 5 before the signing of the agreement, BNB and the competent authorities of the respective Member States shall give the opportunity to the EU mother credit institution or to the EU mother financial holding or to the credit institution with the highest balance sheet total value to express its opinion.
(7) The Bulgarian National Bank shall notify the European Commission on every agreement under paragraph 6, by virtue of which it shall exercise supervision on consolidated basis.

Art. 91. (1) Where a competent authority of a Member State has excluded from the supervision on consolidated basis a bank licensed in the Republic of Bulgaria, BNB shall request from the mother enterprise information in order to facilitate the supervision of this bank.
(2) Where BNB has excluded from the supervision on consolidated basis the subsidiaries of credit institutions or financial holdings of Member States, it shall request from the respective companies information for the purposes of the supervision.

Art. 92. (1) (previous text of Art. 92 – SG 94/10, in force from 31.12.2010) Whilst exercising supervision on consolidated basis of mother credit institutions of the European Union and credit institutions controlled by mother financial holdings from the European Union, BNB shall:
1. Coordinate the collection and the distribution of suitable or important information on current basis and in situations of emergency;
2. (amend, - SG 94/10, in force from 31.12.2010) Plan and coordinate the current supervisory activity in cooperation with the respective competent authorities of the Member States;
3. (amend. – SG 94/10, in force from 31.12.2010) Plan and co-ordinate the supervisory activity in co-operation with the respective supervisory authorities, and in case of necessity – with the central banks, if preparation for actions in event of emergency situation, including adverse developments of the banks and financial markets, is carried out, and where possible- established channels of connection for management of crises shall be used.
(2) (new- SG 94/10, in force from 31.12.2010) Planning and co-ordination of the supervisory activity envisaged in Para 1, Item 3 shall included the measures stipulated in Art. 95, Para 5, Item 2, the preparation of joint assessments, execution of plans in event of unforeseen circumstances and informing the public.

Art. 92a (new – Sg 94/10, in force from 31.12.2010) (1) In case that a parent credit institution from the European Union and its affiliate companies or the affiliate companies of a parent holding from the European Union – subject to supervision by the BNB, files application for the issuance of a permission as per Art. 40, Para 2, Item 4, the BNB jointly with the other competent authorities shall take a common decision to refuse or to issue permission within 6- months time period from the receipt of the application, and shall determine the time period and conditions under which permission is issued.
(2) Application shall be filed with the BNB, who shall immediately provide a copy of it to the other competent authorities.
(3) If within the time period stipulated in Para 1 a common decision is not achieved, the BNB shall take an independent decision.
(4) Decisions envisaged in Para 1 and 3 shall be reasoned, and opinions of the other competent authorities, as expressed within the 6-month time periods under Para 1, shall be stated. Decisions shall be provided to the applicant, and the decision under Para 3 – to the other competent authorities.

Art. 92b. (new – SG 94/10, in force from 31.12.2010) (1) In case, that a request from a competent authority of a Member State in connection with a submitted to its application for issuance a decision under Art. 40, Para 2, Item 4 filed by a parent credit institution from the European Union or its affiliate companies, one of which is a credit institution, licensed in the Republic of Bulgaria; or is filed jointly by the affiliate companies of a parent financial holding from the European Union, one of which is a credit institution, licensed in the Republic of Bulgaria, is received, the BNB shall participate in taking of a common decision to refuse or to issue permission and in the determination of the time periods and conditions under which the decision is issued.
(2) Where a common decision as per Para 1 is not achieved within 6- months period, and the consolidating supervisory authority have taken independent decision, it shall be obligatory for the BNB.

Art. 92c. (new – SG 94/10, in force from 31.12.2010) (1) Where the BNB is the consolidating supervisory authority in the cases of application of Art. 37a, Art. 79, Para 2 and 3 and application of measure in connection with a violence under Art. 103, Para 1, Item 1, the BNB jointly with the other competent authorities, responsible for the supervision over the affiliate companies of a parent credit institution from the European Union or of a parent financial holding from the European Union, shall take a common decision for the determination of the adequacy of the consolidated own equity of the parent undertaking with regard to its financial status and risk profile and for the determination of the stricter capital requirements as per Art. 103, Para 2, Item 5 for each of the companies within the bank group or the financial holding, as well as on consolidated base.
(2) (*) Decision shall be taken within 4-months period from the date, on which the BNB provided to the other competent authorities a report, containing assessment of the ris for the group, in accordance to Art. 73a, Art. 79, Para 2 and 3 and in case of application of the measure in connection with a violation as per Art. 101, Para 1, Item 11. The risk assessment for the affiliate companies, made by the other competent authorities shall be taken in view when the decision is taken.
(3) If within the period envisaged in Para 2 common decision is not achieved, the BNB shall take an independent decision with regard to the application of on consolidated base of Art. 73a, Art. 79, Para 2 and 3, of a measure in connection with a violence as per Art. 103, Para 1, Item 11 and of a measure under Art. 103, Para 2, Item 5, and shall take in view the risk assessment for the affiliated companies, made by the other competent authorities. Before taking an independent decision, the BNB upon its own initiative or upon a request of some of the other competent authorities shall carry out consultations with the CEBS, and shall take in view its recommendation and shall give reason for each substantial deviation from it.
(4) Decisions under Para 1 and 3 shall be reasoned and shall be provided to the parent credit institution form the European Union, and these under Para 3 – to the other competent authorities also. In the reasons of the decision under Para 3 opinions of the other competent bodies, as expressed within the period stipulated in Para 2, shall be stated.
(5) Decisions under Para 1 and 3 shall be reviewed annually and in event of extraordinary circumstances, where some of the other competent authorities sends a reasoned written request to the BNB to update the decision for application of the measure under Art. 103, Para 2, Item 5. In case of such request, the BNB may review decisions under Para 1 and 3 only with the participation of the competent authority who sent the request.

Art. 92d. (new – SG 94/10, in force from 31.12.2010) (1) Where a bank, licensed in the Republic of Bulgaria, is an affiliated company to a parent credit institution from the European Union or of apparent financial holding from the European Union, the BNB shall participate in taking the common decision for determination of the adequacy of the consolidated own equity of the parent uindertaking with regard to its financial state and risk profile and fro determination of the stricter capital requirement as for each of the companies within the bank group or of the financial holding, as well as on consolidated basis.
(2) Where common decision is not achieved as per Para 1, the BNB may require from the consolidating authority to carry out consultations with CEBS.
(3) If common decisions is not achieved, the BNB shall take independent decision regarding application of Art. 73a, Art. 79, Para 2 and 3 and on application of a measure with connection to a violence as per Art. 103, Para 1, Item 11 and of a measure under Art. 103, Para 2, Item 5 to the bank, but shall take in view the opinion of the consolidating supervisory authority and the recommendation of CEBS, if such has been requested.

Art. 92e. (new – SG 94/10, in force from 31.12.2010) (1) The Bulgarian National Bank, where it is acting as a consolidating authority, shall establish supervisory collegiums of competent authorities in order to facilitate execution of the functions stipulated in Articles 92, 92a, 92c and 93 and shall ensure appropriate level of co-ordination and co-operation with the relevant competent authorities from third countries, where expedient, under observation of the confidentiality requirements as per Para 5 and of the European Union legislation.
(2) Supervisory collegiums shall ensure appropriate organisation for execution of the following goals and tasks:
1. information exchange;
2. achieving consensus on assignment of tasks a powers on voluntary base, where appropriate;
3. determination of a plan for executions of inspections, based on risk assessment for the respective group as per Art. 79, Para 2 and 3 and Art. 103, Para 1, Item 11;
4. increasing of supervision efficiency by elimination of the unnecessary duplication of supervisory requirements, including such in relation with the information requirements under Art. 93, Para 2 and Art. 95, Para 2;
5. systematic application of the provided by Directive 2006/48/EC requirements for prudent supervision with regard to the all companies in the group, without harming the opportunities and righ of assessment, provided by the European Union legislation.
6. application of Art. 92, Para 1, Item 3 with taking in view the activity of other forums, which can be established in this field.
(3) The Bulgarian National Bank shall co-operate with the other competent authorities, who participate in the supervisory collegium. Requirements as provided in Art. 63, 64 and 65 shall not establish bars for the confidential information exchange.
(4) For the purposes of establishment and activity of the supervisory collegiums, the BNB, after consultations with the other competent authorities, shall conclude with them written agreements as per Art. 94.
(5) In the supervisory collegiums may participate competent authorities responsible for the supervision over affiliate companies of parent credit institution from the European Union or over parent financial holding from the European Union; competent authorities of the accepting state, where significant branches are located; and where appropriate – the central banks, as well as the competent bodies from third countries, under observation of the confidentiality requirements which according to all of the participating competent authorities are equivalent to the requirements as per Chapter One, Section Two of Directive 2006/48/EC.
(6) The Bulgarian National Bank shall preside the sessions of the supervisory collegium and shall determine the competent authorities, who shall participate in each of the sessions or in an activity of the collegium, taking in view the significance for these authorities of ten supervisory activity which will be planned or co-ordinated, including the possible impact on the financial stability in the respective Member States pursuant to Art. 79b, and the obligations as per Art. 87b, Para 3 and 4.
(7) The Bulgarian National Bank shall provide in advance to all of the members of the supervisory collegium the information regarding the arrangement of the session, the main issues which will be discussed and of the actions which shall be considered. The Bulgarian National Bank shall also provide in time to the all members of the supervisory collegium the overall information with regard to the taken on these sessions decisions and undertaken measures.
(8) The Bulgarian National Bank shall inform CEBS about the activity of the supervisory collegiums, including in emergency situation, and shall provide CEBS with overall information of significant importance for the purposes of the supervisory convergence.
(9) The establishment and activity of the supervisory collegium shall not impact any of the powers of the BNB under this Law.

Art. 92f (new – SG 94/10, in force from 31.12.2010) The Bulgarian National Bank shall participate in a supervisory collegium, organised by the respective consolidating supervisory authority, where carries out supervision on individual base over a bank, who is an affiliate company of parent credit institution from the European Union or a parent financial holding from the European Union. In these cases the BNB shall have the rights and obligations of a competent authority arising from Art. 93e.

Art. 93. (1) (amend. – SG 94/10, in force from 31.12.2010) Where emergency situation, including case of adverse development of the financial markets, which potentially endangers the liquidity or the financial stability in the Republic of Bulgaria or in another Member State where companies from the group have been licensed or significant branches are established, occurs, BNB where acts as a consolidating supervisory authority, shall notify the authorities envisaged in Art. 64, Para 1, Item 10 and Art. 64, Para 2 in the respective Member States and shall provide them with the overall information which is significant for the exercise of their functions.
(2) Where BNB needs information for the purposes of the supervision on consolidated basis and this information has already been provided to a different competent authority, the BNB, in order to prevent double reporting, shall contact the respective competent authority when it is possible.

Art. 94. (1) For the purposes of supervision on consolidated basis BNB shall sign agreements for coordination and cooperation with the supervising competent authorities of the respective Member States. The Bulgarian National Bank shall undertake the responsibility of executing additional supervisory functions pursuant to an agreement with the competent authorities of Member States.
(2) Where a bank licensed in the Republic of Bulgaria is controlled by a credit institution in another Member State the BNB shall be in a position to delegate to the competent supervisory authority of the mother credit institution the responsibility for supervision of the subsidiary on the base of an agreement with this competent supervisory authority of the mother credit institution.
(3) Where a bank licensed in the Republic of Bulgaria is a mother enterprise of a credit institution incorporated in another Member State, BNB shall be in a position to undertake responsibility for supervision of the subsidiary credit institution on the base of an agreement with the competent authority of the Member State.
(4) The Bulgarian National Bank shall notify the European Commission on the signing of the agreements referred to in paragraphs 2 and 3 and on their contents. The Bulgarian National Bank shall disclose information relating to the agreements to the competent authorities of the other Member States as well as to the European Banking Committee.

Art. 95. (1) The Bulgarian National Bank shall disclose to the competent authorities of a Member State essential information relating to their supervisory functions.
(2) Every kind of information that could influence the estimation of the financial stability of the credit or financial institution in the respective Member State shall be deemed as essential.
(3) The essential information referred to in paragraph 2 shall include the following minimum of elements:
1. Description of the bank group structure including the main credit institutions as well as description of the competent authorities which exercise control over the credit institutions in the group;
2. Procedures for collection and examination of information received from the credit institutions in the bank group;
3. Difficulties in the operation of the credit institutions or of other companies in the group that can seriously affect the activities of the credit institutions;
4. Supervisory sanctions and measures imposed by BNB pursuant to the provisions of the present law inclusive of laying down additional capital requirements or restrictions relating to the application of internal operational risk models for the calculation of equity for supervisory purposes.
(4) BNB shall provide information for supervisory purposes at the request of the competent authorities of a Member State exercising supervision of the subsidiaries of EU mother credit institutions or of credit institutions controlled by EU mother financial holdings, over which the BNB exercises supervision on consolidated basis.
(5) Where information for the supervision of a bank controlled by an EU mother credit institution and licensed in another Member State is requested, BNB shall contact the authority exercising supervision on consolidated basis in the respective Member State where it is possible that the authority disposes of the necessary information.
(6) Before taking a decision, which is important for the functions of a competent supervisory authority, BNB shall consult the competent supervisory authority of another Member State where the decision relates to:
1. Changes in the shareholding, organisational or management structure of a bank in a bank group where these changes shall be approved by BNB;
2. Supervisory sanctions and measures imposed by BNB inclusive of laying down additional capital requirements or restrictions relating to the application of internal operational risk models for the calculation of equity for supervisory purposes.
(7) In the cases referred to in paragraph 6, item 2, BNB shall also consult the competent authority for exercising of supervision on consolidated basis.
(8) The Bulgarian National Bank shall be allowed not to perform consultations under paragraphs 6 and 7 where immediate taking of decision is required by the circumstances and where these consultations will embarrass or frustrate the efficiency of the respective decision. In such cases BNB shall inform the competent authorities referred to in paragraphs 6 and 7 without delay.

Art. 96. The persons, who manage the financial holding, should have good reputation and experience for the execution of their functions.

Art. 97. (1) Where a joint venture holding is a mother enterprise of one or more banks licensed in the Republic of Bulgaria, BNB shall be in a position to request from the holding and its subsidiaries any kind of information that would be appropriate for the purposes of supervision of the subsidiaries on consolidated basis.
(2) Bulgarian National Bank shall be in a position to exercise alone or through appointed persons on-the-spot inspection of the received information referred to in paragraph 1.
(3) Where the joint venture holding or one of its subsidiaries is an insurance undertaking, BNB shall be in a position to examine pursuant to the provisions of Art. 99 the received information referred to in paragraph 1.
(4) Where the joint venture holding or one of its subsidiaries is not incorporated in the Republic of Bulgaria, the received information under paragraph 1 can also be examined pursuant to the provisions of Art. 100.
(5) For the purposes of supervision on consolidated basis BNB shall be in a position to request the information referred to in paragraph 1 from the respective supervisory authority of a Member State.
(6) Bulgarian National Bank shall disclose the information referred to in paragraph 1 at a request of the supervisory authority on consolidated basis in a Member State.
(7) The powers of BNB for collection of the information referred to in paragraphs 1 and 5 shall not lead to commitment for supervision on independent basis of the joint venture holding and its subsidiaries, which are not banks or of its subsidiaries, which are not included in the scope of supervision on consolidated basis.

Art. 98. (1) Where BNB functions as a supervisory authority on consolidated basis of a mother enterprise, which is not incorporated in the Republic of Bulgaria, BNB shall be in a position to request from the competent supervisory authority in a Member State to collect from the mother enterprise and forward to it information that would be needed for the purposes of supervision on consolidated basis.
(2) Where the mother enterprise is incorporated in the Republic of Bulgaria but BNB does not exercise supervision on consolidated basis, at a request of the supervisory authority on consolidated basis, BNB shall have the right to request from the mother enterprise information that would be needed for the purposes of supervision on consolidated basis and to present it to the competent authority.
(3) The powers of BNB to collect the information referred to in paragraph 1 and 2 shall not lead to commitment for supervision of the mother enterprise on independent basis where the mother enterprise is financial holding, financial institution or service company.

Art. 99. (1) Where BNB exercises supervision on consolidated basis of banks, financial holdings or joint venture holdings, the subsidiaries of which are one or more than one insurance undertakings or investment intermediaries whose activities are subject to licensing, BNB shall cooperate and exchange information with the competent authorities for supervision of insurance undertakings and/or investment intermediaries.
(2) The Bulgarian National Bank shall keep a list of all financial holdings where it exercises supervision of them on consolidated basis. The Bulgarian National Bank shall present this list to the competent authorities of the Member States and to the European Commission and shall duly notify them of all changes to the list.

Art. 100. (1) At a request of a competent supervisory authority of a Member State, BNB shall examine specified information relating to a credit institution, financial holding, financial institution, service company, joint venture holding or its subsidiary, which operates in the Republic of Bulgaria.
(2) The examination referred to in paragraph 1 shall be performed by BNB independently, by the competent authority that has requested the examination, with its participation or with the participation of external auditor or expert.
(3) Where a credit institution, financial holding, financial institution, service company, joint venture holding or its subsidiary operate in a Member State, BNB shall be in a position to request from the supervisory authority in the Member State examination of specified information relating to the above entity.
(4) In the case referred to in paragraph 3 BNB shall be in a position to perform independent examination or to take part in it.

Art. 101. (1) Where a bank licensed in the Republic of Bulgaria is a subsidiary of a credit institution or financial holding of a non-member country and it is not subject to supervision on consolidated basis by BNB or by a different supervisory authority of a Member State, BNB shall check whether the bank subsidiary is covered by supervision on consolidated basis pursuant to the provisions of the present law.
(2) Bulgarian National Bank shall perform the check referred to in paragraph 1 on its initiative and according to a request by the mother enterprise or by the subsidiary insurance undertaking or investment intermediary licensed in a Member State and shall consult the competent authorities which supervise these entities.
(3) Where performing the check referred to in paragraph 1 BNB shall take into account the standpoint of the European Banking Committee whether the supervisory rules on consolidated basis in the respective non-member country would attain the objectives of the supervision on consolidated basis pursuant to the legislation of the European Community. BNB shall consult the Committee after the termination of the check and before taking the decision.
(4) Where it is established that supervision on consolidated basis is not exercised or the exercised supervision does not comply with the provisions of the present law, BNB shall be in a position to apply supervisory techniques to the subsidiary company, which are deemed appropriate for the purposes of the supervision on consolidated basis pursuant to the provisions of the present law.
(5) The Bulgarian National Bank shall apply the supervisory techniques referred to in paragraph 4 after due consultations with the other competent authorities in the Member States charged with the supervision of the entities referred to in paragraph 1 as well as with the supervisory authority of a non-member country.
(6) The Bulgarian National Bank shall take part in consultations at the request of a competent authority of another Member State where this authority intends to apply the supervisory techniques for the purposes of supervision on consolidated basis.
(7) The Bulgarian National Bank shall be in a position to request the incorporation of a financial holding with registration address in any Member State and subject to the principles of supervision on consolidated basis pursuant to the provisions of the present law.
(8) The Bulgarian National Bank shall announce the supervisory techniques referred to in paragraph 4 to the European Commission and to the other interested supervisory authorities.

Section V.
Supervisory Disclosure
Art. 102. (1) The Bulgarian National Bank shall disclose the following information:
1. Regulations of acts of legislation, rules and instructions in the sector for regulation of bank supervision;
2. Way of application of the provisional and discretionary rules of the EU legislation by BNB;
3. General criteria and methodologies used by BNB in the course of the supervisory review and for the assessment referred to in Art. 79, paragraph 2;
4. Summarised statistical data for the main elements of bank supervision exercised by BNB without affecting the provisions on professional secrecy.
(2) The disclosure of the information shall give the opportunity for thorough comparison of the approaches applied by BNB with the ones applied by the competent authorities of the other Member States.
(3) BNB shall coordinate with the European Commission the way and the form of disclosure.

Section VI.
Supervisory Measures
Art. 103. (1) Bulgarian National Bank shall be in a position to apply the measures referred to in paragraph 2 when is finds out that a bank or its administrators or shareholders have committed violations as follows:
1. Violation or circumvention of the provisions of the present law, of acts of legislation or of other BNB acts and regulations;
2. Violation of the requirements for confidentiality;
3. Conclusion of bank deals, which affect the financial stability of the bank or of bank deals, which through fictitious persons frustrate or circumvent the application of the provisions of the present law, of acts of legislation or of other BNB acts and regulations;
4. Non-performance of undertaken by the bank written commitments to the BNB;
5. (suppl. – SG 24/09, in force from 31.03.2009) Execution of deals or of other activities in violation to the issued banking license or to a permit or approval issued by the BNB;
6. Obstructing bank supervision;
7. Endangering the depositors’ interests;
8. Execution of deals or operations for money laundering or in violation of the Law of Measures against Money Laundering and the regulations on its application;
9. Endangering the stability of the payment systems;
10. (suppl. – SG 24/09, in force from 31.03.2009) Violation of the conditions on the grounds of which the banking license or any other permit or approval have been issued;
11. Decrease of the bank’s equity by 20 or more than 20 per cent where supervisory test for sudden and unexpected changes in the interest rates pursuant to the ordinance under Art. 40, paragraph 1 is applied.
(2) In the cases referred to in paragraph 1 BNB shall be in a position to:
1. Send a written warning to the bank;
2. Convene the General Meeting of the Shareholders or appoint a meeting of the Management or Supervisory Boards (Board of Directors) and determine the agenda of the meetings;
3. Give written orders for the termination and elimination of the committed violations;
4. Give written orders for provision of measures for improvement of the bank’s financial state;
5. (suppl. – SG 94/10, in force from 31.12.2010) Impose stricter supervisory requirements to the bank; where a bank does not meet the requirements as per Art. 73, Para 1 and Art. 73a or in event of review and assessment under Art. 79, Para 2 is found, that it does not provide a stable management and coverage of the risks, the BNB shall propose a stricter capital requirement above the minimal required, if as a result of application of other measures solely, improvement of the bank’s rules, procedures, mechanisms and strategies cannot be expected in a reasonable time period;
6. Give written orders to the bank for undertaking of actions for introduction of changes to the interest rates, maturity structure and to the other conditions relating to the bank’s policy and operations;
7. Impose restrictions on the bank’s activity by prohibiting the execution of certain deals, activities or operations;
8. Restrict the volume of certain activities executed by the bank;
9. Give written orders to the bank to raise its capital;
10. Prohibit the payment of dividends or any form of capital distribution;
11. Prohibit the operation of a foreign bank through a branch or directly; where there exists permanent prohibition against the operation of a bank through a branch, the respective authorities of the bank shall decide on the suspension of the operations of the branch, on the settlement of the relations with the bank’s creditors and on the deletion of the branch from the respective trade register;
12. (suppl. – SG 24/09, in force from 31.03.2009) Require limitation of the bank’s operational expenses and/or prohibit the payment of bonuses, premium, tantieme and other forms of additional remuneration to the administrators of the bank besides the main remuneration specified in their contracts for management;
13. Require changes in the bank’s internal rules and procedures;
14. Give written orders to the bank for dismissal of one or more persons authorised to manage and represent the bank as well as of members of the Management Board or the Board of Directors; if the bank fails to dismiss the respective person within the period of time determined by BNB, the Central Bank shall be in a position to release him from office; as of the day of receipt of the BNB dismissal act the powers of the respective person shall be suspended and his managerial and representative functions shall no longer be valid with respect to the bank;
15. (amend. – SG 24/09, in force from 31.03.2009) Temporarily deprive a shareholder of his voting right and/or give written orders to a shareholder to transfer the shares owned by him within a period of 30 days;
16. Prohibit the conclusion of deals and operations with persons, with whom the bank has established close relations or who belong to the same consolidated group, to which the bank also belongs or who are members of the bank’s management bodies or who exercise supervision of the bank or take part in the management of the persons/entities that exercise control over the bank;
17. Impose additional requirements relating to the bank’s operations;
18. Request a plan of reorganisation to be executed by the bank after prior approval by BNB;
19. Appoint two or more quaestors of the bank for a fixed period of time;
20. Place the bank under special supervision pursuant to Art. 115 - 121 - in case of danger of insolvency;
21. (suppl. – SG 24/09, in force from 31.03.2009) Withdraw the banking license or any other permit or approval ssued by it; in such cases the BNB shall appoint quaestors unless quaestors have been appointed before the issuance of the license withdrawal act.
(3) Where the measures referred to in paragraph 2 are applied the provisions of Art. 26, paragraph 1 and Art. 34 of the Administrative Procedure Code relating the explanations and the objections of the interested parties shall not be implemented.
(4) The acts on the application of the measures referred to paragraph 2 shall be executed without delay.
(5) Bulgarian National Bank shall have the right to request registration of the circumstances under paragraph 2 in the Trade Register and promulgation of the acts referred to in paragraph 2, items 19, 20 and 21 in the Official Gazette in its issue following the day of receipt of the request or in the next issue, at the latest.
(6) (amend. – SG 24/09, in force from 31.03.2009) Where shareholders have been temporarily deprived of their voting right under the order of paragraph 2, item 15 the amount of the shares held by them shall not be taken into account in the calculation of the required quorum for convening a general meeting of the shareholders and for its decisions. In the occurrence of danger for the reliability or the security of the bank management or operations, BNB shall be in a position to implement the measures referred to in paragraph 2, items 7, 10 and 19.
(7) Bulgarian National Bank shall provide suitable measures under paragraph 2 to a bank licensed in the Republic of Bulgaria which operates directly or through a branch in the territory of a Member State in the event that it is notified by the competent authorities of the accepting state that this bank has failed to comply with the applicable banking legislation in the respective Member State. The competent authorities of the accepting Member State shall be notified about the type and the nature of the provided measures.
(8) (amend. - SG 52/07, in force from 01.11.2007) Bulgarian National Bank shall withdraw the banking license of a bank for operations under Art. 5, paragraph 2 and 3 of the Law on the Markets of Financial Instruments without delay where the Financial Supervision Commission files a motivated request.
(9) In the cases referred to in paragraph 1 the BNB shall be in a position, observing the requirements of Section II, to apply appropriate measures under paragraph 2 to branches of banks of a non-member country and their administrators as well as on branches of banks of Member States and their administrators.
(10) Where the present law or of the acts on its application are violated by a financial holding or by a joint venture holding or by a person managing a financial holding or a joint venture holding, BNB shall be in a position to apply the measures referred to in paragraph 2 to the financial holding and the joint venture holding as well as on the administrators.
(11) When applying the measures referred to in paragraph 9 the BNB shall cooperate with the competent authorities of the respective Member States.

Art. 104. (1) Where the measures referred to in Art. 103, paragraph 2, item 2 or 9 are implemented by BNB, the General Meeting of the Shareholders shall be summoned by BNB through an invitation promulgated in the first issue of the Official Gazette following the receipt of the BNB decision or in its next issue, at the latest. In this case Art. 223, paragraph 1 - 3 and 5 and Art. 223а of the Commercial Code as well as the provisions of the bank’s Statute regarding the summoning of the General Meeting shall not be applied.
(2) The General Meeting of the Shareholders shall be opened and shall take place not earlier than 7 days of the promulgation of the invitation in the Official Gazette.
(3) In cases of inquorate under paragraph 1 a new session of the General Meeting of the Shareholders shall be appointed for the next business day and it shall be regarded as legally independent of the presented capital. The date of the session shall be specified in the invitation for the first session.
(4) In the cases referred to in Art. 103, paragraph 2, item 9 the determined by the General Meeting term for subscription and payment of contributions for the subscribed shares shall not exceed 30 days as of the date of the promulgation of the invitation for subscription of shares in the Official Gazette.
(5) In the cases referred to in Art. 103, paragraph 2, item 9, the provision laid down in Art. 194, paragraph 3, sentence second of the Commercial Code shall not apply, while the shareholders’ rights under Art. 194, paragraph 1 and 2 of the Commercial Code shall lapse within 14 days after the promulgation of the invitation for subscription of shares in the Official Gazette.
(6) Where shareholders with qualified interest have harmed through their actions or influence in the management of the bank its reliability or security or where upon BNB judgment, they do not dispose of financial resources for capital raise up to the size specified by BNB, the Central Bank shall have the right where imposing the measure referred to in Art. 103, paragraph 2, item 9 to deprive the shareholders of the bank from their right to participate in the capital raise proportionally to the share pursuant to Art. 194, paragraph 1 and 2 of the Commercial Code.
(7) In the cases referred to in paragraph 6 BNB shall be in a position to lay the bank under an obligation to raise its capital under the stipulation that the new shares are bough by persons and according to prices determined by BNB.
(8) The provisions of Art. 112-112c of the Law of Initial Public Offering of Securities shall not apply where the measure under Art. 103, paragraph 2, item 9 is implemented and in cases of capital raise pursuant to Art. 110 and 118 for a bank – public company; such cases shall fall within the provisions of the Commercial Code and of the present law.

Section VII.
Quaestor
Art. 105. (1) The quaestor shall be a natural person.
(2) The quaestor shall comply with the requirements laid down in Art. 11, paragraph 1. His shall not be in any such relationships with the bank or with any of its debtors that give grounds to justified doubts for his impartiality.
(3) The appointed quaestors shall take decisions unanimously and shall exercise their powers jointly unless the BNB decides differently.
(4) (amend. – SG 24/09, in force from 31.03.2009) The quaestor shall declare in writing to the BNB the circumstances referred to in paragraph 2, sentence second and Art. 11, paragraph 4. He shall undertake to notify BNB for the circumstances without delay.

Art. 106. (1) (amend. – SG 24/09, in force from 31.03.2009) The quaestors shall be appointed and released by the BNB; the requirement for issuing of approval under Art. 11, paragraph 3 shall not be applied.
(2) With the exception of the cases referred to in paragraph 3, the term during which the bank is managed by quaestors shall not exceed 6 months in total. If within this term the license of the bank is not withdrawn, with its expiration the powers of the quaestors shall be suspended and the rights of all bank’s authorities shall be restored.
(3) Where BNB has withdrawn the license of the bank, the powers of the quaestors shall be suspended after the court appoints a liquidator, respectively a trustee in bankruptcy.
(4) Bulgarian National Bank shall be in a position to suspend the quaestor’s powers at all times and to appoint another quaestor in his place. The act of BNB shall not be subjected to appeal.
(5) After the issuance of the act for appointment of a quaestor, BNB shall deliver it to the respective bank without delay and shall publish a notification in at least one central daily newspaper.

Art. 107. (1) With the appointment of quaestors all powers of the Supervisory and Management Boards, respectively of the Board of Directors of the bank shall be suspended and shall be exercised by the quaestors provided that no restrictions have been envisaged in their appointment act.
(2) During the management of the quaestors the General Meeting of the Shareholders shall be summoned only by the quaestors and shall take decisions only according to an agenda determined by them. The quaestors shall exercise the powers of the General Meeting of the Shareholders pursuant to the provisions of Art. 109 and 110.
(3) Bulgarian National Bank shall be in a position to issue mandatory instructions to the quaestors in connection with their activities.
(4) The quaestors shall be in a position to transfer some of their powers to other persons, inclusive to administrators, the powers of whom have been suspended.
(5) The quaestors shall report only to the BNB and shall present a report on their activities immediately at request.
(6) Actions and deals executed on behalf and on the account of the bank without prior authorisation of the quaestors shall be deemed as invalid.

Art. 107a. (new – SG 24/09, in force from 31.03.2009) (1) With the act of assigning a quaestor the BNB may:
1. grant him the right of approving the decisions of the bodies under Art. 107, Para 1 which shall preserve their competences; their decisions shall not have effect without the approval of the quaestor;
2. determine the transactions, activities and operations to be carried out by the bank only upon a preliminary permit by the quaestor.
(2) Besides the competences under Para 1 the quaestor shall have the right:
1. to access to all documents of the sessions of the bodies under Art. 107, Para 1;
2. to attend all sessions and to propose inclusion of issues in the agenda;
3. to assign to a specialized service for internal audit checks on issues determined by him.

Art. 108. (1) The quaestors shall have unlimited access and control over the premises of the bank, the accounting and other documentation, on its property and subsidiaries.
(2) At the request of the quaestors the procurator’s office and the authorities of the Ministry of Interior shall be required to offer assistance in the exercising of their powers under paragraph 1.
(3) Right after their appointment the quaestors shall provide protection for the bank’s assets and shall be in a position to undertake all actions for the purpose of preservation of the bank assets, documents and information as follows:
1. By introducing changes to the procedures for access to the bank’s buildings and premises;
2. By changing passwords for access to the banks’ computers and providing access only to a limited number of employees;
3. By issuing a new type of entry passes to authorised employees and by controlling the access of the employees to these premises.
(4) The quaestors shall suspend the powers of all persons who can obligate or perform any activities on behalf and on the account of the bank and shall authorize other persons.
(5) The quaestors shall notify the corresponding banks, the registrars and the agents of securities, the persons who manage assets on the account of the bank as well as third parties for the circumstances referred to in paragraph 4.
(6) Within 5 days of their appointment the quaestors shall send to every branch of the bank, inclusive of the branches opened in Member States and in non-member countries as well as to the bank’s subsidiaries a copy of the appointment act issued by the BNB.
(7) The quaestors shall suspend payment of dividends or any other form of capital distribution among shareholders as well as the payments to administrators with the exception of the due labour remunerations or the remunerations for services provided to the bank at the request of the quaestors.

Art. 109. (1) Where the license of the bank is not withdrawn, the quaestors shall have the right to take a decision for reorganisation through merging into or amalgamation with another bank, which shall be subject to approval by BNB after the Commission for Protection of Competition issues a permit in cases when the issuance of such permit is mandatory. In these cases the quaestors shall exercise all powers of the General Meeting of the Shareholders as provided in the Commercial Code relating to the reorganisation.
(2) The Bulgarian National Bank shall grant its assent under paragraph 1 only if it judges that the reorganisation will not lead to violation of the banking requirements laid down in the present law and the acts on its application on behalf of the acquiring bank or by the new bank; the Bulgarian National Bank shall grant its assent under paragraph 1 only if it judges that all obligations of the bank managed by the quaestors will be accepted in the course of the reorganisation.

Art. 110. (1) Where the license of the bank has not been withdrawn, the quaestors, after an approval issued by BNB, shall be in a position to take a decision for capital raise through the issuing of new shares, which shall be offered to the shareholders. The contributions to the amount of the emission value shall be made fully within the term set by the quaestors.
(2) In all cases under paragraph 1 the provision of Art. 194, paragraph 3, sentence second of the Commercial Code shall not apply, while the shareholders’ rights under Art. 194, paragraph 1 and 2 of the Commercial Code shall lapse within 14 days after the invitation for subscription is promulgated in the Official Gazette.
(3) The unsubscribed shares as well as the shares, the contributions for which have not been paid pursuant to paragraph 2, shall be offered by the quaestors to other parties.
(4) (amend. – SG 24/09, in force from 31.03.2009) Where the license of a bank, which does not comply with the requirements referred to in Art. 39, paragraph 2 and 3 is not withdrawn, the quaestors, having obtained the assent of BNB, shall be in a position to decide on capital raise through the issuance of new shares and to divest the shareholders of their rights referred to in Art. 194, paragraph 1 and 2 of the Commercial Code. In such case the new shares shall be offered without applying the procedure laid down in Art. 194 of the Commercial Code. The persons, who take part in the capital raise, shall acquire the new shares under the stipulation that BNB issues the respective approval where such permit is required.
(5) Bulgarian National Bank shall issue the permit referred to in paragraph 4 in the following cases:
1. The shareholders of the bank have damaged the bank’s reliability or security through their actions or influence in the bank’s management, or
2. Upon BNB judgment the shareholders of the bank do not dispose of financial resources for capital raise up to the limit specified by BNB, or
3. Upon BNB judgment, giving the shareholders the opportunity to exercise their rights referred to in Art. 194, paragraph 1 and 2 of the Commercial Code may frustrate or delay the capital raise for an unacceptable for the reorganisation needs of the bank period of time.

Art. 111. (1) The quaestors shall be in a position to undertake actions and measures aiming at the reorganisation of the bank, inclusive of negotiating lowering, rescheduling and novation of receivable with the creditors of the bank.
(2) The quaestors shall be in a position to stop the execution of decisions voted by the General Meeting or by the management authorities of the bank.

Art. 112. (1) The quaestor shall exercise his powers with care. He shall be responsible for deliberately caused damages.
(2) All employees of the bank shall be obliged to assist the quaestor in the execution of his powers.

Art. 113. The quaestor shall receive for his work remuneration paid by the bank; the size of the remuneration shall be determined by the BNB.

Art. 114. (1) The Bulgarian National Bank shall be in a position to appoint a quaestor in the branch of a bank headquartered in a non-member country; in such cases the provisions of the present law shall be applied accordingly.
(2) The quaestor under paragraph 1 shall report solely to BNB.

Section VIII.
Special Supervision in Danger of Insolvency
Art. 115. (1) For the sake of reorganizing a bank, which is jeopardised by insolvency, the BNB shall be in a position to place this bank under special supervision.
(2) A bank shall be jeopardised by insolvency in the following cases:
1. The total capital adequacy of the bank is lower than the minimal level, or
2. Upon BNB judgment the liquid assets of the bank will not be enough for the bank to execute its obligations when its assets become callable, or
3. The bank has not executed timely one or more callable obligations to its creditors.
(3) The term of the special supervision shall not exceed 6 months. If quaestors have been appointed under the provisions laid down in Art. 103, paragraph 2, item 19 before the application of this measure, the six-month period shall start from the date of appointment of the quaestors.

Art. 116. (1) In the cases referred to in Art. 115, paragraph 1, BNB shall place the bank under special supervision as follows:
1. BNB shall appoint quaestors if quaestors have not been appointed and shall determine their powers;
2. BNB shall determine the term and the conditions of the special supervision.
(2) In the cases referred to in paragraph 1, BNB shall be in a position to:
1. Lower the interests on the bank’s liabilities to their average market size;
2. Suspend for a definite period of time fully or partially the execution of all or of some of its obligations;
3. Restrict its activities fully or partially;
4. Determine conditions and additional requirements for the procedures for disposal of the bank’s property;
5. Give orders for compulsory capital raise and deprive the current shareholders from the right to take part in the raise;
6. Remove from office the members of the Board of Directors, respectively of the Management and Supervisory Boards;
7. Temporarily deprive from voting rights shareholders who hold directly or indirectly more than 10 per cent of the voting shares if they have damaged the reliability or the security of the bank through their actions or influence in the management;
8. Give orders for compulsory lowering of the share capital of the bank with the amount of the accrued loss.
(3) The circumstances referred to in paragraph 1 and 2, which are subject to registration, shall be entered in the Trade Register at BNB request.

Art. 117. (1) Compulsory lowering of share capital shall be applied when the loss accrued by the bank cannot be covered by the general reserves inclusive of non-distributed profits of past years.
(2) In the cases referred to in Art. 116, paragraph 2, item 8 simultaneously with the decision on capital lowering shall be taken a decision for capital raise pursuant to Art. 203 of the Commercial Code. In this case the bank’s shareholders shall lose the right under Art. 194, paragraph 1 and 2 of the Commercial Code to acquire a share of the new shares corresponding to their share before the raise.

Art. 118. (1) In the cases referred to in Art. 116, paragraph 2, items 5 or 8, BNB shall be in a position to give orders for the capital raise to be executed on the stipulation that the new shares shall be acquired by the Deposit Guarantee Fund or by financial institutions approved by BNB.
(2) In the cases referred to in Art. 116, paragraph 2, item 8 the new shares shall be acquired according to par value. In the cases referred to in Art. 116, paragraph 2, item 5 the new shares shall be acquired according to emission value. The emission value shall be determined by dividing the balance sheet equity by the number of shares in its capital; the requirements of Art. 176, paragraph 2 of the Commercial Code shall be observed.
(3) (amend. – SG 24/09, in force from 31.03.2009) Where the Deposit Guarantee Fund takes part in the capital raise of a bank under paragraph 1, the BNB approval referred to in Art. 28 shall not be required.
(4) Where BNB has given orders for bank’s capital raise or lowering, the quaestor shall exercise the powers of the General Meeting and shall determine the conditions, the procedures and the terms for subscription of shares and payment of contributions. In such cases the procedures for capital raise or lowering laid down in the bank’s Statute shall not be applied.
(5) In the cases referred to in Art. 116, paragraph 2, item 7 the size of the shares owned by the shareholder who is deprived from voting rights shall not be taken into consideration when calculating the necessary quorum for the holding of the General Meeting of the Shareholders and for taking of decisions.

Art. 119. (1) Actions and deals executed by the bank in violation of Art. 116, paragraph 2, items 1-4 after the promulgation of the decision of BNB in the Official Gazette shall be deemed as invalid.
(2) In the cases referred to in Art. 116, paragraph 2, item 2 all executory proceedings, inclusive of the executory proceedings pursuant to the Law of Special Pledges against bank property shall be suspended.
(3) The following actions shall be allowed in the cases referred to in Art. 116, paragraph 2, item 2:
1. Execution of obligations originating from payment orders accepted for settlement by the bank before its placement under special supervision;
2. Execution of orders for payment originating from exercising of rights or execution of obligations under financial security agreements provided the orders are given before or on the date of placement of the bank under special supervision or provided that the opposite party in the security agreement proves that it has not been informed of the bank’s placement under special supervision.
3. Execution of netting operations through the payment system;
4. Execution of money obligations related to the support of the bank or having originated after the date of the special supervision as a result of legal deals or actions performed by the quaestors and necessary for the reorganisation of the bank.
(4) In the cases referred to in Art. 116, paragraph 2, item 2 and in the course of the period of exercising of powers by BNB, it shall be considered that the bank has not delayed the payment of its money obligations, the execution of which has been suspended.
(5) In the cases referred to in Art. 116, paragraph 2, item 2 the bank shall not bear real responsibility for non-performance of the obligations, the execution of which has been stopped by the special supervision. Interests for delay and penalties relating to the money obligations of the bank, the execution of which has been stopped, shall not be accrued in the course of the special supervision; conventional interests on such obligations shall be accrued but their payment shall take place after the lifting of the special supervision.

Art. 120. (1) Under the conditions of special supervision the quaestors shall have the powers laid down in section VII and in the current section unless otherwise provided in their appointment act issued by BNB.
(2) Under the conditions of special supervision the quaestors shall be in a position to do the following:
1. To suspend the execution of decisions taken by the General Meeting of the bank's management authorities;
2. To terminate without prior notification agreements, which have been concluded before the placement of the bank under special supervision; the bank shall not be liable to compensation where these agreements are unfavourable for the bank and their clauses deviate from the current market conditions.

Art. 121. Within one month of their appointment the quaestors under conditions of special supervision shall present to BNB a bank accounting statement and a report on the current state of the bank. They shall be in a position to propose the implementation of measures under Art. 103, paragraph 2.

Chapter twelve.
LIQUIDATION, SALE OF ENTERPRISE AND CLOSING OF A BRANCH
Section I.
Voluntary Liquidation
Art. 122. (1) Decision for voluntary liquidation of a bank shall be taken by the General Meeting of the Shareholders after prior BNB permit.
(2) The permit request referred to in paragraph 1 shall be accompanied by an approved by the bank’s management authority liquidation plan.
(3) The Bulgarian National Bank shall issue a permit provided that it establishes that that bank is solvent and is in a position to execute its obligations to the creditors without delay.
(4) The issuance of the BNB permit shall invalidate the license of the bank. BNB shall undertake the necessary measures to inform the public about the invalidation.
(5) The Bulgarian National Bank shall be in a position to refuse issuing of a permit for voluntary liquidation in the following cases:
1. Where BNB judges that the bank will not be in a position to pay off without delay or to settle its obligations to the creditors in a different way;
2. Where BNB judges that the proposed liquidation plan is against the interest of the bank’s creditors;
3. Where BNB judges that the documents presented by the bank contain incomplete, contradictory or insufficient information;
4. The extra documents requested in order for BNB to judge whether the requirements for the issuance of a permit have been observed, have not been provided in time.
(6) The conditions and the procedures for the issuance of a voluntary liquidation permit shall be determined in a BNB ordinance.

Art. 123. Liquidation expenses shall be as follows:
1. Remuneration to the liquidators;
2. Labour remuneration, social security contributions and other amounts due pursuant to the labour legal relations with the staff of the bank under liquidation proceedings;
3. Remuneration to hired by the liquidator experts, consultants and proxies in connection with the execution of its powers;
4. Other expenses under signed agreements and activities necessitated by the liquidation proceedings.

Art. 124. (1) The receivables of the depositors shall be deemed as claimed from the liquidator.
(2) The liquidator shall draw up a list of all claimed receivables by the bank’s creditors; the list shall be placed at the creditors’ disposal in the bank’s premises.
(3) The liquidator shall distribute all the accumulated under the bank liquidation proceedings funds pursuant to Art. 94, paragraph 1, items 1-8 of the Law of Bank Bankruptcy.
(4) The creditors of receivables connected with expenses originating from the liquidation proceedings, shall receive payment on the date of maturity; in case of not receiving payment on the date of maturity, they shall be satisfied pursuant to Art. 123, item 4.

Art. 125. (1) Where it is established in the process of voluntary liquidation that the bank is insolvent pursuant to Art. 36, paragraph 2, the bank liquidator shall advise BNB to request the institution of bankruptcy proceedings from the court. The proposal shall be accompanied by a report and by documents certifying the bank’s financial state.
(2) The Bulgarian National Bank shall examine the proposal referred to in paragraph 1.
(3) In case the proposal referred to in paragraph 1 is legitimate, the Governor of the BNB, on the grounds of a report prepared by the Subgovernor in charge of the "Bank Supervision" Division, shall issue an order to certify that the bank is in a state of insolvency and shall request institution of bankruptcy proceedings from the court.
(4) The court shall examine the request filed by the BNB pursuant to the provisions and the procedures in the Law of Bank Bankruptcy.

Section II.
Compulsory Liquidation
Art. 126. The Deposit Guarantee Fund shall appoint liquidators to every bank with withdrawn banking license pursuant to Art. 36, paragraph 1.

Art. 127. (1) Only a natural person shall be appointed liquidator in bank liquidation proceedings.
(2) The provisions referred to in Art. 25, paragraphs 1 and 2 of the Law of Bank Bankruptcy shall also be applied to the bank liquidator.
(3) The powers of the bank liquidator shall be exercised by minimum two persons.
(4) The Bulgarian National Bank shall have the right to perform inspections relating to the observation of the requirements laid down in paragraph 2. Where it is detected that the liquidator does not comply with the requirements, BNB shall be in a position to file a request to the Deposit Guarantee Fund for his dismission.
(5) Provided that the requirements laid down in present Art. are observed, the bank quaestors can also be appointed bank liquidators.
(6) The provisions under Art. 34 of the Law of Bank Bankruptcy shall also be applied to the bank liquidator.

Art. 128. (1) The liquidator shall present at the BNB and at the Deposit Guarantee Fund reports whose type, contents and terms shall be determined by the BNB Subgovernor in charge of the "Bank Supervision" Division.
(2) The liquidator shall deposit the resources received from the encashment of the bank property or from the collection of the bank receivables to special accounts in Bulgarian leva or in foreign currency.

Art. 129. The provisions under Art. 123 and 124 shall also be applied to the compulsory liquidation proceedings.

Art. 130. (1) Where it has been established in the process of compulsory liquidation by the Deposit Guarantee Fund or the liquidator that the bank is insolvent within the meaning of Art. 36, paragraph 2, item 2 or that the bank has not paid off its callable liabilities for more than 60 days, they shall advise BNB for requesting the institution of bankruptcy proceedings from the court. The proposal shall be accompanied by a report and by documents relating to the bank’s financial state.
(2) The Bulgarian National Bank shall examine the proposal referred to in paragraph 1.
(3) In case the proposal referred to in paragraph 1 is legitimate, the Governor of the BNB, on the grounds of a report prepared by the Subgovernor in charge of the "Bank Supervision" Division, shall issue an order to certify that the bank is in a state of insolvency and shall request institution of bankruptcy proceedings from the court.
(4) The court shall examine the request filed by the BNB pursuant to the provisions and the procedures in the Law of Bank Bankruptcy.

Section III.
Selling of Bank Enterprise
Art. 131. (1) A bank enterprise may be sold only to another bank under the terms that BNB issues prior approval to the deal.
(2) Proceedings for voluntary liquidation of the bank shall be instituted simultaneously with the enforcement of the agreement for the sale of the bank enterprise.
(3) Prior to the conclusion of the deal for the sale of the bank enterprise, the bank shall file at the BNB a request for preliminary approval of the deal and for issuance of the permit referred to in Art. 122, paragraph 1.
(4) The request referred to in paragraph 3 shall be accompanied by a market valuation of the bank enterprise, draft sales agreements and other documents determined in a BNB ordinance.
(5) Where the bank enterprise is to be sold, the creditors of the selling bank and of the buying bank shall be notified accordingly via the Official Gazette and at least two central daily newspapers. In these cases Art. 15, paragraph 1, sentence second of the Commercial Code shall not apply.
(6) The Bulgarian National Bank shall be in a position not to approve the sales deal relating to the bank enterprise and to refuse the issuance of a permit for voluntary liquidation in the following cases:
1. Where BNB judges that the bank-buyer shall not pay off in time or settle in a different way its obligations to the creditors, including of the creditors of the bank-seller;
2. Where BNB judges that the sale will not protect accordingly the interests of the creditors of the seller and the buyer;
3. Where BNB judges that the sale will lead to violation by the bank-buyer of the requirements for banking pursuant to the provisions of the present law and the regulations on its application;
4. Where BNB judges that the information contained in the documents provided by the bank is incomplete, contradictory or insufficient, or
5. The extra documents requested in order for BNB to judge whether the requirements for the issuance of a permit have been observed, have not been provided in time.
(7) The liquidator of a bank whose enterprise has been sold shall distribute the selling price among the bank’s shareholders after the expiration of the term laid down in Art. 16a, paragraph 1 of the Commercial Code.
(8) A bank under liquidation proceedings shall be sold as an enterprise or shall merge into another bank only after obtaining a permit issued by BNB. The Bulgarian National Bank shall issue such permit only on the stipulation that the acquiring bank enters into the obligations of the bank and where BNB judges that the circumstances under paragraph 6 or Art. 109, paragraph 2 are available.

Section IV.
Closing of Bank Branch
Art. 132. (1) Where a bank licensed in the Republic of Bulgaria decides on closing of bank branch abroad, it shall inform BNB without delay and encloses a detailed plan regarding the way of settlement of all liabilities having occurred during the period of operation of the branch.
(2) The Bulgarian National Bank shall judge whether the suggested plan protects to a sufficient degree the interests of the bank’s creditors abroad and whether it includes conditions for the settlement of the relations with them within a suitable period of time. The BNB shall be in a position to raise objections to the plan within 30 days of its submission and to instruct the bank accordingly.
(3) The bank shall have the right to execute the plan after it has been approved by BNB.
(4) The branch shall not be closed down before settling the relations with the bank’s creditors in the respective country.
(5) Before submission of a request for deletion of the branch from the respective public register, the persons who represent the bank shall deposit with BNB a declaration in writing that all the relations between the bank and the creditors in the respective country, which have occurred in the course of operation of the branch, have been settled.
(6) The provisions laid down in paragraph 1-5 shall apply to the cases when a bank of a non-member country, which has obtained a permit to operate in the Republic of Bulgaria through a branch, decides on closing the branch in the Republic of Bulgaria.

Chapter thirteen.
REORGANISATION MEASURES AND TERMINATION PROCEDURES
Section I.
General Provisions
Art. 133. (1) Reorganisation measures shall be the measures concerning a local or a foreign bank. Reorganisation measures shall be provided by BNB or the competent authorities of another Member State as well as by their courts to a bank inclusive of its branches in a Member State with a view to protecting or restoring its financial stability and these measures could affect existing rights of third parties, inclusive of the measures for suspension of executory proceedings or lowering of the amount of the receivables or other similar measures.
(2) Termination procedures shall be the procedures in cases of liquidation or bankruptcy of a bank licensed in the Republic of Bulgaria or in another Member State inclusive of the bank’s branches abroad or compulsory termination of the operation of a branch of a Bulgarian bank in a Member State or in a non-member country, a branch of a bank incorporated in a Member State as well as any other procedure of this kind relating to termination of operation and holding of collective proceedings for converting of the bank’s assets into cash opened and controlled by the respective administrative or court authorities of the Member State inclusive of the cases when the proceedings end with agreement or in another similar manner.
(3) Within the meaning of this chapter the bank’s shareholders and its administrators shall not be deemed as third parties.

Section II.
Reorganisation Measures
Art. 134. (1) The Bulgarian National Bank shall be the competent authority in charge of applying reorganisation measures to a bank licensed in the Republic of Bulgaria inclusive of applying measures to its branches opened in Member States. The conditions and the procedures for applying and appealing against such measures as well as the legal consequences shall be settled by the Bulgarian legislation unless otherwise provided in the present chapter.
(2) Where applying reorganisation measures to a bank having branches in other Member States, the BNB shall duly notify the competent authorities of these Member States before applying the measures and where this is impossible with a view to protecting the interests of the bank’s creditors – simultaneously with their application. The BNB notification shall specify legal and other consequences of the imposing of the measure.
(3) The acts issued by BNB on applying reorganisation measures shall be published in at least two central daily newspapers in the Republic of Bulgaria within two business days of the date of their issuing.
(4) The acts issued by BNB on applying reorganisation measures inclusive of the acts on applying reorganisation measures to a bank branch in a non-member country, shall be summarised in the Official Gazette of the European Union as well as in two national newspapers in every Member State where the respective bank has opened a branch. The resume of the act shall be published in Bulgarian language and in the languages of the Member States where the respective bank operates.
(5) The resume of the act referred to in paragraph 4 should contain a description of the legal and actual reasons for the issuance of the act, name and address of a competent court of appeal as well as the deadline for appeal.

Art. 135. (1) Before applying reorganisation measures to a branch of a bank having its head office in a non-member country and branches in one or more Member States, the BNB shall notify the competent authorities of these Member States for its intention to apply reorganisation measures to a branch as well as of their legal and other consequences. Where prior notification is not possible, the BNB shall notify the competent supervisory authorities immediately after applying the measures.
(2) Where BNB judges that reorganisation measures should be applied in the territory of the Republic of Bulgaria to a bank of a Member State, it shall notify the competent authorities of the sending Member State.

Art. 136. (1) Reorganisation measures provided by a competent authority of a Member State for a bank licensed in this Member State, shall be accepted directly and without formalities in the Republic of Bulgaria and as of the moment they are subject to execution, they shall become effective for the bank branch operating in the Republic of Bulgaria as well as for the third parties in the Republic of Bulgaria. The legal consequences of the reorganisation measures shall be settled by the legislation of the respective Member State unless otherwise provided by the present law.
(2) The parties that administer reorganisation measures in the territory of the Republic of Bulgaria implemented by the competent authority of a Member State shall enjoy the same status and powers as they enjoy according to the legislation of the Member State. These parties shall apply the Bulgarian legislation where the assets of the bank shall be realised in the territory of the Republic of Bulgaria and where labour legal relationship having occurred in the territory of the Republic of Bulgaria shall be settled.
(3) Reorganisation measures implemented by a competent authority of a Member State for a bank licensed in a non-member country shall be accepted directly and without formalities in the Republic of Bulgaria and as of the moment they are subject to execution, they shall become effective for the third parties in the Republic of Bulgaria.

Section III.
Bank Winding Up Procedures
Art. 137. (1) Bulgarian court or administrative authorities shall be competent to decide on the liquidation of a bank or on the institution of bankruptcy proceedings for a bank licensed in the Republic of Bulgaria. The decision of these authorities shall become effective also for the branches of the bank in other Member States.
(2) Unless otherwise provided in the present law the Bulgarian legislation shall apply to the liquidation and bankruptcy proceedings of a bank licensed in the Republic of Bulgaria inclusive of the following cases:
1. Movable property – subject of the proceedings and the legal regime regarding the movables acquired by the bank after the institution of the proceedings;
2. Rights of the bank and the powers of its liquidator or trustee in bankruptcy;
3. Conditions for compensations;
4. Consequences from the institution of proceedings on current agreements, to which the bank is a party;
5. Effect of the proceedings over the court cases initiated by separate creditors against the bank;
6. Receivables claimed from the bank and their legal regime if they have occurred after the institution of the proceedings;
7. Procedures and requirements for claiming and accepting of receivables;
8. Rules regarding the distribution of accumulated resources from encashment of assets, the list of the receivables of the bank’s creditors as well as the rights of the creditors who have been partially satisfied after the institution of the bankruptcy proceedings as a result of the realisation of real collaterals or through compensation;
9. Conditions for termination of the bankruptcy proceedings and the circumstances;
10. Creditors’ rights after the termination of the proceedings;
11. Regime regarding the proceedings’ expenses;
12. Conditions and proceedings for the declaration of the legal acts that damage the interests of the creditors void, voidable or non-rebuttable.

Art. 138. (1) Bulgarian National Bank shall duly notify the competent authority of the respective Member States where the bank referred to in Art. 137, paragraph 1 operates through a branch, that the institution of compulsory liquidation proceedings or of bankruptcy proceedings has been requested, respectively that a decision for voluntary liquidation of the bank has been issued.
(2) Bulgarian National Bank shall notify the competent authority referred to in paragraph 1 on the decision on the institution of liquidation or bankruptcy proceedings as well as on the legal and other consequences thereof.
(3) The procedures for notification laid down in paragraph 1 and 2 shall be applied in the cases of winding up of a branch operating in the Republic of Bulgarian of a bank having its head office in a non-member country where the same bank has opened a branch in another Member State. In such cases BNB and the competent authorities shall coordinate their actions with the competent administrative and court authorities in the other accepting Member States for the purposes of the proceedings.

Art. 139. (1) The decision of the competent court or administrative liquidation authority, the institution of winding up proceedings for a bank licensed in a Member State and operating in the Republic of Bulgaria shall be accepted directly and without formalities in the Republic of Bulgaria and shall give rise to action in the country as of the moment of its taking effect and giving rise to action in the territory of the respective Member State where the proceedings have been instituted
(2) The decision referred to in paragraph 1 shall be subject to registration according to the place of location of the branch in the Republic of Bulgaria. The registration shall have the effect of announcement.
(3) The legislation of the respective Member State where the bank has been licensed shall apply unless otherwise provided in the present law.

Art. 140. (1) The liquidator or the trustee in bankruptcy of a bank licensed in the Republic of Bulgaria and having branches in other Member States shall publish in Bulgarian language an excerpt of the decision for initiation of bank liquidation, respectively of institution of bankruptcy proceedings in the Official Gazette of the European Union and at least in two national newspapers of every Member State where the bank has opened branches.
(2) The liquidator or the trustee in bankruptcy of the bank referred to in paragraph 1 shall be obliged to notify and invite in writing the creditors of the bank from the other Member States, who are interested in demanding their receivables with the exception of the creditors whose receivables do not need demanding since they are considered officially accepted by the trustee of bankruptcy or the liquidator.
(3) It is obligatory for the invitation to the creditors referred to in paragraph 2 to contain information in Bulgarian language as follows:
1. Initiation of liquidation or institution of bankruptcy proceedings for the bank referred to in paragraph 1;
2. Terms for demanding receivables;
3. Necessity of providing evidence;
4. Authority charged with the accepting of claims for receivables or stands relating to receivables as well as requirements for demanding receivables;
5. Consequences for non-claiming of receivables in time or for non-claiming of receivables at all inclusive of the circumstance after the termination of the bank’s liquidation and bankruptcy proceedings in the country where the bank has been licensed.
(4) The invitation referred to in paragraph 2 shall contain information whether the creditors with preferential receivables secured by real rights should claim them with a view to their acknowledgment as well as other significant circumstances relating to the receivables.
(5) The invitation that is sent to the creditors under paragraph 2 shall have the following title written in all official languages of the European Union: "Invitation for claiming of receivables. Terms that have to be observed". Where presentation of a standpoint relating to the receivables is demanded by the circumstances the title of the invitation shall read as follows in all official languages of the European Union: "Invitation for presentation of a standpoint relating to receivables. Terms that have to be observed ".
(6) Every creditor referred to in paragraph 2 inclusive of public authorities, shall have the right to claim receivables or to present a standpoint relating to them in the official language or in one of the official languages of the respective Member State. In such case the claiming of the receivables shall be performed under a title in Bulgarian language as follows: "Claiming of receivables".
(7) The liquidator or the trustee in bankruptcy shall have the right to request a translation in Bulgarian language of all documents referred to in paragraph 6.
(8) Unless otherwise provided by the present law, every creditor referred to in paragraph 2 shall send copies of all documents verifying his receivables if any and shall specify type of the receivables, date of origination and size, preferences, real security or lien as well as the assets covered by the collateral.
(9) The receivables of all creditors of a bank licensed in the Republic of Bulgaria and having been subjected to a procedure of liquidation or bankruptcy proceedings shall enjoy equal rights and shall be paid off in a consecutive manner basing on equal criteria irrespective of the place of occurrence of the receivables– in the territory of the Republic of Bulgaria or of a Member State.
(10) The liquidator and the trustee in bankruptcy shall inform regularly and accordingly the creditors of the bank under liquidation or bankruptcy proceedings referred to in paragraph 1 regarding the course of the proceedings.

Section IV.
General Provisions Relating to Reorganisation Measures or Winding up Procedures
Art. 141. When applying reorganisation measures to a bank or instituting winding up procedures the legal consequences shall be settled as follows:
1. Labour agreements and relations – according to the legislation of the Member State applicable to the respective labour agreements;
2. Agreements that confer rights to use and acquire immovable property – according to the legislation of the Member State where the property is located; the legislation shall also be applied to determine the difference between movable and immovable property;
3. Rights of the bank relating to assets, ship or airplane, which are subject to registration in a public register – according to the legislation of the Member State where the register is located.

Art. 142. (1) Application of reorganisation measures to a bank or initiation of winding up procedures shall not affect the rights of creditors or of third parties originating from real collateral in connection with tangible or intangible assets inclusive of movables or immovables, concrete possessions or possessions defined in kind or a combination of possessions that belong to the bank but are located in the territory of another Member State in the course of application of these measures or of the initiation of the winding up procedure.
(2) The rights referred to in paragraph 1 shall include:
1. The right to request encashment or to convert of assets into cash and thus satisfy his demand with the income received as a result of the encashment inclusive of cases of pledge or mortgage established over the assets;
2. The right to preferential satisfaction inclusive of satisfaction by virtue of pledge established over receivables or by virtue of transfer of receivables as collateral;
3. The right of the party, that has rights over a possession, to demand its return or recovery by the party that owes it or uses it without legal basis;
4. The right to use the yield of the assets offered as collateral.
(3) Right registered in the public register and objectable to third parties by virtue of which can be acquired the right referred to in paragraph 1, shall be regarded as right under paragraph 1.
(4) The provisions laid down in paragraph 1 does not exclude the possibility of demanding the declaration of certain legal acts void, voidable and non-objectable pursuant to Art. 137, paragraph 2, item 12.

Art. 143. (1) The application of reorganisation measures to a bank or the initiation of winding up procedure where the bank is a buyer of possession, shall not affect the rights of the seller over this possession, according to a sales agreement with preservation of ownership, until the price is fully paid up where in the course of applying measures to the bank or opening of winding up procedures the possession is located on the territory of a Member State.
(2) The application of reorganisation measures to a bank or the initiation of winding up procedures where the bank is seller of possession according to an agreement referred to in paragraph 1 shall not give grounds for breaking or termination of the agreement provided that the possession has been delivered and shall not be an obstacle to the buyer’s acquisition of ownership over the possession when in the course of application of these measures or opening of winding up procedures the possession – subject of sale and purchase has been located in the territory of another Member State.
(3) The provisions laid down in Art. 1 and 2 does not exclude the possibility of demanding the declaration of certain legal acts void, voidable and non-objectable pursuant to Art. 137, paragraph 2, item 12.

Art. 144. (1) Applying reorganisation measures to a bank or opening of winding up procedures shall not affect the right of its creditors to mutual off-set of counter claims where the law applicable to bank receivables warrants this procedure.
(2) The provisions of Art. 1 does not exclude the possibility of demanding the declaration of certain legal acts void, voidable and non-objectable pursuant to Art. 137, paragraph 2, item 12.

Art. 145. The applicable legislation relating to applying reorganisation measures or opening of winding up procedures shall be as follows:
1. The right of ownership or other rights over financial or other instruments; the existence or the transfer of these rights presupposes their entering into a register, account or centralised depository institution established or registered in a Member State – the legislation of the Member State where the register, account or centralised depository institution are established or registered;
2. Netting agreements – the legislation applied to the agreement that envisages netting;
3. Buy-back agreements – the legislation that is applied to the buy-back agreement provided that item 1 is not violated;
4. Deals concluded on regulated market – the legislation applicable to the agreements relating to these deals provided that item 1 is not violated;
5. Pending court cases relating to possessions or rights withdrawn from the bank – the legislation of the Member State where the respective claim is pursued.

Art. 146. (1) The parties that administer reorganisation measures, the liquidator, the trustee in bankruptcy or another competent court or administrative authority of the sending state shall take all necessary measures for registration of the reorganisation measures or the measures for initiation of bank winding up procedure in the respective trade, property or another public register in the territory of the Republic of Bulgaria where this registration is obligatory pursuant to Bulgarian legislation.
(2) The registration expenses shall be regarded as a part of the reorganisation expenses or of the expenses for the bank’s winding up procedure.

Art. 147. (1) The provisions laid down in Art. 137, paragraph 2 shall not apply to the rules for the declaration of certain acts that damage the interests of all creditors invalid, voidable and non-objectable where the person enjoying the rights specified in the act presents evidence that the legislation of another Member State shall apply to the act that damage the interests of all creditors and pursuant to this legislation the act shall be indisputable in the concrete case.
(2) The rule laid down in Art. 134, paragraph 1, sentence second shall not apply in the cases referred to in paragraph 1 where a reorganisation measure determined by a court authority contains rights relating to invalidity, voidability and non-objectability of acts that damage the interests of all creditors and the acts have been executed before the application of the measure.

Art. 148. The validity of an act concluded after the application of a reorganisation measure or after the initiation of a bank winding up procedure, by virtue of which the bank disposes with good consideration of immovable property, ship or airplane where this immovable property, ship or airplane are subject to registration in a public register or of financial or other instruments or rights on such instruments where their existence and transfer presupposes their registration in a register, account or central depository institution, which is located or registered in a Member State shall be subjected to the legislation of the Member State of the possession’s location or the registration of the register, account or depository institution.

Art. 149. All parties that give or receive information relating to the informative or consultative procedures in the current chapter shall undertake to keep bank and professional secret.

Art. 150. (1) The decision of the competent authority in a Member State relating to the appointment of a person for the administration of reorganisation measures or winding up procedures of a bank licensed in a Member State shall become effective on the territory of Republic of Bulgaria. The persons shall provide evidence for their appointment by presenting a verified copy of the appointment act accompanied by non-legalised translation in Bulgarian language.
(2) The persons appointed under paragraph 1 as well as the persons duly authorised by them shall have the right to exercise their powers originating from the legislation in the Member State over the bank branch in the territory of the Republic of Bulgaria unless otherwise provided by the present law. They provide support to the creditors of the respective bank in the Republic of Bulgaria relating to the exercising of their rights.
(3) Where exercising their powers in the territory of the Republic of Bulgaria, the appointed persons under paragraph 1 shall be obliged to apply the Bulgarian legislation inclusive of the procedures for conversion of assets into cash and presentation of information to the staff. Their powers in the territory of the Republic of Bulgaria shall not entitle them to exerting pressure or to resolving legal disputes.

Chapter fourteen.
ISSUING AND APPEALING ADMINISTRATIVE ACTS
Art. 151. (1) The individual administrative acts referred to in Art. 14-17, 36, 38, Art. 103, paragraph 2, items 20 and 21 and paragraph 8 shall be issued by the Board of Governors of BNB on a proposal from the Governor and Subgovernor who is in charge of the "Bank Supervision" Division and in all other cases – by the Subgovernor or by an official authorised by him.
(2) The administrative acts referred to in paragraph 1 shall be motivated and executed without delay.
(3) The legitimacy of the administrative acts referred to in paragraph 1 can be appealed before the Supreme Administrative Court. The court cannot stop the execution of the act until the final judgment is pronounced.
(4) Accounting or economic examination, if necessitated by the court proceedings referred to in paragraph 3, shall be performed by experts appointed by the court according to a list of experts approved by the Chairman of the Supreme Administration Court. The experts should have the necessary qualifications and banking experience. The terms and conditions and the procedures for inclusion in or exclusion from the list are determined in an ordinance issued jointly by the Minister of Justice and the BNB Governor.
(5) Where BNB has not approved a license application within 6 months of the submission of the license application form together with all the required documents and information, this shall be considered as implicit denial on behalf of BNB and can be appealed pursuant to Art. 3. Implicit denial shall also be present in cases when BNB has not approved a license application within 12 months of the submission of the license application form.
(6) Where BNB has not approved a license application within 3 months of the submission of the license application form together with all the required documents and information, this shall be considered as implicit denial on behalf of the BNB and can be appealed pursuant to Art. 3.
(7) The individual administrative acts referred to in the present law shall be presented to the addressees against a signature or via registered mail with attached slip for acknowledgment of receipt. The delivery of the registered letter with the receipt acknowledgment slip shall be made to the permanent address of the individual or to the headquarters and the address of registration of the legal entity.
(8) Where the administrative act is not delivered pursuant to paragraph 7, it shall be regarded as delivered with its placement at a special place in the premises of BNB. The latter shall be certified by a protocol drawn up by officials nominated by BNB Subgovernor in charge of the "Bank Supervision" Division.

Chapter fifteen.
ADMINISTRATIVE AND PENAL PROVISIONS
Art. 152. (1) Commitment or tolerated commitment of violation of the present law or of an act on its application if the deed does not represent a crime, shall be punished with a fine from BGN 1000 to BGN 4000; in case of repeated violation – from BGN 3000 to BGN 12 000.
(2) Distribution of untrue information or circumstances for a bank, which lower the good names of the bank and the trust in it, if the deed does not represent a crime, shall be punished with a fine from BGN 2000 to BGN 5000; in case of repeated violation – from BGN 3000 to BGN 10 000.
(3) In case the violation under paragraph 2 has been made through the mass media, the fine shall range between BGN 5000 and BGN 10000; in case of repeated violation – from BGN 8000 to BGN 20 000.
(4) Where the violator referred to in paragraph 1 or 3 is a legal entity the imposed property sanction shall be as follows:
1. In the cases referred to in paragraph 1 – from BGN 20 000 to BGN 70 000, in case of repeated violation – from BGN 50 000 to BGN 100 000;
2. In the cases referred to in paragraph 3 – from BGN 50 000 to BGN 200 000, in case of repeated violation – from BGN 80 000 to BGN 250 000.

Art. 153. (1) The violation acts referred to in Art. 152 shall be drawn up by officials authorised by the Subgovernor of the "Bank Supervision" Division.
(2) The penal orders shall be issued by the Subgovernor in charge of the "Bank Supervision" Division or by an official authorised by him.
(3) The drawing up of the acts, the issuance, the appeal and the execution of the penal order shall be executed pursuant to the Law of Administrative Violations and Punishments.

Additional provisions

§ 1. (1) Within the meaning of the present law:
1. "Administrator" shall be:
а) A member of the bank’s Supervisory or Management Boards (Board of Directors);
b) Procurators and persons whose positions, according to the bank’s internal structure, include managerial and controlling functions over major structural units;
c) The management of the specialised office for internal audit.
2. "Deposit" is every amount of money received against the obligation to be paid back unless it has been extended as follows:
а) As a bank loan;
b) As earnest money making the execution of commercial or other deal possible;
c) As advance payment according to a sales agreement or to an agreement for provision of services or other activities; the advance payment shall be subject to repayment in cases of non-execution of the clauses of the agreement;
d) For other purposes in all cases determined by BNB.
3. "Public attraction of deposits or other renewable resources" means acceptance of deposits or of other renewable resources from more than 30 persons that are neither banks, nor other institutional investors. Where bonds or other debt securities are issued not according to the provisions of the Law of Public Offering of Securities, it shall be considered that there is public offering of deposits or of other renewable resources in the following cases:
a) The bond emissions or the emissions of other debt securities have been acquired through initial offering by more than 30 persons that are neither banks, nor other institutional investors;
b) This is one of the issuer’s major activities, and
c) The issuer grants loans by occupation or provides other financial services by occupation.
4. (amend. – SG 24/09, in force from 31.03.2009) "Related persons" are:
a) Husband and wife, direct relatives without limitation, indirect relatives up to fourth degree inclusive of the in-laws up to third degree;
b) Partners;
c) Entities where one entity takes part in the management of the other or of its subsidiary;
d) Entities where one and the same legal entity or natural person take part in their management of controlling body, inclusive of the cases when the natural person represents a legal entity;
e) Entity and person holding more than 10 per cent of the voting shares in the company;
f) Persons/entities, one of which controls the other;
g) Parties whose activities are controlled by a third party or by a subsidiary of the third party;
h) Parties that jointly control the third party or the subsidiary of the third party;
i) Parties one of which acts as the other’s trade representative;
j) Parties one of them having made a donation to the other.
4a. (new – SG 24/09, in force from 31.03.2009) "Persons acting in concert" shall mean two or more persons of which a reasonable assumption can be made, due to the nature of the relations between them or between each of them and a third person based on their market behaviour or the commercial transactions concluded by them, that they exercise or would exercise their rights in the shares in the bank held by them according to an express or tacit agreement with another shareholder. Such persons are also the related persons;
5. (amend. – SG 24/09, in force from 31.03.2009; amend. – SG 94/10, in force from 31.12.2010) "Economically related persons" shall be two or more persons, who hold common risk, due to the fact that they are financially (business) related parties bound in such a way that if one of them experiences financial problems, including in event of funding or payment of its own obligations, the other or all the rest may also experience difficulties in financing their activity or executing their obligations. Such are two or more persons related in one or more of the following ways:
a) the spouses and direct and collateral relatives of up to second degree;
b) (revoked – SG 94/10, in force from 31.12. 2010)
c) the persons under Item 4, Letters "c" – "i".
6. (amend. – SG 24/09, in force from 31.03.2009) "Qualified interest" is present in cases when one party holds directly or indirectly 10 or more than 10 per cent of the capital or of the voting rights in the General Meeting of the company or when the holding of shares of the capital or of the voting rights in the General Meeting of the company allow exercising of significant influence on the company’s management.
6a. In determining the qualifying holding shall be taken into account also:
a) voting rights held by a third party with whom that person has concluded an agreement, which obliges them to adopt, by concerted exercise of the voting rights they hold, a lasting common policy towards the management of the issuer in question;
b) voting rights held by a third party under an agreement concluded with that person providing for their temporary transfer;
c) voting rights attaching to shares which are lodged as collateral with that person, provided the person controls the voting rights and declares its intention of exercising them;
d) voting rights attaching to shares in which that person or entity has the life interest;
e) voting rights which are held, or may be exercised within the meaning of Item 6a, Letters "a" to "d", by an undertaking controlled by that person;
f) voting rights attaching to shares deposited with that person which the person can exercise at its discretion in the absence of specific instructions from the shareholders;
g) voting rights held by a third party in its own name on behalf of that person;
h) voting rights which that person may exercise as a proxy where the person can exercise the voting rights at its discretion in the absence of specific instructions from the shareholders.
6b. In determining the qualifying holding shall not be taken into account:
a) shares acquired only for the purposes of clearing and settlement within the usual settlement cycle not longer than three working days from conclusion of the transaction, as well as where the shares are held by trustees provided that they may exercise the voting rights attached to the shares only upon instruction from the client given in writing or electronically;
b) shares held by a market maker provided that he is licensed to act as investment broker, he does not participate in the management of the company and does not influence the company for purchase of shares or for maintenance of their prices;
c) voting rights or shares which investment brokers or credit institutions may hold as a result of providing the underwriting of financial instruments emission and/or placing of financial instruments on a firm commitment basis included under Art. 5, Para 2, Item 6 of the Law on the Markets of Financial Instruments, provided that such rights are not exercised or used in any other way for intervention in the management of the issuer and as far as they are disposed of within one year of acquisition;
6c. In determining the qualifying holding to the voting rights of the parent undertaking of the managing company shall not be added the voting rights of the managing company attached to shares included in an individual portfolio, managed under Art. 202, Para 2, Item 1 of the Law on the Public Offering of Securities, provided that the managing company exercises the voting rights independently from the parent undertaking. This shall not apply to cases where the parent undertaking or another company controlled by the parent undertaking has invested in shares with voting rights managed by the managing company, where the managing company does not have right to exercise them at its discretion but only in compliance with direct or indirect instructions given by the parent undertaking or that other company controlled by the parent undertaking.
6d. In determining the qualifying holding to the voting rights of the parent undertaking of an investment broker granted a license for exercising activity under Art. 3 of Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field shall not be added the voting rights of the investment broker attached to shares included in an individual portfolio managed by it under § 1, Item 7 of the Additional Provisions of the Law on the Markets of Financial Instruments, provided that the investment broker:
a) has the right to manage an individual portfolio under Art. 5, Para 2, Item 4 of the Law on the Markets of Financial Instruments;
b) may exercise the voting rights in the shares only upon instruction given in writing or in electronic way, or to guarantee through applying suitable measures that the management of the individual portfolio is performed independently from other services or under conditions equivalent to the conditions of Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS);
c) exercises the voting rights independently from the parent undertaking.
6e. Item 6d shall not apply where the parent undertaking or another company controlled by the parent undertaking has invested in shares with voting rights included in individual portfolio managed by the investment broker, where the investment broker does not have the right to exercise them at its discretion but only in compliance with direct or indirect instructions provided by the parent undertaking or that other company controlled by the parent undertaking.
7. "Control" is present in cases when a party (the controlling party):
a) Holds more than a half of the votes in the General Meeting of another legal entity (subsidiary), or
b) Has the right to determine more than a half of the members of the management or controlling body of another legal entity (subsidiary) and in the same time is shareholder or partner in the legal entity, or
c) Has the right to exercise decision-making influence on a legal entity (subsidiary) by virtue of an agreement concluded with the legal entity or by virtue of its act of incorporation or statute, if this is permitted by the legislation applicable to the subsidiary, or
d) Is a shareholder or partner in a company, and:
aa) More than a half of the members of the legal entity’s (subsidiary) management or controlling authority where these members have executed the respective functions during the previous and the current financial year and up to the moment of the preparation of the consolidated financial statements have been appointed solely as a result of the exercised voting right of the legal entity (subsidiary), or
bb) Which controls independently or by virtue of an agreement with other shareholders or partners in the legal entity (subsidiary) more that a half of the votes in the General Assembly of the legal entity, or
e) Is in a position, according to competent authorities’ judgment, to exercise in a different way crucial influence on the decision taking process relating to the operations of another legal entity (subsidiary)
In all cases under "a", "b" and "d" the votes of the subsidiaries shall be added to the votes of the controlling party as well as the votes of parties that operate in their own name but on the account of the controlling party or of a subsidiary.
In all cases under "a", "b" and "d" the votes of the controlling party shall be reduced by the voting shares held by a party that is neither the controlling party, nor a subsidiary as well as by voting shares - subject of a pledge where the voting rights are exercised upon pledger’s instructions and in his interest.
In all cases under "a", and "d" the votes of the controlling party shall be reduced by voting shares held by the subsidiary itself through a party that is controlled by the subsidiary or through a party that operates in its own name but on the account of the controlling party and of the subsidiary.
8. "Mother company" is a legal entity that exercises control over one or more companies (subsidiaries).
9. "Subsidiary" is a legal entity, which is controlled by another legal entity (mother company). Legal entities that are subsidiaries of the subsidiary shall be regarded as subsidiaries of the mother company.
10. "Close relationship" is present where two or more natural persons or legal entities are related under one of the following way:
a) Either through holding, by one party directly or through a controlling party, 20 or more than 20 per cent of the votes in the General Assembly or in the capital of the other party, or
b) By relationship of control, or
c) Permanently with one and the same third party by relationship of control.
11. "Bank group" is where the mother company is a bank with other credit institutions and/or financial institutions as subsidiaries.
12. "Financial holding" is where the mother company is a financial institution with exclusively or mostly credit or financial institutions as subsidiaries and under the condition that at least one of the subsidiaries is a credit institution; the mother company is not a financial holding within the meaning of the Law of Supplementary Supervision of Financial Conglomerates.
13. "Joint venture holding" is where the mother enterprise is different from a credit institution, financial holding or joint venture financial holding within the meaning of the Law of Supplementary Supervision of Financial Conglomerates and at least one of its subsidiaries is a credit institution.
14. "Distribution of capital" is allocation of capital or other kind of bank property to its shareholders with the exception of allocation of new shares as a result of capital raise through conversion of profit into capital.
15. "Member State" is a country - member of the European Union or another country, which belongs to the European economic area.
16. "Sending country" is a Member State, the competent authorities of which have issued a license to a credit institution.
17. "Accepting country" is a Member State where the credit institution of a Member State has a branch or provides direct services.
18. "Non-member country" is a country, which a not a Member State within the meaning of item 15.
19. "Competent authorities" means BNB and the national authorities of the other Member States that are authorised, within the virtues of a legal act, to exercise supervision of credit institutions.
20. "License" is every document, irrespective of its form, issued by the competent authorities of a Member State or of a non-member country and authorising an institution to operate as a credit institution.
21. "Service company" is a company whose main subject of business includes holding and management of property, provision of services for processing of information or other similar activities that are supplementary to the main business of one or more credit institutions.
22. "Branch" is a duly registered place of business being a legally inseparable part of a credit institution, through which all or some of the approved business activities of the credit institution are executed directly.
23. (amend. – SG 24/09, in force from 31.03.2009) "Money brokerage" is mediation for interbank crediting.
24. "Derivative instruments" are rights and liabilities, the value of which is directly or indirectly influenced by the price of securities, foreign currency, commodities, interest rates, indexes, estimation of credit risk or of other similar variable values.
25. "Family" includes husband and wife, direct relatives, brothers, sisters as well as the persons who live together permanently.
26. "Mother credit institution in a Member State" is a credit institution with another credit or financial institution as a subsidiary or holds interest in such institution and is not a subsidiary of another credit institution licensed in the same Member State or of a financial holding incorporated in the same Member State.
27. "Mother credit institution in the European Union" is a mother credit institution in a Member State, which is not a subsidiary of another credit institution licensed in a Member State or of a financial holding incorporated in a Member State.
28. "Mother financial holding in a Member State" is a financial holding, which is not a subsidiary of a credit institution licensed in the same Member State.
29. " Mother financial holding in the European Union " is a mother financial holding in a Member State, which is not a subsidiary of a credit institution licensed in a Member State or of a different financial holding incorporated in a Member State.
30. "Repeated" is the violation executed within one year of the enforcement of the penalty proceedings that have imposed a penalty for the same type of violation.
31. (new – SG 94/10, in force from 31.12.2010) "Consolidating supervisory authority" is this competent authority, who is responsible for the exercise of supervision on a consolidated basis over the parent credit institution from the European Union and over a credit institution, controlled by a parent financial holding from the European Union.
(2) (revoked – SG 24/09, in force from 31.03.2009)

§ 2. Unless otherwise provided by the present law, functions of the BNB relating to the supervision of the bank system shall be exercised by the Central Bank’s Subgovernor in charge of the "Bank Supervision" Division individually and independently or by officials duly authorised by him.

§ 3. The organisation and the supervision of the security of banks and financial institutions shall be determined in an ordinance issued jointly by the Minister of Interior and the Management Board of BNB.

§ 4. (amend. and suppl. – SG 94/10, in force from 31.12.2010) This Law introduces provisions of the Council Directive 89/117/ЕС on the obligations of branches of credit institutions established in a Member State regarding the publishing of annual accounting documents, Directive 2000/46/EC of the European Parliament and the Council relating to the taking up, pursue of and prudential supervision of the business of electronic money institutions, Directive 2001/24/EC of the European Parliament and the Council relating to the reorganisation and winding up of credit institutions and Directive 2006/48/EC of the European Parliament and the Council relating to the taking up and pursuit of the business of the credit institutions (recast), and of Directive 2009/111/EC Of The European Parliament And Of The Council Of 16 September 2009 Amending Directives 2006/48/EC, 2006/49/EC And 2007/64/EC as regards banks affiliated to central institutions, certain own funds items, large exposures, supervisory arrangements, and crisis management (OJ L 302/07 of 17 November 2009.

Transitional and concluding provisions

§ 5. Law of Banks (promulgated in the Official Gazette, issue 52 of 1997; annexed, issue 15 of 1998; amended, issues 21, 52, 70 and 98 of 1998, issues 54, 103 and 114 of 1999, issues 24, 63, 84 and 92 of 2000, issue 1 of 2001, issues 45, 91 and 92 of 2002, issue 31 of 2003, issues 19, 31, 39 and 105 of 2005, issues 30, 33 and 34 of 2006) shall be abrogated.

§ 6. The banks – holders of banking license under the provisions of the abrogated Law of Banks (promulgated in the Official Gazette, issue 52 of 1997; annexed, issue 15 of 1998; amended, issues 21, 52, 70 and 98 of 1998, issues 54, 103 and 114 of 1999, issues 24, 63, 84 and 92 of 2000, issue 1 of 2001, issues 45, 91 and 92 of 2002, issues 31 of 2003, issues 19, 31, 39 and 105 of 2005, issues 30, 33 and 34 of 2006) shall be obliged to vote on changes in their statutes in compliance with the present law within three months of its enactment and to submit to the BNB a request for update of their licenses. The license updating acts shall be issued by the Governor of the BNB.

§ 7. The foreign banks of Member States – holders of licenses for operation in the Republic of Bulgaria before the enactment of the present law shall continue operating in the country without observing the requirements for notification referred to in Art. 20, paragraph 1 and without receiving a notification or waiting for the expiration of the term referred to in Art. 21, paragraph 2.

§ 8. The issued by the BNB subdelegated legislation on the application of the abrogated Law of Banks (promulgated in the Official Gazette, issue 52 of 1997; annexed, issue 15 of 1998; amended, issues 21, 52, 70 and 98 of 1998, issues 54, 103 and 114 of 1999, issues 24, 63, 84 and 92 of 2000, issue 1 of 2001, issues 45, 91 and 92 of 2002, issues 31 of 2003, issues 19, 31, 39 and 105 of 2005, issues 30, 33 and 34 of 2006) shall preserve their effect as far as they are not contradictory to the present law.

§ 9. (1) The requirements of the present law shall apply to pending administrative proceedings before BNB upon its enactment.
(2) The issued by BNB administrative acts relating to the abrogated Law of Banks (promulgated in the Official Gazette, issue 52 of 1997; annexed, issue 15 of 1998; amended, issues 21, 52, 70 and 98 of 1998, issues 54, 103 and 114 of 1999, issues 24, 63, 84 and 92 of 2000, issue 1 of 2001, issues 45, 91 and 92 of 2002, issues 31 of 2003, issues 19, 31, 39 and 105 of 2005, issues 30, 33 and 34 of 2006), which have not been subject to appeal in court, shall not be appealed in court under the provisions of the present law.

§ 9a. (new – SG 52/07, in force from 01.11.2007) Everywhere in this Law the words "Art. 52, Para 2 and 3 of the Law of public offering of securities" shall be replaced by "Art. 5, Para 2 and 3 the Law on the Markets of Financial Instruments".

§ 10. (1) The pending bank procurators upon the enactment of the present law, with the exception of the procurators whose authorisation is limited to a bank branch, shall be released from office if within two months of the enactment of the present law they have not obtained the certificate referred to in Art. 11, paragraph 2.
(2) The Bulgarian National Bank shall release from office the persons referred to in paragraph 1 if they are not released by the respective authority within 30 days after the expiration of the term referred to in paragraph 1.

§ 11. The limitations laid down in Art. 11, paragraph 1, items 4 and 5 of the present law, in Art. 234, paragraph 2, item 1 of the Law of Commerce and in Art. 25, paragraph 1, items 4 and 13 of the Law of Bank Bankruptcy can be frustrated pursuant to a decision of the BNB Board of Governors as follows:
1. For a member of the management or controlling body of a bank where BNB has acquired over 50 per cent of the voting shares after 1 October 1995 if the person has been appointed by the competent authority after the acquisition by the BNB, has not been member of its management or controlling body and has been relieved from responsibility by the General Meeting of the Shareholders of the bank;
2. For a member of the management or controlling body of a bank where the Bank Consolidation Company AD held over 50 per cent of the voting shares, if the person has been appointed after 1 January 1994 upon the proposal of the Bank Consolidation Company AD, has not been member of the bank’s management or controlling body and has been relieved from responsibility by the General Meeting of the Shareholders of the bank.

§ 12. The mutual benefit credit cooperations of private agricultural owners, which have been established as agricultural capital funds pursuant to signed agreements on utilisation of gratuitous resources between the government of the Republic of Bulgaria and the European Commission, shall continue their operation as financial institutions within the meaning of the present law and according to procedures specified by the Council of Ministers.

§ 13. The BNB Board of Governors shall issue regulations on the application of chapters first, second, third, fourth, fifth, seventh, ninth, tenth, eleventh, twelfth and thirteenth.

Transitional and concluding provisions
TO THE LAW ON THE MARKETS OF FINANCIAL INSTRUMENTS
(PROM. - 52/07, IN FORCE FROM 01.11.2007)

§ 27. (1) This Law shall enter into force from 1 November 2007 except § 7, Items 6, 7, 8, 18, 19, 22 – 24, 26 – 28, 30 – 40, Item 44, Letter "b", Items 47, 48, Item 49, Letter "a", Items 50 – 62, 67, 68, 70. 71, 72, 75, 76, 77, Item 83, Letters "a" and "d", Item 85, Letter "a", Items 91, 93, 94, Item 98, Letter "a", Subletter "aa", second sentence regarding the replacement, Subletter "bb", second sentence regarding the replacement, Subletter "cc", second sentence regarding the replacement and Subletter "cc", second sentence regarding the replacement, Item 99, Letters "d" and "e", Item 101, Letter "b" and Item 102, § 8, § 9, Item 4, Letter "a", Items 5 and 7, § 14, Item 1 and § 19 which shall enter into force three days after the promulgation of the Law in the State Gazette.
(2) Paragraph 7, Item 6, 7 and 8 shall apply by 1 November 2007.

Transitional and concluding provisions
TO THE CIVIL PROCEDURE CODE
(PROM. – SG 59/07, IN FORCE FROM 01.03.2008)
§ 61. This code shall enter into force from 1 March 2008, except for:
1. Part Seven "Special rules related to proceedings on civil cases subject to application of European Union legislation";
2. paragraph 2, par. 4;
3. paragraph 3 related to revoking of Chapter Thirty Two "a" "Special rules for recognition and admission of fulfillment of decisions of foreign courts and of other foreign bodies" with Art. 307a – 307e and Part Seven "Proceedings for returning a child or exercising the right of personal relations" with Art. 502 – 507;
4. paragraph 4, par. 2;
5. paragraph 24;
6. paragraph 60,
which shall enter into force three days after the promulgation of the Code in the State Gazette.

Transitional and concluding provisions
TO THE LAW ON THE PAYMENT SERVICES AND PAYMENT SYSTEMS
(PROM. - SG 23/09, IN FORCE FROM 01.11.2009)

§ 23. This Law shall enter into force from 1 November 2009 except § 10, which shall enter into force from the day of its promulgation in the State Gazette.

Additional provisions
TO LAW ON AMENDMENT AND SUPPLEMENTATION OF THE LAW ON THE CREDIT INSTITUTIONS
(PROM. – SG 24/09)

§ 34. This Law shall implement the provisions of Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 amending Council Directive 92/49/EEC and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector (OJ L 247/1, 21.9.2007).

Transitional and concluding provisions
TO THE LAW ON AMENDMENT AND SUPPLEMENTAION OF THE LAW ON THE CREDIT INSTITUTIONS
(PROM. – SG 24/09)

§ 35. The licenses to banks seated in the Republic of Bulgaria shall be updated within 6 months from entry into force of this Law on the basis of an application filed by them with the BNB, accompanied by a decision for amendment of their statutes in compliance with the amendments under Art. 2, Para 2. The licenses to banks seated in a third country exercising activity in the Republic of Bulgaria through branch shall be updated under the same order upon estimating the compliance between Art. 2, Para 2 and the permitted corporate purpose of the respective bank. The acts for updating the license shall be issued by the Governor of the BNB.

§ 36. (1) The financial institutions under Art. 3, Para 2 shall be registered in the BNB within 6 months from entry into force of this Law.
(2) The requirements under Art. 3a, Para 1, Item 1 regarding the legal form of organization shall not apply to registration of the cooperations in the sense of § 12 of the Transitional and Concluding Provisions.

§ 37. (1) The administrative proceedings for granting permits under Art. 28 and 31 pending upon entry into force of this Law shall be concluded under the hitherto effective order.
(2) The persons, acting in concert, for which grounds for approval under the order of Art. 28 arise upon entry into force of this Law, shall file an application within three months. In case of failure to comply with the specified term or where they are not granted approval, the BNB may apply the measure under Art. 103, Para 2, Item 15.
...................................................................

§ 50. This Law shall enter into force from the day of its promulgation in the State Gazette.

Transitional and concluding provisions
TO THE LAW ON AMENDMENT AND SUPPLEMENTAION OF THE LAW FOR GUARANTEEING OF DEPOSITS IN THE BANKS
(PROM. – SG 44/09, IN FORCE FROM 12.06.2009)

§ 8. The law shall enter into force from the day of its promulgation in the State Gazette, except for § 2 and § 5, item 1, item "b", which shall enter into force from 1 September 2009.

Transitional and concluding provisions
TO THE LAW ON AMENDMENT AND SUPPLEMENTAION OF THE LAW ON EXCISES AND TAX WAREHOUSES
(PROM. - SG 95/09, IN FORCE FROM 01.01.2010)

§ 96. The Law shall enter into force from January, 1 2010, except for § 1, § 2, item 1, 3, 4 and 6, § 3 and 4, § 5, item 1 and 4, § 6, 7, 8, 10 and 11, § 13, item 1, letters "b" and "c", § 15 and 16, § 20, т. 2, § 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 35, 36, 37, 38, 39, 41, 42, 45, 46, 47, 50, 51, 52, 53, 54, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 78, 81, 82, 86, 87, 88, 90, 91, 92, 93, 94 and 95, which shall enter into force from the date of their promulgation in State Gazette, and § 2, т. 2 and 5, § 5, item 3, § 20, item 1, § 34, 43, 44, 48, 77, 79, 80, 83, 84, 85 and 89, which shall enter into force from April, 1 2010.

Transitional and concluding provisions
TO THE LAW OF AMENMENT AND SUPPLEMENTATION OF THE LAW ON THE CREDIT INSTITUTIONS
(PROM.ULGATED – SG 94/2010, IN DFORCE FROM 31.12. 2010)

§ 22. Till 31 December 2012, the time period envisaged in Art. 92c, Para 2 shall be 6 months.

§ 23. This Law shall enter into force from 31 December 2010.

Transitional and concluding provisions
TO THE LAW OF AMENDMENT AND SUPPLEMENTATION OF THE LAW ON THE PAYMENT SERVICES AND PAYMENT SYSTEMS
(PROM. – SG 94/10, IN FORCE FROM 30.03.2011)

§ 69. This Law shall enter into force from 30 June 2011, except for:

1. Paragraphs 1-16, § 41 – 56 and §§ 62 and 66, which shall enter into force from 30 April 2011;
2. Paragraphs 60 and 68, which shall enter into force from 31 December 2010.