The Bulgarian legal system is constantly improving and adopting EU patterns. In order to facilitate lower business start-up costs in Bulgaria, amendments to the Commercial Act were adopted in November 2008. Since then, the registration of a limited liability company – the most common legal form for a business – is made with an initial payment of Lev1,750 (€890), representing 35% of the minimum capital requirement of Lev5,000. However, following registration, the remaining part of the capital, up to the statutory minimum of Lev5,000, will be paid within a two-year period.
Bulgaria's mortgage-lending/real-estate bubble burst as a result of the global credit crisis, and prices have fallen dramatically. Work for lawyers involved in big commercial real estate has therefore also dropped off, though throughout 2009 there was advice needed on the re-negotiation of relevant financings....
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Bulgaria's mortgage-lending/real-estate bubble burst as a result of the global credit crisis, and prices have fallen dramatically. Work for lawyers involved in big commercial real estate has therefore also dropped off, though throughout 2009 there was advice needed on the re-negotiation of relevant financings.
Foreign direct investment took a hit in autumn 2008 following the effects of the financial crisis, as investors started to focus on more developed markets.
In 2009, the nature of assignments coming law firms' way changed considerably. With bank lending (especially to real-estate developments) restricted, much of the work involved corporate and/or financial restructurings. M&A activity also shifted from straight transactions to strategic acquisitions and distressed sales.
However, there were indications that bank lending would loosen up somewhat towards the end of 2009 following the dropping of mandatory bank reserve thresholds.
Capital market activity was also very low in 2009. The Bulgarian exchange is young compared to others in the region, which has meant that what confidence there was suffered a serious blow when the effects of the global financial crisis hit the country.
The conflict between the interests of local and international firms – based on differing opinions on the Bulgarian Bar Association's requirements for law firms to operate in the country – stepped up a notch in 2009, with a group of the international firms appealing to the EU for a decision on whether or not local players have been acting out of step with EU directives on freedom of practice.
However, many firms have a fairly optimistic vision of the future, as well as reporting steady workflow in terms of corporate and regulatory advice. As one partner notes: "Yes, there is a financial crisis, but the world has not stopped. The sky has not fallen in."
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