The Bulgarian foreign-direct-investment screening regime became effective as of 22 July 2025. Shortly thereafter, filings began arriving at the Bulgarian Investment Agency (BIA), which is the body responsible for verifying the completeness of applications before they are forwarded to the Interdepartmental Council for Screening of Foreign Direct Investments (FDI Council).
In essence, under the new regime, investments above certain thresholds (EUR 2 million or 10 % of the target company’s capital) made by non-EU investors or by EU-based entities with non-EU ultimate owners in specified areas such as aerospace, defence, financial services, energy etc., are subject to prior approval by the FDI Council.
Our firm was the first to submit FDI filings, on behalf of several US venture-capital funds investing in an innovative Bulgarian company, and also the first to secure clearances. We are glad for the opportunity to contribute to CEE Legal Matters’ The Debrief – October series by sharing our first-hand experience on that topic.
Key observations and practical insights from the process so far:
- Being conservative is justified. The FDI regime is still in its early days and investors should be cautious due to the broadly defined scope of the law. It is aligned with the areas listed under Art. 4, para. 1 of the EU Regulation 2019/452 (on FDI screening) without further elaborations. Some of these areas are very broad (e.g., “access to sensitive information, including personal data, or the ability to control such information”) and clear guidance from the authorities is much needed. The risks from implementing a notifiable investment without approval are significant – fines for failure to submit a filing amount to 5% of the investment’s value.
- Broadly formulated requirements in secondary FDI legislation related to supporting documentation require pragmatic approach and good time management to minimize closing delays and avoid excessive documents collection. Formalities such as apostilles and legalized translations are strictly applied. While we managed to navigate the process efficiently, albeit with a fair degree of anxiety until the BIA confirmed the completeness of our applications, a more concise and standardised list of minimum required documents would be of great help for investors.
- Important aspects of the FDI regime remain to be clarified. A notable example is the “portfolio/passive investment” exception. Although both the EU FDI Regulation and the Bulgarian rules mention it, neither of them defines it. Some of our clients may have qualified for this exemption. However, the FDI Council did not respond to our request for a statement or a no-jurisdiction letter and instead proceeded to approve the transactions, thus implicitly suggesting that the exemption did not apply.The definition of “foreign direct investment” also provides limited clarity on that subject: the meaning of “lasting and direct links” between the investor and the target is vague. Mentioning non-exhaustively the most apparent example of a notifiable investment (“including investments enabling effective participation in the management or control of a company”) is of little value and only implies that other, non-controlling investments could still fall within the scope.
- Food for thought: while the Bulgarian FDI rules qualify the “expansion of an existing investment” as a separate FDI that could be subject to a new notification/approval if the thresholds are exceeded, it is worth considering introducing an exception for situations where the increase/expansion merely serves to maintain the same participation level (e.g., through anti-dilution mechanisms) that was already cleared in a prior FDI filing.
- The authorities so far act efficiently, but communication with applicants could be more pro-active.
The information contained in this article is provided only for information purposes. It is not a legal advice and should not be acted upon as such.