REPUBLIC OF BULGARIA NATIONAL ASSEMBLY

BANKING AND LENDING ACT

Promulgated State Gazette No. 25/27.03.1992 Amended SG No. 62/1992; 59 & 109/1993; 63/1994; 63/1995; 12 & 42/1996

Chapter One

GENERAL PROVISIONS

Article 1

(1) A bank shall be a body corporate, set up as a joint-stock company, or a cooperative, which has been granted permission, under the terms and procedures of this Act, to carry out deposit, credit, and other banking transactions by occupation.

(2) Banking transactions shall be:

1. acceptance of money from other persons on deposit (bank deposit contract);

2. granting loans and acceptance credits (bank credit contract);

3. purchase of bills of exchange and promissory notes (discount transactions);

4. transactions in foreign payment instruments and in precious metals;

5. acceptance of other persons' valuables on deposit for management (deposit transactions);

6. purchase and sale of securities (securities transactions);

7. undertaking warranty, guarantee, and other security (guarantee transactions);

8. carrying out operations on non-cash payments and on clearing checking accounts of other persons (checking accounts transactions);

9. commission and intermediary transactions on the management of capital investment funds and assistance in the acquisition of shares in domestic and foreign investment funds;

10. acquisition of rights over collectible sums for goods delivered or services rendered, and undertaking the risk of eventual non-payment;

11. other similar activities as specified by the Bulgarian National Bank, hereinafter referred to as "the Central Bank".

(3) Banks shall not perform commercial transactions other than those provided for under para. (2), except where this is necessary for carrying out the banking transactions or in the process of collecting their claims on extended credits;

(4) (Amended, SG No. 63/1995, 42/1996) Banking transactions by occupation under para (2), items 3, 4, 7 and 10, may also be carried out by other persons, subject to a permission by the Central Bank. To such persons the provisions of Chapters One, Three, Nine, Ten, Eleven, Sixteen and Seventeen shall only apply, and Art. 25 shall apply as well to the persons who carry out transactions under para (2), item 4. The terms and conditions of granting permissions shall be determined by Regulations of the Central Bank.

Article 2

The provisions of this Act shall not apply to:

1. the Central Bank whose activity is regulated by a separate Act;

2. insurance institutions, in reference to transactions they carry out as provided for by a separate Act;

3. the Post-Office system, in reference to money transactions that are typical of its activity;

4. social and health insurance institutions;

5. mutual funds for housing construction savings and loans whose activity is regulated by a separate Act;

6. persons who grant money loans against collateralized possessions (pawnbroker's offices);

Article 3

The provisions of this Act shall also apply to banks established by a separate Act unless otherwise provided for by such an Act.

Chapter Two

ESTABLISHMENT AND MANAGEMENT

Article 4

(1) (Amended, SG No. 42/1996) Banks shall be established, managed, transformed, and liquidated under the terms and procedures instituted with regard to the relevant legal form by the legislation in force, unless otherwise provided for by this Act.

(2) (New, SG No. 42/1996) Banks may open more than one branch in a separate settlement, including the settlement where their residence is.

Article 5

Shares issued by a bank which entitle their holder to a voting right, shall be registered by name and shall be entered in the shareholders register.

Article 6

The bank's Articles of Association shall also contain, in addition to the data stipulated by the relevant legislation, information on the banking transactions it is to perform, the authorizations to sign for and represent the bank, as well as the ways and means for exercising internal control.

Article 7

The bank shall be managed and represented jointly by at least two persons. They shall not delegate the entire management and representation of the bank to one of them only but they may authorize third persons to take separate actions.

Article 8

(1) Persons under the preceding Article shall:

1. be permanently resident in the country;

2. have university education;

3. have the requisite professional experience in banking;

4. have not been convicted for a deliberate common law crime;

5. have not been members of an executive or controlling body, or unlimited liability partners, in a partnership which has been wound up due to insolvency, should unsatisfied creditors have remained;

6. have not been deprived of the right to hold positions of liability;

7. be not spouses, or relatives, in direct or collateral lineage, up to two times removed, to each other, or to another member of a managing or controlling body of the bank.

(2) Persons who do not meet the requirements under para. (1) shall be dismissed by a decision of the Central Bank, should the competent body not dismiss them within 2 months from the date of the written notice of the Central Bank.

Chapter Three

GRANTING AND REVOKING PERMITS (LICENCES) FOR PERFORMING BANKING OPERATIONS

Article 9

(1) A written permit (licence) granted by the Central Bank shall be required for performing banking transactions under Art. 1, para. (2). It may be issued to cover all, or some of the banking transactions specified under art. 1, para. (2).

(2) The following documents shall be attached to the application form for issuing a banking licence:

1. the articles of association, and other documents of association;

2. information on the paid-in (transferred) capital;

3. the business plan of the bank;

4. the names and addresses of the persons who are to manage and represent the bank, and information on their qualification and professional experience in banking;

5. (Amended, SG No. 42/1996) information on the persons having subscribed more than one per cent of the capital, certifying the origin of the funds out of which the deposits for the subscribed shares were made. Physical persons and representatives of legal persons shall declare that the funds are not borrowed.

6. other information, such as may be required by the Central Bank.

Article 10

In order to get a permit for opening branches of foreign banks in the country, documents in addition to those under para. (2) shall be submitted, namely:

1. the annual financial statements of the foreign bank for three consecutive years;

2. the written consent of the bank supervision body in the respective country for opening a branch, should this be required by the legislation of the foreign bank domicile country, ;

Article 11

The trade representation of a foreign bank in the country shall submit to the Central Bank a verified copy of the registration act, within 14 days from its date of issue. It shall not perform banking transactions.

Article 12

(1) Before giving a ruling on the application for a permit, the Central Bank makes all the necessary inquiries to verify the validity of the documents submitted, the financial position of the applicant and its professional qualification, the experience of the persons authorized to manage and represent the bank, and the need for the operations which the bank intends to carry out.

(2) (New: SG No. 63/1995) Where the applicant has requested license for pursuing deals under Article 1, para 2, items 6 and 9, the application for issue of license shall have as enclosures also the documents and the information under Article 47, para 2, items 3, 4 and 6 of the Securities, Stock Exchanges and Investment Companies Act.

(3) (New: SG No. 63/1995) Before taking a decision on the request, the Central Bank shall require opinion in writing from the Securities and Stock Exchanges Commission. The Commission shall submit its opinion to the Central Bank not later than two months following the request in writing.

(4) Within six months after receiving the application form and the enclosures, and, should additional information have been requested, after its receipt, the Central Bank shall issue the permit or it shall notify the applicant for its refusal.

(5) The permit for banking operations may exclude the performance of such transactions or activities which the Central Bank shall estimate the applicant is not qualified for.

(6) The permits issued are entered in a special register kept with the Central Bank.

Article 13

(1) A bank which has been granted a permit under the terms and procedures of this Act may start banking operations only if it has premises appropriate for its activities and adequate technical equipment at its disposal.

(2) The premises under the preceding paragraph shall meet security and protection requirements as specified by the Minister of Internal Affairs and the Central Bank.

Article 14

(1) The Central Bank may refuse to grant a permit, where:

1. the Articles of Association, and the other documents of association do not comply with this Act or other legislative acts;

2. the activity which the applicant intends to perform does not correspond to the local needs or to the interests of the Bulgarian economy;

3. the capital of the bank and its paid-in portion do not meet the requirements of Art. 21;

4. the Articles of Association contain provisions which do not guarantee the safety of the assets contributed;

5. some of the persons authorized to manage and represent the bank can not hold the position due to a legal interdict or because they do not meet the requirements under Art. 8, para.(1);

6. some of the shareholders controlling over 10 per cent of the votes, by their actions or by their influence on decision-making, may harm the reliability or the security of the bank, or of its operations;

7. (New, SG No. 42/1996) it has determined that persons having subscribed more than 1 per cent of the capital have made their deposits through borrowed funds.

(2) In the cases under para. (1), items 1, 3, 4 and 5, the Central Bank may refuse to grant a permit only if the applicant has failed to remove the inconsistencies within the term set by the Central Bank which can not be shorter than one month.

(3) (New: SG No. 63/1995) The Central Bank shall reject the issuing of license for pursuing of deals under Article 1, para 2, items 6 and 9, where the requirements of the Securities, Stock Exchanges and Investment Companies Act and of the normative acts related to its application have not been satisfied, and provided the applicant has not removed the discrepancies within the term specified, which may not be less than one month.

Article 15

In the cases of a refusal under the preceding Article, the applicant may again apply for a permit to perform banking operations not earlier than six months after the refusal ruling has come into force, or after the expiry of the term under Art. 12, para.(2) in case of a tacit refusal.

Article 16

(1) A person who does not have a permit to perform banking transactions under Art. 1, para.(2), items 1, 2, 5, and 8, shall not use, in his name, advertising or other activity, the word "bank" or any of its derivatives in a foreign language, or any other word denoting banking operations;

(2) The prohibition under the preceding paragraph shall not apply to an institution the name of which has been established or recognized by a legal act or by an international agreement to which the Republic of Bulgaria is a signatory, as well as where the context the term "bank" has been used in, makes it clear that the institution has not the object of making banking transactions.

(3) A permit to perform banking operations under a name resembling the name of an existing bank in this country or abroad shall not be issued.

Article 17

(1) A domestic or foreign person, as well as economically related persons, spouses or relatives in direct or collateral lineage up to three times removed, shall not, without the permission of the Central Bank, directly or indirectly acquire shares in a local bank providing them with more than 5 per cent of the total number of votes at the General Meeting of the shareholders.

(2) Without the permission of the Central Bank, the bank shall not:

1. acquire shares, equity, or other interest in a non-financial enterprise, if their value exceeds 10 per cent of the enterprise net worth;

2. open branches abroad;

3. alter its name as designated in the permit;

4. be transformed through a take-over, merger, demerger, or conversion into another type of company.

5. perform banking transactions beyond the scope of the permit granted;

(3) The provisions of para. (2), item 1 shall not apply when the shares and interests have been acquired as redemption of credits extended. In this case the bank shall transfer the shares and interests acquired, which exceed 10 per cent of the enterprise capital, within three years.

(4) The Central Bank shall consider the request for permits to be granted under paras (1) and (2) within three months after its receipt.

(5) The transactions or actions under paras (1) and (2), made without a permit, shall be declared null and void, respectively cancelled, by the court of law through legal proceedings instituted by the Prosecutor, the Central Bank, or other interested parties.

Article 18

The District Court registers the bank and enters changes under the provisions of Art. 17, para. (2), upon submission of the relevant permits issued by the Central Bank.

Article 19

(1) (Amended, SG No. 42/1996) The Central Bank may revoke the permit granted, if its holder:

1. fails to start the permitted banking operations within 12 months after the permit has been granted;

2. fails to bring his operations in conformity with the conditions stipulated by the permit granted, or with the measures required by the Central Bank pursuant to Art. 56;

3. has submitted false information which have served as grounds for granting the permit;

4. performs banking operations in violation of this Act, or of other legislative acts;

5. is a foreign bank whose right to carry out banking operations has been revoked in the country of its domicile.

(2) (Amended, SG No. 42/1996) A permit shall be revoked by a decision of the Central bank. In the cases under para. (1), items 2 to 5, by the same decision a questor shall be appointed with powers pursuant to Art. 58, para 1, up to the appointment of a liquidator.

(3) (Repealed, SG No. 42/1996)

Article 20

When the decision for revoking the permit comes into force, the Central Bank shall immediately send a copy of the decision to the relevant court so that it initiates legal proceedings for the liquidation of the bank, shall promulgate the decision in the State Gazette, and shall take other necessary measures to inform the public for the revocation of the permit.

Chapter Four

OWNERS' EQUITY, LIQUIDITY, AND OTHER REQUIREMENTS

Article 21

(1) Each bank or bank group, in order to guarantee the cash funds and other valuables entrusted to it by its creditors, shall, at all times, maintain an owners' equity, the minimum amount, the structure, and the ratios to its balance sheet assets and liabilities of which shall be determined by the Central Bank in accordance with the scope of the banking transactions performed, and shall be promulgated in the State Gazette.

(2) The amount of the owners' equity shall not be less than 8 per cent of the bank's risk assets.

Article 22

(1) To set up its reserve fund, the bank shall allot at least one-fifth of its profit, after paying the taxes due and before paying dividends, until the amounts on the fund have come up to 1.25 per cent of the sum total of the balance sheet assets, and of the assumed guarantees and other securities.

(2) Should the amounts on the reserve fund fall below the minimum amount, as stipulated by para (1), the bank shall reimburse the amounts on the fund so that they reach the minimum level within three years.

(3) The reserve fund amounts may be used to cover for operating losses of the bank only when the special provisions under Art. 26 have been exhausted.

Article 23

Banks shall maintain minimum liquid funds in a ratio and under conditions periodically determined by the Central Bank.

Article 24

Should the liquid funds of a bank drop below the level determined under the terms and procedures of Art. 23, the bank pays penalty interest on the loans it has received from the Central Bank to the amount of the shortage for the time of its coverage, up to 18 points above the interest rate of the Central Bank on lombard credits.

Article 25

The bank shall maintain a differential between its assets and liabilities in foreign currency to an amount, not exceeding the amount determined by the Central Bank as a percentage of the owners' equity of the respective bank.

Article 26

(New, SG No. 42/1996)

(1) To cover against bad and doubtful claims, banks shall set up special provisions.

(2) The provisions shall constitute an element of the accounting expenses. These prescriptions shall become effective as of January 1, 1997.

(3) The Central Bank shall set out the criteria for classifying claims as bad and doubtful, as well as the ratio between the special provisions and the total amount of such claims.

Article 27

Banks shall not pay dividends before allocating the requisite amounts to the Reserve Fund, and to the special provisions under Art. 26.

Article 28

(1) The extension, directly or indirectly, of credits, credit facilities, or guarantees to an amount exceeding 15 per cent of the owners' equity of the bank, to one person, or to economically related persons (a big credit), shall be done by the decision of the persons who manage and represent the bank.

(2) The big credit extended by a bank or a bank group shall not exceed 25 per cent of the owners' equity of the bank.

(3) The total amount of the big credits extended shall not exceed 8 times the owners' equity of the bank.

(4) The restrictions under paras (2) and (3) shall not apply to the following cases:

1. where the transactions are guaranteed by a collateral or mortgage of ascertainable market value, are wholly covered by insurance, and the value of the security exceeds the amount of the guaranteed commitment by at least 25 per cent;

2. on credits extended to, or guaranteed by, the government;

3. in other cases determined by the Central Bank.

Article 29

(1) The total amount of a bank's investments in real estate, equipment, shares and interests in non-financial enterprises shall not exceed its owners' equity as reflected in its account books.

(2) The provisions of the preceding paragraph shall not refer to real estate, equipment, shares and interests which the bank has acquired from realized mortgages, collaterals, and other securities for the purpose of preventing losses in its banking operations, on condition that they be transferred within up to 3 years after their acquisition.

Chapter Five

RELATIONS BETWEEN BANKS AND THE PERSONS THEY SERVICE

Article 30

(1) Banks may credit each other through depositing money, purchasing securities, or in another manner specified by the Central Bank.

(2) Banks, keeping bank secrecy, shall exchange the relevant information necessary for servicing their clients.

Article 31

(Amended, SG No. 42/1996) The Central Bank shall assist for setting up an information system on the creditworthiness of the persons serviced by the banks, which the banks may use under the terms and conditions of Art. 30, para. (2). The terms and conditions for the setting up and functioning of this system shall be settled in a regulation of the Central Bank.

Article 32

(1) The interest rates on credits and money deposits shall be negotiated between the borrowers, depositors respectively, and the banks on the basis of the base interest rate determined by the Central Bank, and depending on the demand and supply of credits, the solvency of the borrower, the term of the credit or the deposit, and other circumstances.

(2) The interest rates on foreign currency credits and deposits shall be negotiated in accordance with the terms on the international credit markets, and depending on the demand and supply of credits in this country.

Article 33

(1) A bank may accept a money deposit only if it has announced the terms and conditions which shall apply to all depositors.

(2) The terms and conditions shall contain:

1. the interest rates and the method of calculating the interest, if the periodic interest dues are not a proportional part of the annual interest rate;

2. the periods of interest payments, and information on whether the interest rate is variable or not;

3. the minimum amount accepted on deposit;

4. the minimum period during which the deposit can not be withdrawn, or can be withdrawn but with the consequence of losing the whole or part of the interest;

5. the deductions from the interest due;

6. the amount up to which deposits are insured or guaranteed by the system available for this purpose.

Article 34

(1) When extending credits, the bank shall offer its client, free of charge, its business rules which contain:

1. information on the total costs of the loan (interests, fees, commissions, etc.), and on the objective criteria on which basis such costs may be altered;

2. the method of calculating the interest, if the periodic interests due are not a proportional part of the annual interest rate;

3. the additional commitments related to payments;

4. the amount of the effective interest rate, calculated in a manner determined by the Central Bank.

(2) In the cases of consumer loans, the banks shall, upon contracting them, send to the borrower, in a written form, information on the current interest rate applied, expressed as an annual interest rate, the criteria for setting a floating interest rate if such is applied, as well as on the other costs.

(3) If the borrower has used a credit beyond the one extended according to the initial agreement with the bank (overdraft), the bank shall notify him, in a written form, of the interest rate applied for the respective period, as well as of the other costs related to the credit.

(4) The costs of the credit shall be determined by a credit agreement, including the cases of principal redemption ahead of schedule.

Article 35

The bank announces the terms and conditions on deposits and credits in premises accessible to clients.

Article 36

(1) (Amended, SG No. 42/1996) When extending credits, the bank shall accept the collaterals provided for by law. Shares, issued by the bank or by persons, economically related to it, shall not be accepted as collateral.

(2) The collateralized possessions may remain in safe custody with the person providing the collateral, on conditions specially negotiated with the bank.

(3) To the benefit of the bank, the following collaterals may also be instituted:

1. collateral of goods and materials under processing where the pledgor has the right to process the collateralized possessions and sell the goods produced, on conditions agreed upon with the bank;

2. collateral of goods in circulation where the borrower has the right to realize the collateralized goods on conditions agreed upon with the bank.

Article 37

Where a credit is not repaid at maturity, the bank shall have the right to receive a writ of execution, on the basis of an account statement. The credit agreement may provide for the right of the bank to sell the collateralized possessions by auction, under terms and procedures established by Regulations of the Minister of Justice and the Managing Board of the Central Bank.

Article 38

The bank shall have the right to a legal mortgage on buildings acquired through the use of a bank credit.

Article 39

Banks may demand from borrowers to submit reports and other documents relevant to their operations, as well as to conduct audits of the appropriate use of the credits extended, the conditions of storing and the quality of the goods on which the credits have been spent.

Article 40

Banks shall effect non-cash payments under terms and procedures established by Regulations of the Central Bank.

Chapter Six

CREDIT RESTRICTIONS

Article 41

(1) Only by a decision of its collective managing body, and upon the approval of its internal controlling body, the bank may extend credits to:

1. members of managing and controlling bodies of the bank;

2. procurators, commercial agents and representatives of the bank;

3. spouses and relatives in direct lineage up to three times removed, including the relatives of the persons under items 1 and 2;

4. shareholders holding shares entitling them to over 5 per cent of the total number of votes at the General Meeting of the shareholders;

5. a shareholder whose legal representative is a member of a managing or controlling body of the bank;

6. bodies corporate where persons under items 1 and 2 take part in the management;

7. commercial companies where the bank holds over 10 per cent of the shares and interests;

8. persons supervising the bank's operations;

9. members of the Managing Board of the Central Bank.

(2) The provisions of para. (1) shall not apply where:

1. the amount of the credit extended to persons under para. (1), items 1, 2, 3, 8, and 9, does not exceed their annual remuneration;

2. the amount of the credit extended to persons under para. (1), items 4, 5, 6, and 7, is below 1 per cent of the paid-in capital of the bank.

(3) Banks shall not offer preferential credit terms and conditions to persons under para. (1), namely:

1. concluding a transaction which in its essence, objectives, characteristics or risk, can not be made by banks with clients other than those mentioned under para. (1);

2. collecting interests, fees or other cash commitments, or accepting collaterals which are lower than those demanded from other clients.

(4) The amount of a credit extended by a bank to an employee of its, shall not exceed 24 times his monthly gross salary.

(5) The total amount of the credits extended to persons under para. (1) shall not exceed 20 per cent of the paid-in capital of the bank, and to employees of the bank - 5 per cent, respectively.

Chapter Seven

SPECIAL RULES FOR SOME DEPOSITS

Article 42

(1) Cash amounts intended for accumulation shall be accepted on savings deposits. Cash amounts intended for settlement, or deposited on condition that they will be withdrawn after the expiry of a previously specified period, shall not be regarded as savings deposits.

(2) On opening savings deposits, banks shall issue savings account-books.

(3) Only the presentation of a savings account-book shall make the use of a savings deposit possible. Where the whole amount of the deposit has been repaid, the savings account-book shall be retained by the issuer.

Article 43

(1) Where the savings account-book has been lost, destroyed, or stolen, the depositor shall immediately notify the bank in writing.

(2) The bank shall not be liable if before being notified under para. (1) it has, in good faith, paid an amount to a person authorized to receive the payment.

(3) Where differences occur between the data from the deposit account and the data from the savings account-book, the data from the savings account-book shall be considered authentic unless more than 3 years have passed since the last entry of interest accrual. Otherwise, the data from the deposit account shall be considered authentic.

Article 44

The establishment of savings banks within an enterprise to accept money deposits from the employees under the liability of the enterprise is prohibited. Employers may accept money deposited by their employees only if that money is immediately deposited with a bank in the name of and on the account of each of the employees.

Article 45

(1) Banks shall be obliged to participate in the deposit insurance system worked out by the Central Bank, up to a specified amount, by setting up a relevant institution and allotting resources to funds.

(2) A bank which does not provide protection for deposits up to a specified amount pursuant to the preceding paragraph, shall not perform banking transactions under Art. 1, para. (2), item 1.

Article 46

Savings deposits of individuals, unless they are traders, together with the interest accrued on them to the amount of up to 10 minimum salaries, shall not be subject to distraint, unless it has been proved by an enforced court ruling that they have been criminally acquired, as well as on commitments of alimony, for guilty damages or financial gains or deficiency in audits.

Chapter Eight

BANK SECRECY

Article 47

(1) Bank employees, members of managing and controlling bodies of the bank, officials from the Central Bank, liquidators, as well as any other persons working for the bank, shall not, unless authorized, disclose, use to their personal benefit, or to the benefit of the members of their families, facts and circumstances concerning the assets and transactions on accounts and deposits of the bank's clients which have become known to them in the discharge of their professional duties.

(2) All bank employees, when taking office, shall sign a declaration for observance of bank secrecy.

(3) The provisions of para. (1) shall also apply to cases where the persons concerned are not in office or their activities have been discontinued.

(4) In addition to the Central Bank and for the purposes and under the terms and conditions of Art. 30, para. (2), and Art. 31, the banks may give information on the transactions and account balances of individual clients only by their consent or by a court ruling.

(5) The court may order the revealing of the data specified in paragraph 4 also upon request from:

1. the prosecutor, upon the presence of data for a committed crime;

2. the head of the territorial tax directorate when:

a) an act of the tax bodies has established that the inspected person has foiled the carrying out of a tax inspection or does not keep the required accounts, as well as if they contain essential omissions;

b) an act of a competent state authority has established the occurrence of an accidental event which has led to the destruction of the accounting documents of the inspected person."

3. the heads of the State Financial Control Chief Directorate and of the State Financial Control territorial directorates, when an act of a state financial control authority has established that:

a) the management of the inspected person is thwarting the performance of the audit or examination;

b) the inspected person does not keep accounts, or its accounts are incomplete or untrustworthy;

c) there are data for shortages or crimes;

d) distraints should be placed on bank accounts in order to secure the receivables, found during the inspection;

e) an act of a competent state authority has established the occurrence of an accidental event which has led to the destruction of accounting documents of the inspected person.

(6) In the cases specified in paragraph 5 the regional judge shall rule in camera on the application within 24 hours of its receipt.

Chapter Nine

NOTIFICATIONS

Article 48

(1) Following the expiry of each month, banks shall submit their monthly financial statements to the Central Bank.

(2) Banks shall draw up six-month reports in a form determined by the Central Bank which give sufficient information as to their transactions, liquidity, solvency and their overall financial position.

(3) The statements and reports shall be submitted to the Central Bank within a period specified by it.

Article 49

Within a period of 15 days banks shall notify the Central Bank in writing of:

1. personal changes in their managing bodies;

2. decreases or increases in their capital;

3. opening and closing down of branches in the country, and the temporary discontinuation of their banking operations;

4. discontinuation of certain banking transactions;

5. big credits extended under Art. 28;

6. sudden emergence of overindebtedness or insolvency;

7. amendments made to the documents of association of the bank;

8. credits extended under Art. 41.

Article 50

(1) Banks shall submit to the Central Bank copies of their Articles of Association, regulations, instructions, and other acts containing provisions for the scope and procedures for making transactions, the capital, and the internal organization of the bank, within 7 days after their adoption, or after making amendments and addenda to them respectively.

(2) Banks shall maintain with the Central Bank a certified and updated list of their employees, including their branches and representative offices, who are authorized to manage and represent them, with enclosed description of their powers and specimens of their signatures.

Article 51

A person who is a member of a managing or controlling body of a bank shall be dismissed if:

1. the person has been sentenced to imprisonment for a premeditated common crime;

2. the person has been a member of an executive or controlling body of a company which has been wound up due to insolvency, if unsatisfied creditors have remained;

3. the person is a spouse or a relative removed up to three times, direct and collateral lineage included, of another member of the managing or controlling body of the bank.

Chapter Ten

ANNUAL STATEMENT OF ACCOUNTS

Article 52

(1) The Managing Board (the Board of Directors) of each bank shall ensures the annual statement of accounts.

(2) The annual statement of accounts of each bank shall be verified by at least two auditors who are certified public accountants appointed by the General Meeting of the shareholders; selection shall be made among certified public accountants experienced in banking included in a list approved by the Managing Board of the Central Bank.

(3) Certified public accountants who have financial interests in a bank, different from those of depositors, or are employees or representatives of the bank, shall not be appointed its auditors.

(4) The auditors shall, after conducting the necessary audits, give a conclusion whether the balance sheet and the profit-and-loss account are duly prepared, and whether they truly and exactly reflect the operations of the bank;

(5) Should violations of this Act which are of major significance for the further functioning of the bank be found out in the process of auditing, the auditors shall immediately notify the Central Bank of such findings.

(6) The results of the final audit of the annual financial statements shall be presented in a separate report. It is submitted to the managing bodies and to the internal controlling body of the bank elected in conformity with the Articles of Association, as well as to the Central Bank and to the Minister of Finance.

Chapter Eleven

BANK SUPERVISION

Article 53

(1) The Central Bank shall supervise the operations of the banks, as well as the operations of the branches and the representative offices of foreign banks in this country. It may demand any accounting and other necessary documents, as well as any information on their activities, to be submitted, and it may conduct periodic and special purpose audits.

(2) Pursuant to the provisions of this Act, the Central Bank shall take actions necessary for eliminating malpractices in banking operations which endanger the safety of the cash funds and other valuables entrusted to banks, hamper the proper making of banking transactions, or may cause significant damages to the national economy.

(3) Enterprises which may be conceived of, under the circumstances, as conducting banking operations without a permit, shall submit, upon the demand by the Central bank, the required information and documents. For this purpose the Central Bank may carry out on-site inspections.

Article 54

Government bodies and officials shall cooperate with the bank supervision bodies in performing their functions.

Article 55

When conducting audits and inspections, the bank supervision bodies shall have the right to:

1. free access to the premises of persons making banking transactions under Art. 1, para. (2);

2. demand documents and collect information pertaining to carrying out the task assigned;

3. appoint experts;

4. conduct counter audits in other banking and non-banking enterprises on issues related to the audit or the inspection;

5. apply to the court to impose distraints or judicial disability on the property of persons who have inflicted damages.

6. (New, SG No. 63/1995) attend meetings of the managing and control bodies of persons pursuing banking deals.

Article 56

(1) Where it is found out that a bank conducts its operations in violation of this Act, or the regulations for its enforcement, or that such bank has made other breaches as to the liquidity and stability of banking operations requirements, the Central Bank may:

1. oblige such a bank to take specific measures, necessary for the removal of such irregularities;

2. send its representatives to the meetings of the managing bodies of such a bank to discuss measures to remove such irregularities;

3. convene the General Meeting of the shareholders, and a sitting of the managing and controlling bodies of the bank on agenda of its own choosing;

4. appoint a person of relevant qualification and experience to advise such a bank on measures to get out of the difficulties, and set his remuneration to be paid by the bank;

5. restrict its operations;

6. (Amended, SG No. 42/1996) remove from office persons authorized to manage and represent such a bank.;

7. (New, SG No. 42/1996) to remove from office all members of the board of directors, respectively all members of the governing and supervisory boards;

8. (Amended, SG No. 42/1996) revoke the permit granted.

(2) (Amended, SG No. 42/1996) In the cases under para 1 item 6 the Central Bank shall appoint a term, within which the competent body should authorize other persons. Where within the appointed term that does not get accomplished and the number of the remaining authorized persons is below the minimum required by the Law and the Articles of Association, as well as where for completing the number of staff there needs to be present a decision of the General Meeting of Shareholders, the Central Bank shall remove the remaining authorized persons and shall appoint for a term up to 6 months two or more questors with the powers to manage and represent the bank, until the competent body elects other persons meeting the requirements under Art. 8 para 1. This provisions shall also apply to the cases under Art. 8 para 2 and under Art. 51.

(3) (New, SG No. 42/1996) In the cases under para 1 it. 7 the Central Bank shall appoint two or more questors with powers to fully manage and represent the bank until the establishing of new bodies, for a term which shall not exceed 6 months.

(4) (New, SG No. 42/1996) In cases of emergency upon the enforcement of measures under para 1, items 5, 6, 7 and 8, the provisions of Art. 7 para 2 and Art. 11 para 1 regarding the explanations and objections of interested parties of the Administrative Procedures Act shall not apply.

(5) (New, SG No. 42/1996) The court shall, by request of the Central Bank, enter in the court register and promulgate in the State Gazette the new

circumstances in the cases under para 1, items 5, 6 and 7, and under paras 2 and 3.

(6) (Former para 3, amended, SG. No. 42/1996) In cases under para 1, item 5, the Central Bank may revoke the license for pursuing deals under Article 1, para 2, items 6 and 9, should it be ascertained that the bank is in violation of the Securities, Stock Exchanges and Investments Companies Act and the normative acts related to its application. Before revoking the license, the Central Bank shall consider an opinion in writing from the Securities and Stock Exchanges Commission, which shall be submitted not later than 30 days following the request thereof.

(7) (New, SG No. 63/1995, former para 4, amended, SG No. 42/1996) Upon entry into force of the decision for revoking the license under para 3, the Central Bank shall send forthwith a copy thereof to the court for deletion of the respective part of the scope of activities of the bank concerned, and shall undertake the necessary measures to notify the public.

Chapter Twelve

(New, SG No. 42/1996)

QUESTOR

Article 57

(1) The questor shall be a physical person.

(2) The questor shall meet the requirements of Art. 8 para 1, items 1 to 6, and shall not:

1. be a sole trader or a member of an executive or control body or a partner with unlimited liability in a partnership or cooperative, if insolvency proceedings have been opened or if insolvency proceedings have been discontinued and there have remained unsatisfied creditors;

2. be an insolvent debtor restored into his rights;

3. be a spouse, relative of direct descent or of collateral descent up to the sixth line removed, or a relative by marriage up to the third line inclusive, of a member of a managing or control body of the bank;

4. maintain with the bank or with any debtor thereof relationships which give rise to any grounded suspicion regarding his impartiality.

(3) When two or more persons have been appointed as questors they shall take decisions unanimously and shall exercise their powers in concurrence, except where the bank resolves otherwise.

(4) The questor shall declare in writing before the Central bank the circumstances under para 2. He shall be obliged to give the Central Bank prompt notification when alterations of these circumstances occur.

Article 58

(1) The questor appointed pursuant to Art. 19 para 2 shall have the powers to:

1. freely access all bank premises;

2. examine and investigate all operations carried out by the bank;

3. require that all or any transactions determined by him be performed upon his preliminary written permission. Transactions performed without his permission shall be null and void;

4. take any other necessary steps for the preservation of the bank property, and to stop the execution of decisions made by the bank's managing bodies bodies;

5. collect the essential information and documents on the persons within the scope of the deposits insurance system and submit them within the fixed terms to the body, entrusted with its management.

(2) The questor, appointed pursuant to Art. 56 para 1 it. 5, shall exercise control over the bank's activity as to its conformity with the restrictions imposed thereunto. In exercising this control he shall furthermore be vested with the powers under para 1 items 1 and 2.

(3) The questors appointed pursuant to Art. 56 para 1 it. 6 shall jointly exercise the powers of the removed persons in their task of managing and representing the bank.

(4) The questors appointed pursuant to Art. 56 para 1 it. 7 and Art. 65 para 2 shall jointly exercise the powers of the board of directors, including the powers regarding the management and representation of the bank. If the bank is a joint-stock company with a two-tier management system, the provisions of the Trade Act regarding the powers of the supervisory board shall not be applicable.

Article 59

Within two days after his appointment the questor shall forward to every bank branch a copy of the Central Bank's decision and if necessary, he may notify the correspondent banks on the conformity with the restrictions imposed and on the accomplishment of his functions.

Article 60

(1) The questor shall exercise his powers with the concern of a good caretaker. He shall be held responsible solely for damages, resulting from willful conduct or gross negligence.

(2) Every bank official must assist the questor in the accomplishment of his powers.

(3) Upon the Central Bank's permission the questor may delegate separate powers thereof to other persons.

Article 61

For his work the questor shall be entitled to a remuneration at the account of the bank, determined by the Central Bank.

Article 62

The questor shall deliver to the Central Bank monthly, and upon its request - immediate reports on his activity.

Article 63

(1) The powers of a questor shall terminate:

1. by his death or enforcement of judicial disability on him;

2. upon the exipration of his term of appointment.

(2) The Central Bank can at any time terminate the powers of a questor if he does not meet the requirements of Art. 57 para 2 or does not discharge his duties in good faith.

Chapter Thirteen

SPECIAL SUPERVISION AT THE RISK OF INSOLVENCY

(New, SG No. 42/1996)

Article 64

There is a risk of insolvency for the bank:

1. when its relation of overall capital adequacy is below the fixed minimum level or

2. in the presence of a risk that the state of the bank's assets would hinder it from meeting its commitments on the day they become claimable.

Article 65

(1) Whenever the Central Bank ascertains the risk of a bank's becoming insolvent, it shall place it under special supervision.

(2) In the cases under para 1 the Central Bank shall remove from office the persons who manage and represent the bank. It shall appoint questors holding the powers pursuant to Art. 58 para 3 and can:

1. diminish the interest due on the commitments of the bank to its average market size;

2. cease the discharge of all or some of its commitments;

3. restrict its activity;

4. prohibit the payment of dividends;

5. prohibit the bank from disposing with its property or to identify the property the bank could dispose with;

6. forcibly increase the size of the capital;

7. remove from office the members of the board of directors, of the managing and supervisory board respectively. In that case the appointed questors shall possess the powers under Art. 58 para 4;

8. withdraw temporarily the voting right of shareholders, owning directly or indirectly more than 10 per cent of the voting shares, if through their activity or influence on the bank's management the above have harmed its reliability or security;

9. withdraw temporarily the powers of the General Meeting of Shareholders and settle matters within its competence.

(3) In the cases under para 2 it. 8 the amount of the shares owned by the shareholder deprived of his voting right shall not be taken into account when calculating the necessary quorum for holding the General Meeting of Shareholders and for taking decisions by that meeting.

(4) The special supervision may not be applied for longer than 1 year, and the measure under para 2 it. 2 - for longer than 30 days.

(5) By request of the Central Bank the Court shall enter in the trade register the circumstances under paras 1 and 2, that are subject to entry. In that case the provision of Art. 231 of the Trade Act shall not be applicable.

(6) The decisions of the Central Bank under para 1 shall be promulgated in the State Gazette.

Article 66

(1) Actions and transactions, executed by the bank in breach of Art. 65 para 2 items 1, 2, 3, 4 and 5 after promulgation of the decision of the Central Bank shall be invalid.

(2) In the cases of Art. 65 para 2 it. 2 the execution proceedings against the bank's property shall be suspended.

Article 67

If the General Meeting of Shareholders, respectively the Central Bank, in the cases under Art. 65 para 2 it. 9, takes a decision on transformation, the provision of Art. 264, sentence 1 of the Trade Act shall not be applicable.

Article 68

Within two months after their appointment the questors shall submit to the Central Bank a financial statement and report on the bank's current state. They may additionally propose for steps to be taken under Art. 65 para 2.

Article 69

Questors may negotiate with the creditors of the bank to reduce, defer and novate their claims, as well as to undertake other actions and steps striving to strengthen the bank.

Chapter Fourteen

BANKRUPTCY

(New, SG No. 42/1996)

Article 70

(1) Bankruptcy proceedings for a bank shall be initiated when it is insolvent.

(2) A bank is insolvent when its assets are insufficient to cover its commitments or it is not capable of discharging a claimable and indisputable cash commitment.

(3) An assumption of insolvency is made when a bank has ceased payment. Enforcement of measures under Art. 65 para 2, it. 2 does not signify that the bank is insolvent.

(4) Whenever it ascertains insolvency, the Ventral Bank is obligated to demand from the Court to initiate bankruptcy proceedings.

(5) The circumstances under para 2 shall be determined by the Central Bank on the grounds of the operative legal acts and accounting standards.

Article 71

(1) A petition to the Court for initiation of proceedings for a bank's bankruptcy may only be filed by the Central Bank.

(2) The Central Bank is obliged to demand the initiation of bankruptcy proceedings whenever also the insolvency has occurred during the enforcement of the measures under Art. 65, as well as in the cases under Art. 85 para 4.

(3) The petition of the Central Bank on the initiation of bankruptcy proceedings should be grounded.

(4) To the petition for the initiation of bankruptcy proceedings the Central Bank shall enclose:

1. a copy of the last annual financial statement at the filing date of the petition, authorized by CPA's;

2. other written evidence;

3. a copy of the petition and the enclosed evidence on the bank;

Article 72

The Court shall review the petition at an in camera sitting and shall summon the Central Bank and the bank.

Article 73

(1) The Court shall register the case on the day of receipt of the petition.

(2) The Court shall appoint the sitting not later than 14 days after receipt of the petition.

Article 74

(1) When it ascertains that a bank is insolvent the Court shall by means of its decisions:

1. declare the insolvency and determine its initial date;

2. open bankruptcy proceedings;

3. adjudge the bank bankrupt;

4. discontinue the powers of the bank's bodies;

5. decree a total distraint and judicial disability;

6. withdraw the bank's right to manage and dispose of its property, included in the mass of the bankruptcy;

7. decree the start of the liquidation of the property, included in the mass of the bankruptcy, and distribution of the liquidated property;

8. appoint a trustee.

(2) By the entry into force of the decision under para 1 all credits granted by the bank without collateral or in breach of this Act, shall become claimable.

Article 75

(1) The Court shall appoint a trustee from the Central Bank's list of trustees.

(2) The trustee has the powers under Art. 658 para 1 items 1 to 9 and 12 to 14 of the Trade Act.

(3) The trustee shall submit to the Court and to the Central Bank monthly, and upon request - prompt reports on his activity.

Article 76

(1) Adjudged as invalid with respect to the mass of the bankruptcy may be the following actions and transactions performed by the bank:

1. a transaction for no consideration, performed within two years prior to the date of the insolvency, prior to the date of the decision under Art. 65 para 1, respectively;

2. a transaction for consideration, where what has been given considerably exceeds in value what has been received, performed within one year prior to the date of insolvency;

3. the establishing of a pledge, mortgage or another collateral, performed within one year prior to the date of insolvency in favour of a claim to the bank, uncollateralized to that moment;

4. a transaction which has been performed within one year prior to the date of insolvency and damages the creditors, to which party it is a shareholder, holding at least 5 per cent of the bank's capital, a member of a managing body or another person, controlling the bank or its activity.

(2) In case the measures, envisaged in Art. 65 have been imposed, the terms under para 1 shall become effective as from the date of the decision on their imposition.

(3) The Central Bank too may bring the action under para 1.

Article 77

No meeting of creditors has to be held in the course of the bankruptcy proceedings.

Article 78

(1) The adjudication of the Court under Art. 692 para 4 of the Trade Act is subject to appeal before the Supreme Court in observance of the procedure for appeal of decisions. In that case the prescription of Art. 694 of the Trade Act shall not be applicable.

(2) Entitled to appeal shall be any person having filed an objection under Art. 692 para 3 of the Trade Act, as well as persons under Art. 692 para 2 of the Trade Act.

(3) A 7-day term of appeal shall be fixed, effective as of the receipt of the notification under Art. 692 para 4 of the Trade Act.

(4) Whenever the appeal is rejected, the case cost shall be at the account of the appellant, and when the bank is the appellant, the cost shall be at the account of the mass of the bankruptcy.

(5) The adjudication of the Court under Art. 692 para 5 of the Trade Act shall not be subject to appeal.

(6) An enacted adjudication of the Court under Art. 692 para 4 and 5 of the Trade Act shall have a settling force for the debtor, the trustee and all creditors of the bankruptcy.

(7) Approved shall be any claim, included with approvals with an enacted adjudication of the Court in a list of the claims, approved by the trustee.

Article 79

In the course of bankruptcy proceedings of a bank restructuring pIans may not be proposed.

Article 80

The liquidation of the property shall be performed by a trustee.

Article 81

(1) By request of the trustee or the Central Bank the Court may permit the sale of the bank as a concern as a whole or in portions to be performed by direct negotiation or through a mediator, without observing the requirement of Art. 718 para 1 of the Trade Act.

(2) To sell the bank as a concern as a whole or in portions, the trustee may diminish its commitments, provided the creditors are not thereby placed in a less favourable position than they would have been at the distribution of the liquidated property under the terms and procedures of the law.

(3) The Court shall approve the transaction subject to the receipt of the Central Bank's written statement of opinion. The latter should be provided 7 days at the latest after it had been required.

(4) The Court shall verify whether the transaction does not contravene the law and whether pursuant to para 2 it is not detrimental to the interests of the bank's creditors.

Article 82

The trustee shall launch the liquidation of the bank's property under the provision of Art. 717 of the Trade Act whenever he has failed to sell the bank as a concern as a whole or in portions or if he deems this to provide greater protection to the creditors' interests.

Article 83

At the performance of a distribution of the liquidated property the claims are redeemed in the following successive order:

1. claims, collateralized by a pledge or a mortgage - from the value of the pledged or mortgaged property;

2. claims, entitling to the right of distraint - from the value of the distrained property;

3. bankruptcy costs;

4. claims, having arisen after the date of the decision on the enforcement of the measures under Art. 65 and not having been settled at their maturity date;

5. claims for which the deposits insurance fund has been subrogated;

6. claims of depositors which are not covered by the deposits insurance system ;

7. claims of banks;

8. current contributions, payable to the State social security and having arisen up to one year prior to the date of the decision on the opening of bankruptcy proceedings;

9. current claims of the state and municipal councils under the public law, such as taxes, duties, fees and others, as well as such, as have arisen up to one year prior to the date of the decision for opening of bankruptcy proceedings;

10. all remaining claims.

Article 84

To the extent that in this chapter there exist no specific provisions, there shall respectively apply the provisions of Section Four of the Trade Act.

Chapter Fifteen

LIQUIDATION

(Amended, SG No. 42/1996)

Article 85

(1) A voluntary liquidation of a bank shall be effected by a decision of the body which has set it up, after the preliminary permission of the Central bank. Such a permission shall be granted only if the Central Bank ascertains that the bank is solvent and disposes of sufficient liquid assets to pay, with no deferral, its commitments to depositors and other creditors.

(2) Repealed, SG No. 63/1994.

(3) (New, SG No. 42/1996) The liquidator shall undertake actions for the liquidation of the bank's property, if a sale of the concern to another bank fails to be accomplished within a term up to six months.

(4) (New, SG No. 42/1996) When the liquidator ascertains in the course of the liquidation that the bank is insolvent, he shall propose to the Central Bank to petition the Court for the opening of bankruptcy proceedings. To his proposal the liquidator shall enclose documents, attesting the bank's state.

(5) (New, SG No. 42/1996) The provisions of paras 3 and 4 shall also be applicable in the cases under Art. 20.

(6) (New, SG No. 42/1996) For cases unsettled by this Article there shall be applicable the provisions of Chapter Seventeen of the Trade Act.

Chapter Sixteen

ADMINISTRATIVE PENALTY PROVISIONS

(Amended, SG No. 42/1996)

Article 86

(1) (Amended, SG No. 42/1996) Whoever makes, or allows the making of a breach of this Act and of the regulatory acts issued on its application, shall be imposed a fine to the amount of one to six monthly gross salaries, if the deed does not constitute a crime.

(2) Whoever performs banking transactions by occupation without having been granted a permit by the Central Bank, or in violation of the conditions on which the permit has been granted, shall be imposed a fine of up to 100 thousand levs, if this does not constitute a crime. The incomes obtained from the illegal banking transactions shall be forfeited to the State.

(3) (New, SG No. 42/1996) When breaches have been found under paras 1 and 2, legal persons shall be imposed a financial sanction in the amount of 500 000 up to 2 000 000 levs.

Article 87

(1) The statements of the detected malpractices under the preceding Article shall be drawn up by the bank supervision bodies, and the penalty enactments shall be issued by the Governor of the Central Bank, or an official he has authorized.

(2) The drawing up of the statements, the issuance, the appeal against and the enforcement of the penalty enactments shall be effected under the terms and procedures of the Administrative Malpractices and Penalties Act.

Chapter Seventeen

ISSUANCE OF AND APPEALS AGAINST ADMINISTRATIVE ENACTMENTS OF THE CENTRAL BANK

(Amended, SG No. 42/1996)

Article 88

(1) Individual administrative enactments under Art. 1, para. (4) shall be issued jointly by the Governor, or a deputy-governor he has authorized, and another member of the Managing Board of the Central Bank, and in the remaining cases - by the Managing Board of the Central bank.

(2) (Amended, SG No. 42/1996) The administrative enactments under the preceding paragraph may be appealed against before the Supreme Administrative Court as to their legality, under the terms and procedures of the Administrative Proceedings Act.

(3) (New, SG No. 42/1996) The decisions pursuant to Chapter Thirteen may be appealed regarding their legality before the Supreme Administrative Court within 7 days of their promulgation in the State Gazette. The Court shall review the appeal within 14 days at an in camera sitting and shall summon the Central Bank and the bank. The Court may not suspend the execution of the decision until it passes a decision on the appeal.

SUPPLEMENTARY PROVISIONS

§ 1. A "bank group" or "economically related persons", within the meaning of this Act, shall be such banks, persons respectively, one of which, directly or indirectly, owns over 50 per cent of the capital of other banks, persons respectively, or has an interest which carries majority in decision-making, or obstructs decision-making.

§ 2. A "non-financial enterprise", within the meaning of this Act, shall be a person which is not a bank, an investment fund, an insurance or a leasing company, or a person under Art. 1, para. (4).

TRANSITIONAL AND CONCLUDING PROVISIONS

§ 3. (1) Within 6 months after this Act has come into force, banks shall bring their Articles of Association and operations in conformity with its provisions, and within one year - with the provisions of Art. 28, paras. (2) and (3).

(2) (Amended, SG No. 42/1996) The Banks should reach the ratio between the owners' equity of the bank and its risk assets under Art. 21 by the year 2001. Within this term the Central Bank shall determine annually the minimum levels of this ratio, which the banks should reach and maintain.

(3) In case of non-observance of the requirements under paras (1) and (2), the Central Bank shall take the measures specified under Art. 56.

§ 4. (1) The provisions of Art. 339, sections "b", and "c" of the Civil Proceedings Code for unsellable real estate shall not apply to claims of banks, in case the debtor has deliberately put himself in a position of insolvency.

(2) The provisions of Art. 402 of the Civil Proceedings Code do not apply to claims of banks in case the debtor has deliberately put himself in a position of insolvency, or when a mortgage has been instituted on the debtor's property, or it has been collateralized to the benefit of the bank.

§ 5. The claims of banks which have emerged in relation to arrears or to the claimability ahead of schedule of credits extended to bodies corporate before this Act has come into force, shall be collected from the balances of their own or their guarantors' accounts, observing the sequence established, without being necessary for the bank to get a writ of execution.

§ 6. By December 31, 1994, the banks with a government interest may alter the amount of their authorized capital only by the permission of the Central Bank after a reevaluation of its assets.

§ 7. Art. 161, para. (3) of the Commercial Code shall be hereby amended as follows:

"(3) The minimum amount of the capital necessary to conduct banking or insurance operations shall be regulated by a separate Act."

§ 8. (Amended, SG No. 42/1996) The Managing Board of the Bulgarian National Bank shall issue regulations for the enforcement of Chapters One, Three, Four, Five, Six, Seven Nine, Eleven and Twelve.

§ 9. Repealed, SG No. 62/1992

This Act was submitted to a vote and duly adopted by the National Assembly on March 18th, 1992, and the State Seal was affixed hereto.

Chairman of the National Assembly: Stephan Savov

REPUBLIC OF BULGARIA NATIONAL ASSEMBLY

ACT ON THE AMENDMENT AND SUPPLEMENTATION OF THE BANKING AND LENDING ACT

Promulgated State Gazette No. 42/15.05.1996

TRANSITIONAL AND CONCLUDING PROVISIONS

§21. Real property which the state has submitted for utilization and management to the commercial banks upon their establishing shall, in the event of transformation of BNB subsidiaries into commercial banks and in the event of transfer of BNB subsidiaries to commercial banks, remain ownership of the commercial banks.

§22. Art. 612 of the Trade Act (promulgated SG No. 48/1991; amended and supplemented No. 25/1992, Nos. 61 and 103/1993, No. 63/1994 and No. 63/1995) is amended and supplemented as follows:

1. The text of Art. 612 becomes para 1, and the words "bank and" are deleted.

2. A para 2 is created:

"(2) The bankruptcy proceedings shall be performed under terms and procedures, settled by a separate act. The provisions of this section shall apply to the extent that the separate act does not provide otherwise.

§23. In §10 para 2 of the Transitional and Concluding Provisions of the Transformation and Privatization of State and Municipal Enterprises Act (promulgated SG, No. 38/1992; amended No. 51/1994, Nos. 45, 57 and 109/1995), a third sentence is added: "The established restriction

on actions of disposal shall not refer to the transactions effected by the Bank Consolidation Company PLC, Sofia.

§24. In the cases of Art. 81 the provisions of the Transformation and Privatization of State and Municipal Enterprises Act shall not apply.

§25. (1) If by the entering of this Act into force the Central Bank has undertaken strengthening measures with respect to banks, in which it has acquired over 50 per cent of the voting shares, the provisions of Chapter Thirteen shall not apply. With regard to such banks the Central Bank may petition bankruptcy proceedings if it ascertains that the undertaken strengthening measures have not conducted or shall not conduct to coverage of the incurred losses.

(2) Regarding the members of the managing and control bodies of these banks, having assumed office subsequently to the acquisition of the shares by the Central Bank, the restrictive provisions of Art. 51 it. 2 and Art. 57 para 2 it. 1 of the Banking and Lending Act, and Art. 234 of the Trade Act shall not apply, if the said have been exempted from liability by the General Meeting of Shareholders.

§26. The provisions of §6 concerning Art. 26 para 2 shall enter into force as of January 1, 1997.

§27. This Act shall enter into force as of the day of its promulgation in the State Gazette.

This Act was adopted by the 37th National Assembly on May 14th 1996 and the State Seal was duly affixed to it.

Chairman of the National Assembly: Blagovest Sendov