PART ONE
GENERAL PART

CHAPTER ONE
GENERAL PROVISIONS

Merchant
Article 1

(1) (Amended, SG No. 83/1996) For the purposes of this Law a merchant shall mean any natural or legal person engaged by occupation in any of the following transactions:
1. purchasing goods or other chattels for the purpose of reselling them in their original, processed or finished form;
2. sale of one's own manufactured goods;
3. purchasing securities for the purpose of reselling them;
4. commercial agency and brokerage;
5. commission, forwarding and transportation transactions;
6. insurance transactions;
7. banking and foreign-exchange transactions;
8. bills of exchange, promissory notes and cheques;
9. warehousing transactions;
10. licence transactions;
11. supervision of goods;
12. transactions in intellectual property;
13. hotel operation, tourist, advertising, information, entertainment, impresario and other services;
14. purchase, construction or furnishing of real property for the purpose of sale;
15. leasing.
(2) Merchants are:
1. the companies;
2. the cooperatives, except housing cooperatives.
(3) Any person which has established a business, which in accordance with its purposes and volume requires that its activities be conducted on a commercial basis even if not listed under paragraph 1, shall also be deemed a merchant.

Persons Who Are Not Merchants
Article 2

The following shall not be deemed merchants:
1. natural persons engaged in farming;
2. artisans, persons providing services through their own labor or members of the professions, except where their activity may be defined as a business within the meaning of Article 1, paragraph 3;
3. persons providing hotel services by letting rooms in their own home.

CHAPTER TWO
COMMERCIAL REGISTER

Keeping a Commercial Register
Article 3

(1) Each district court shall keep a commercial register in which it shall register all merchants and all other relevant circumstances pursuant to this Law.
(2) Other registers for individual types of merchants may be kept by virtue of a law.

Obligation to Register
Article 4

(1) Every merchant must apply for registration in the commercial register by declaring the circumstances established by the preceding article.
(2) The persons which shall be under an obligation to declare the circumstances subject to registration shall be determined by law.
(3) Any person under an obligation to apply for registration, or respectively to present the documents or signatures provided for in this Law, shall do so within seven days of the occurrence of the circumstance, unless the law provides otherwise.

Force of Entry
(New - SG No. 84/2000) Article 4a

Third party shall refer to all circumstances subject to entry even though they have not been entered, unless the Law provides they shall be in force after the entry in the register.

Public Nature of the Commercial Register
Article 5

Everyone shall be free to inspect the commercial register and the documents pursuant to which the entries have been made, as well as to obtain copies thereof.

Publishing of Registration
Article 6

The court shall publish the registrations made in the commercial register in the State Gazette when required by law.

CHAPTER THREE
TRADE NAME AND SEAT

Definition
Article 7

(1) A trade name shall be the name under which a merchant shall carry on its business and under which it shall sign.
(2) In addition to the necessary content established by law, a trade name may also denote the purposes of a business, the names of the partners, and a freely chosen extension. A trade name must correspond to the truth, must not deceive, and must not be offensive to public order and morals.
(3) The merchant shall mandatorily inscribe its trade name in Bulgarian. It may additionally inscribe it in a foreign language.

Trade Name of a Branch
Article 8

The trade name of a branch shall incorporate the trade name of the merchant and the extension "branch".

Trade Name During Liquidation
Article 9

The trade name of a merchant which has been declared in liquidation shall carry the extension "in liquidation", and upon declaration of bankruptcy - "in bankruptcy".

Change of Trade Name
Article 10

(1) A trade name may be changed upon an application by the merchant which has registered it.
(2) Should a trade name contain the name of a retiring partner, it may be preserved only with that partner's consent.

Exclusive Right
Article 11

(1) A trade name may be used only by the merchant which has registered it.
(2) In case of use of another's trade name the interested parties shall be free to seek an injunction, as well as damages for such use.

Seat and Registered Office
Article 12

(1) A merchant's seat shall be the community where its registered office is located.
(2) A merchant's address shall be the address of its registered office.

Obligation to Provide Data
Article 13

(1) (prev. Art. 13 - SG 84- 2000) A merchant shall provide the following data on all its commercial correspondence: trade name; seat and registered office; court of registration; registration number and bank account. A merchant may also provide a forwarding address.
(2) (New, SG 84- 2000) In the commercial correspondence of a branch except the data under the previous paragraph concerning the merchant opened the branch, shall be obligatory to indicate also the court of the registration of the branch and the its number of registration.

Change of Seat
Article 14

(1) Any relocation of a merchant's registered office to another community shall be declared before the court with which the merchant is registered, within the time period set forth in Article 4, paragraph 3.
(2) A relocation of the registered office to the district of another court shall be declared within the time period set forth in the preceding paragraph before the court where the merchant's new registered office shall be located.
(3) The court of the original registration shall forthwith forward through official channels the merchant's commercial file to the court where the new registered office is located.

CHAPTER FOUR
ENTERPRISES AND TRANSACTIONS WITH THEM

Transactions With an Enterprise
Article 15

(1) An enterprise as a set of rights, obligations and factual relations shall be transferable by a transaction in writing with the signatures attested by a notary public. The transferor shall advise all creditors and debtors of the effected transfer.
(2) Absent another agreement with the creditors, upon the transfer of an enterprise the transferor shall be liable jointly and severally with the transferee. Creditors of recoverable liabilities shall first address the transferor.

Registration
Article 16

(1) The transfer of an enterprise shall be registered in the commercial register in the sections of both the transferor and the transferee, and shall be published in the State Gazette.
(2) (Amended SG 104/1996) Should the contract transfer real property or another interest therein, the contract shall be registered with the recordation office as well.

Creditors Secured
Article 16a
(Added SG No 42/1999)

Six months after the publication of the enterprise transfer the creditors of the transferor may claim from the transferee performance or security according to their rights. Transferred enterprise shall be managed separately within the six - month term.

CHAPTER FIVE
BRANCHES

Branch
Article 17

(1) A merchant may open a branch outside the community where its seat is located.
(2) A branch shall be registered in the commercial register of the court in whose district its seat is located.
(3) The registration shall be made on the basis of a written application which shall stipulate:
1. the merchant's trade name, seat and purposes;
2. the merchant's registered capital, when required by law;
3. the seat and purposes of the branch;
4. the branch manager.
(4) The application shall be accompanied by a certificate of the merchant's registration.
(5) The court in which the branch has been registered shall forthwith forward a copy of the court's ruling on the registration to the court where the merchant is registered. The registration shall be done as a matter of course.

Relocation of a Branch
Article 18

The rules pertaining to a merchant shall apply mutatis mutandis to the seat and registered office of a branch and its relocation.

Account Books of a Branch
Article 19

A branch shall keep its account books as an independent merchant, without preparing a separate balance sheet. The branch of a legal person which is not a merchant within the meaning of this Law and the branch of a foreign person shall further prepare a balance sheet.

Jurisdiction
Article 20

Actions based on disputes arising from a direct relationship with a branch may be brought against the merchant at the seat of the branch as well.

CHAPTER SIX
AGENCY

Section I
Direct Agency

Procurator (Manager)
Article 21

(1) (Amended SG 70/1998) A procurator shall be a natural person commissioned and authorized by a merchant to manage its enterprise for compensation. Such authority may be given to more than one person for either a separate or joint exercising of the procuration. The signatures on the procurator's mandate (procuration) shall be notarized and it shall be submitted by the merchant for registration in the commercial register together with a specimen signature of the procurator.
(2) A procurator shall sign by adding his own name to the merchant's trade name and an extension indicating the procuration.

Procurator's Powers
Article 22

(1) A procurator shall be entitled to perform or effect any acts or transactions related to the carrying on of the business activities, to represent the merchant, and to authorize third parties to perform specific acts. He may not authorize third parties with those of his powers which are derived by operation of law.
(2) A procurator may not alienate or encumber any real property of the merchant except when expressly authorized to do so. The authorization may be restricted to the business of a single branch. No other restrictions shall be binding upon third parties.

Relationship Between Merchant and Procurator
Article 23

The relationship between a merchant and a procurator shall be governed by an agreement.

Binding Effect of Authorization upon Third Parties
Article 24

An authorization shall be binding upon third parties only after being registered in the commercial register.

Termination of Authorization
Article 25

(1) An authorization shall be terminated upon withdrawal by the merchant, and the registration of such withdrawal in the commercial register.
(2) An authorization shall not be terminated by virtue of a merchant's death or placing under judicial disability.

Agent
Article 26

(1) An agent shall be a person authorized by a merchant to perform, for compensation, the acts set forth in the mandate. Absent any other instructions, an agent shall be deemed authorized to perform all acts related to the merchant's usual business. The authorization shall be made in writing and the signature shall be notarized.
(2) An agent shall need express authorization to alienate or encumber real property, to accept bills of exchange, to obtain a loan, or to engage in litigation. Any other restrictions on its mandate shall be binding upon a third party only if that party new or ought to have known of such restrictions.
(3) An agent may not transfer its powers to a third party without the merchant's consent.
(4) An agent shall sign by adding its own name to the trade name and an extension indicating the agency.

Relationship Between Merchant and Agent
Article 27

The relationship between a merchant and an agent shall be governed by an agreement.

Termination of the Mandate
Article 28

The authorization of an agent shall be terminated in accordance with the provisions of civil law.

Restrictions and Liability
Article 29

(1) A procurator or agent may not, without the merchant's consent, effect commercial transactions either on their own behalf or on the behalf of a third party within the framework of their authorization. Consent shall be deemed given if at the time of authorization the merchant knew of the carrying on of such activities and their termination was not agreed upon expressly.
(2) In case of a breach of the obligations set forth in the preceding paragraph the merchant shall be entitled to seek damages or to state that the transactions effected by the authorized persons have been effected on its behalf. The statement shall be made in writing not later than one month of its becoming aware of the transaction, but not later than one year of the effecting of the transaction, and shall be addressed to the procurator or agent and to the third party.
(3) Actions pursuant to paragraph 2 shall expire by limitation after five years from the date the transaction was effected.

Shop Assistant
Article 30

(1) The relationship between a merchant and its assistant shall be governed by a contract.
(2) A shop assistant may not effect transactions on the merchant's behalf. When working in a generally accessible sales area, a shop assistant shall be deemed authorized to effect the transactions which are usually effected in such an area.

Restrictions
Article 31

A shop assistant may not engage in any commercial activity independently or on the behalf of third parties in competition with his employer, except with the latter's express consent.

Section II
Sales Representative

Definition
Article 32

(1) A sales representative shall be a person engaged independently and by occupation in assisting the business of another merchant. A sales representative may be authorized to effect transactions in the name of the merchant, or in its own name but on the behalf of the merchant.
(2) The contract between the merchant and the sales representative shall be executed in writing.

Sales Representative's Obligations
Article 33

(Amended, SG No. 83/1996) A sales representative shall cooperate or effect transactions with due care, taking into consideration the merchant's interests. It shall forthwith notify the merchant of any transaction effected by it.

Merchant's Obligations
Article 34

(1) A merchant shall provide the sales representative with all relevant information concerning the conclusion and performance of a contract.
(2) A merchant shall forthwith notify the sales representative whether it accepts a transaction effected without authorization.

Commission Under Del Credere Contracts
Article 35

A sales representative which undertakes to be personally liable for the performance of obligations under effected transactions shall be entitled to an additional commission which shall be agreed upon in writing. The parties may not agree in advance that no such commission shall be owed.

Right to Commission
Article 36

(1) A sales representative shall be entitled to a commission for all transactions effected by it or through its assistance during the term of its contract with the merchant.
(2) Where a sales representative is entrusted with a specified territory or circle of clients, it shall also be entitled to a commission for all transactions concluded without its assistance, but with persons from the same territory or with the same clientele.
(3) A sales representative shall be entitled to a commission for any of the merchant's claims which it has collected.
(4) Either party shall be entitled to request from the other abstracts from the account books concerning the transactions concluded on the basis of the agency agreement.

Commission Rate
Article 37

Where the commission has not been agreed upon, it shall be deemed to amount to the customary rate paid for the specific activities.

Commission Payment Term
Article 38

A sales representative's commission shall be paid on a monthly basis, unless the agreement provides otherwise.

Reimbursement for Customary Expenses
Article 39

A sales representative shall be entitled to reimbursement for the customary expenses related to its activities, unless the agreement provides otherwise.

Compensation Upon Termination or Avoidance
Article 40

(1) A sales representative shall be entitled to a compensation upon termination of its agreement, when the merchant continues to enjoy benefits from the clientele established by the sales representative.
(2) Such compensation shall be equal to the sales representative's average annual commission for the entire duration of its agreement.
(3) Compensation pursuant to the preceding paragraph shall not be due when the agreement is avoided through the sales representative's fault.
(4) Upon termination of the agreement the sales representative may claim compensation for already concluded or pending contracts.

Restrictions Following Termination of Contract
Article 41

(1) Any restrictions on the activities of a sales representative subsequent to the termination of the agreement shall be agreed upon in writing.
(2) Restrictions must encompass the same territory and type of goods or services as the agency agreement. They may not be for more than two years following the termination of the contract. The merchant shall owe a respective compensation for the period of restriction.
(3) Should a sales representative declare the agreement avoided through a fault of the merchant, the sales representative shall be free to discharge itself from the said restrictions not later than one month from the date of the avoidance.

Effect of Restriction
Article 42.

Even when not authorized to conclude contracts a sales representative may accept acts performed by third parties to protect their rights against imperfect performance by the merchant. A sales representative may act to secure evidence in name of the merchant. Any restriction on these rights shall be binding upon third parties only if they knew or ought to have known of the said restriction.

Ratification of Contract
Article 43

Should a sales representative conclude contracts without authorization, and the third party did not know of that fact, the contract shall be deemed ratified by the merchant if the merchant fails to reject it upon being notified of it by the sales representative or the third party and inform them correspondingly.

Prohibition on Representation of Competitors
Article 44

A sales representative may represent several merchants as long as they are not in competition among themselves. It may reach agreement with a merchant to be its exclusive sales representative.

Scope of Agency
Article 45

The subject and territory of a sales representative shall be determined by the agency agreement.

Relationship Between Merchant and Sales Representative
Article 46

(1) The internal relationship between the sales representative and the merchant shall be governed by the agreement between them. Absent any other provision, a sales representative shall arrange for its own premises. If the compensation is not indicated in the agreement, the customary compensation for the type of representation shall be due.
(2) Representation under the preceding paragraph may not be delegated to another party in the same territory.
(3) A sales representative shall indicate in the documents issued by it and on its commercial correspondence the information required under Article 13.

Termination of Representation
Article 47

(1) Where the sales representation agreement has been concluded for an indefinite term, during the first three years following the date of conclusion each of the parties may terminate it with a monthly notice and, after the end of the third year, with a three months' notice.
(2) An agreement which has been concluded for a definite period may be terminated before its expiration if the party wishing to terminate it compensates the other party for the damages caused.
(3) The rights of the sales representative under Article 40 may not be prejudiced by the termination pursuant to paragraphs 1 and 2.
(4) A sales representative which has ceased its activities shall apply to the court, within the time period set forth in Article 4, to delete its registration.
(5) Should a representation be terminated by reasons of death or placing under disability of the sales representative, the heirs or, respectively, the guardian, and in case of bankruptcy the respective court, shall inform the court of the deletion.
(6) Where no application has been made for the deletion pursuant to the previous paragraph, the deletion shall be made by the court on its own motion as soon as it learns of the grounds thereof.

Applicability
Article 48

The provisions of Articles 32 to 47 shall not apply to persons engaged as representatives or brokers in stock exchange transactions, or as representatives of persons engaged in auction operations.

Section III
Broker

Definition
Article 49

(1) A broker shall be a merchant which by occupation acts as an intermediary so that transactions may be entered into.
(2) As far as brokerage for contracts for the carriage of goods by sea and for stock exchange transactions are concerned, the provisions for the said activities shall apply even when the brokerage is performed by a mercantile broker.

Broker's Journal
Article 50

(1) A broker shall keep a journal in which it shall record on a daily basis all executed contracts. At the end of each day the broker shall date and undersign all entries for that day.
(2) Contracts shall be recorded consecutively in the order of their execution; an entry shall include the names of the contracting parties, the time of execution of the contract and the essential arrangements.
(3) A broker must, upon request, provide the parties with an abstract from its journal containing the full entry concerning their contract.

Brokerage
Article 51

A broker shall be entitled to a commission from one or both parties in accordance with the arrangement reached. Absent such an arrangement, the customary brokerage for the type of transaction in the specific circumstances shall be owed by both parties.

Section IV
Trade Secrets

Obligation to Protect Trade Secrets
Article 52

In carrying on their activities a procurator, an agent, a shop assistant, a sales representative and a broker must protect the trade secrets of the persons which have commissioned them to perform certain acts, as well as their good name as merchants.

CHAPTER SEVEN
ACCOUNT BOOKS

Obligation to Keep Accounts
Article 53

(1) A merchant shall keep accounts in which it shall record the movements of its enterprise's property. Such movements shall be recorded in chronological order.
(2) A merchant shall, through inventory performed within the time periods prescribed by the Law on Accountancy, establish the availability and value of the items of the assets and liabilities of its enterprise's property.
(3) A merchant shall sum up the results of its commercial activities on the basis of the entries in its books and inventory, and prepare an annual financial statement and, where necessary, the relevant accounting notes. The annual financial statement shall be verified by a certified public accountant.

Continuity Of Opening and Closing Balance Sheet
Article 54

The opening balance sheet for each year shall correspond to the closing balance sheet for the preceding year. A balance sheet shall also be prepared when a merchant winds up its activities.

Admissibility as Evidence
Article 55

(1) Regularly kept account books and entries therein shall be admissible as evidence between merchants for establishing commercial transactions.
(2) Account books kept in violation of the provisions of this Law or the Law on Accountancy shall be inadmissible as evidence in favor of the party whose duty it is to keep them.