In 1997, Bulgaria became only the third European country, to pioneer a modern non- possessory pledge system. Way ahead of its time, this system created reliable guarantees for credit institutions and opportunities for secured transactions, significantly contributing to Bulgaria’s market economy and fostering business development. The Center for the Study of Democracy (CSD) was at the forefront of developing the concept and legal framework for the introduction of special pledges in the country. As a result, the Central Register of Special Pledges was established at the Ministry of Justice, later becoming the first centralized electronic and public register. This Register set a model for the future as one of the most reliable modern institutions of Bulgaria’s market economy.
In 2001 Bulgaria became one of the first countries in Europe to adopt modern legislation regulating electronic documents and electronic signatures in line with the best European standards. CSD played a key role in its drafting and practical implementation, consulting the development of the necessary secondary legislation, publishing the first legal commentary (2004), and providing practical assistance to the first e-signature service providers.
Today, electronic signatures are indispensable for citizens and businesses in various sectors - from public procurement and e-banking to e-commerce, e-correspondence and document management (especially when submitting various documents to the National Revenue Agency, the Registry Agency, the National Social Security Institute, the Labor Inspectorate, etc.). The benefits of electronic signatures are particularly evident in registry services such as the registration of legal entities, the registration of facts and documents, and the issuance of certificates.
Transition to a modern registration system for legal entities
A CSD-led task force prepared the first concept for a comprehensive registration reform(2003). Drawing on the experience of the then leading countries, it prototyped the structure of a future Electronic Registry Center, which would include constituent and related registers as well as the registration and certification procedures.
The draft reform strategy, further developed and adopted by the Bulgarian government in 2005, paved the way for a modern registration system to enable the country’s economic growth, increase business transparency, and reduce corruption risks. The strategy called for full centralization and digitalization of the existing registers of legal entities transferring them from the courts to a specialized executive agency.
- Commercial Register
On 1 January 2008, the Commercial Register Act entered into force, resulting in the establishment of a central electronic Commercial Register maintained by the Registry Agency of the Ministry of Justice. This register covers all commercial companies, cooperatives, and branches of foreign companies and operates as a single, centralized, electronic database. The introduction of the Commercial Register has simplified the process of starting a business and has played a significant role in reducing corruption.
- Central Register of Non-Profit Legal Entities
In 2012–2013, CSD updated the Strategy for the Establishment of the Central Register of Legal Entities and the Electronic Registry Center, outlining further steps necessary for successful completion of the registration reform. This accelerated the transfer of the registration of non-profit legal entities from district courts to the Registry Agency, stepping up digitization, reducing excessive administrative burden and keeping information across registers concordant and up-to-date. Thus, the registry reform took a decisive step towards the establishment of the Central Register of Legal Entities in Bulgaria.
What is next?
The first circle of CSD proposals for registry reforms was completed on 1 July 2023, as the Central Register of Special Pledges was transferred to the Registry Agency. Data from this rightly called, boutique registry has been successfully migrated to the new system, and creditors are receiving certificates from it without having to re-register, as was the case with the transfer of the Commercial Register and the NGO Register.
As a result, Bulgaria has achieved a new level of digitization and interconnection of registers under the auspices of the Agency: Commercial Register and Register of Non-Profit Legal Entities, Property Register, BULSTAT Register, Register of Spousal Property Relations, and Register of Special Pledges. This should allow the Bulgarian government and interested stakeholders to take registry-enabled transparency and anti-corruption to the next level – harnessing the power of big data for routine corruption risk assessment and the development of laser-focused enforcement actions and new policy initiatives.
The registration reform should continue with the creation of an Electronic Registry Centre and the incorporation or linking of existing or other registries (tax, motor vehicle, land, etc.) to it, as originally proposed by CSD. The evolving landscape of registration reform, coupled with the increasing penetration of new technologies, will require accelerated updates to legislation, regulations, resources and technological infrastructure.