Nikolai Gouginski, Valentin Bojilov and Vladislav Antonov (Djingov, Gouginski, Kyutchukov & Velichkov) authored this publication

While the new legislation introducing FDI screening entered into force on March 12, 2024, the relevant foreign investors' obligation to file for FDI clearance is not effective until the executive branch has instituted additional implementing regulations.

Summary of major changes in 2024

• In December 2024, the executive published drafts of implementing regulations, and stakeholders were invited to submit comments. These public consultations expired in mid-January 2025.
• The draft implementing regulations set out, among others, further details about the institutional framework and procedural aspects of FDI screening, and provide a template screening application.
• The executive is now expected to adopt and promulgate the implementing regulations soon. FDI screening will become fully operational as of the date of their entry into force.

Who files?

A foreign investor intending to make a covered FDI must file for the investment's prior clearance. The "foreign investor" concept encompasses investors based outside of the EU—"non-EU persons" —and includes any individual who has made, or intends to make, an FDI in Bulgaria, provided they are not a national of an EU Member State; and any legal entity that has made, or intends to make, an FDI in Bulgaria, provided it is seated outside an EU Member State.

Any legal entity—a "deemed non-EU entity" —seated in an EU Member State but controlled by a non-EU person or another person (not necessarily an incorporated person) organized under the laws of a country that is not an EU Member State is also considered to be a foreign investor.

Additionally, any legal entity or other person (not necessarily an incorporated person) which, although seated in an EU Member State, is affected by a contract or internal rules by virtue of which the relevant investment of that person is directly or indirectly controlled by one or several individuals or legal entities that are established outside the EU; or makes the investment in its own name but for the account of a non-EU person or a deemed non-EU entity, by virtue of an agreement, is considered to be a foreign investor.

Types of deals reviewed

To be subject to FDI screening, the relevant FDI must have potential effects in the areas covered by article 4, paragraph 1 of the EU Investment Screening Regulation, and: result in the acquisition of at least 10 percent of the capital of an undertaking that operates in Bulgaria, or the investment's amount will exceed €2 million; or result in the acquisition of at least 10 percent of the capital of an undertaking that operates in Bulgaria and performs high-tech activities; or the investment qualifies as a "new investment" exceeding €2 million.

The quantitative criteria, however, will be disregarded—so that even small but substantively in-scope investments will trigger FDI screening—if there is, directly or indirectly, non-EU governmental participation in the foreign investor's capital. That extension of the FDI screening requirement to small investments will not apply where the non-EU governmental participation is linked to such "low-risk" countries as may be designated by the Bulgarian parliament. The quantitative criteria do not apply to FDIs by a foreign investor from Russia or Belarus, or FDIs in the production of oil-derived energy products and related critical infrastructure. 

Scope of the review

FDI screening is conducted by a specialized inter-agency council—the Screening Council—which is composed of specifically designated representatives of various governmental agencies. The Screening Council is supported by a secretariat within the Council of Ministers (the Bulgarian cabinet).

A template screening application sets the scope of the information about the investor, the investment and the target (if relevant) and the supporting documents that should be provided.

When assessing an FDI, the Screening Council considers whether the FDI is likely to affect security or public order, with respect to its potential to impact any of the areas covered by article 4 of the EU Investment Screening Regulation. It also considers whether the FDI is likely to affect security or public order, due to: the exercise of direct or indirect control, through equity or financing, over the foreign investor by non-EU government, including via public authorities or armed forces; the past involvement of the foreign investor in activities considered to have affected the security or the public order in an EU Member State; or a high level of risk of the foreign investor being involved in illegal or criminal activities.

The Screening Council has broad discretion to request information and documents, to appoint experts and solicit opinions from third parties and governmental agencies.

Review process timeline

The timeline of review is 45 calendar days as of registration of the application. There is an option for a single extension by 30 additional days. If within this timeline the Screening Council objects to the FDI, the timeline is extended by up to six additional months for the negotiation of commitments.

An FDI screening application must be submitted to the Investment Promotion Agency. It has three days to complete formality checks, and up to seven days to request additional documents or corrective steps, if necessary. When complete, the Investment Agency transfers the application to the secretariat.

The substantive review process starts when the secretariat registers the application. It is structured as a  process that may go through several consecutive stages, each one with its own timeline.

The first stage of the review is carried solely by the Secretariat. Within 14 days of commencement of the review, the secretariat recommends to the Screening Council one of two options: either to adopt a "no objections" decision; or begin complex assessment of the FDI.
The next stage of the review is carried out by the Screening Council. Within 14 days of receipt of the recommendation by the Secretariat, it either allows the FDI without complex assessment, or begins complex assessment.

If the Screening Council decides to allow the FDI without complex assessment, the process moves to the next stage, where each institution or agency representative sitting on the Screening Council has 14 days to object to the decision for approval without complex assessment.

If an objection is returned, the Screening Council conducts a complex assessment.

If there is no objection within the 14-day period, the Screening Council issues permission for implementation of the FDI.

Complex assessment is a distinct stage of the review. It is conducted by the Screening Council at its discretion or upon the objection of a representative or institutional member of the Screening Council. Complex assessment must be concluded within the 45 + 30 days review timeline, unless the Screening Council communicates objections to the FDI.

Following the conclusion of the complex assessment, the Screening Council will either approve the FDI; approve the FDI conditionally; or reject the screening application, thus prohibiting the investment.

How foreign investors can protect themselves

Where the Screening Council objects to the FDI, its objections are communicated to the investor. This stops the clock of the review timeline. The investor and the Screening Council may then commence negotiations to agree on appropriate conditions under which the FDI may proceed. Negotiations must be completed within six months and conclude with execution of a written document either setting out the terms of the agreed conditions, or confirming the lack of agreement on appropriate conditions.

The following conditions may be adopted: restriction of the equity participation of the foreign investor to a threshold of 20 percent (10 percent if the target is involved in high-tech industries); implementation of measures aimed at the protection of personal data, the security of information or otherwise (upon proposal by a relevant regulator); or introduction of special voting or management rights in favor of the government (applicable in the context of privatizations only).

If negotiations conclude without an agreement on conditions, the Screening Council issues a final decision rejecting the FDI screening application.

Decisions of the Screening Council are subject to judicial review by the administrative courts.

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