Bulgarian individuals and legal entities
Foreign individuals and legal entities

Bulgarian individuals and legal entities

Necessary documents for the registration of a new client

Bulgarian legal entities

1. Copy of a court decision, signed by the persons with representative power*
2. Copy of a certificate of good standing, signed by the persons with representative power*
3. Copy of tax registration, if available, signed by the persons with representative power*
4. Copy of VAT registration, if the entity is VAT-registered, signed by the persons with representative power*
5. Copy of Bulstat registration, signed by the persons with representative power*
6. Copy of the identity cards of the persons with representative power, signed by the persons with representative power*
7. If a proxy is available
   • explicit Power of Attorney for trading with the securities, subject of the transaction, also identifying the bank account details for money transfer (in case of sale of securities), notary-certified
   • copy of the identity card of the proxy

*All certifications consist of signatures of the persons with representative power, business stamp and date of signing

Bulgarian individuals

1. Identity card
2. If a proxy is available
   • explicit Power of Attorney for trading with the securities, subject of the transaction, also identifying the bank account details for money transfer (in case of sale of securities), notary-certified
   • copy of the identity card of the proxy

Foreign individuals and legal entities

Necessary documents for the registration of a new client

Foreign legal entities

1. Copy of a court decision or a certified document indicating the entry of the entity in the Commercial Registry of the relevant country. The copy should be signed by the persons with representative power *
2. Certified signatures of the persons with representative power
3. Copy of the personal documents of the persons with representative power*
4. If a proxy is available – explicit and certified Power of Attorney*
   • copy of the personal documents of the proxy (ID), signed by him/her
   • declaration, signed by the proxy, stating that the latter does not trade with securities professionally
5. Money Laundering declaration for a purchase

* certified true copies or originals

Foreign individuals

1. Copy of the personal documents of the individual (ID), signed by him/her
2. Certified signature
3. If a proxy is available – explicit and certified Power of Attorney
   • copy of the personal documents of the proxy (ID), signed by him/her
   • declaration, signed by the proxy, stating that the latter does not trade with securities professionally
4. Money Laundering declaration for a purchase

PURCHASE of securities
PURCHASE of securities (when using a separate custodian)
SALE of securities
SALE of securities (when using a separate custodian)

PURCHASE of securities

Step 1. You should have enough funds on your account with FFBH or you should initiate a wire transfer to FFBH on the trade date, at the latest.
Step 2. You sign and send a sale order to FFBH.
Step 3. FFBH executes a trade on the floor of the BSE-Sofia.
Step 4. FFBH sends you a confirmation with information about the trade immediately after the trade is executed.
Step 5. You sign the necessary document in our office. If you are unavailable to sign the documents in person (e.g. if you reside in a foreign country), you should send back the confirmation by fax or you could send a scanned copy by e-mail.

The settlement period on the BSE-Sofia is T+2. This means that you should have the securities in your account by 5 pm (local time) on the second working day after the day of the trade.

For more information on the settlement process, please contact us.

PURCHASE of securities (when using a separate custodian)

Step 1. You should have an account with a Bulgarian custodian bank.
Step 2. You sign and send a purchase order to FFBH.
Step 3. FFBH executes a deal on the floor of the BSE-Sofia.
Step 4. FFBH sends you a confirmation with information about the trade immediately after the trade is executed.
Step 5. You send proper instructions and sufficient funds to the global custodian/clearing institution you are using, with information about the deal and the settlement of the money. The global custodian forwards these instructions, together with the funds, to the Bulgarian custodian bank.
Step 6. After the instructions and the funds are received by the Bulgarian custodian bank, the bank and FFBH start to communicate and send settlement instructions to the Central Depository (CD).
The settlement period on the BSE-Sofia is T+2. That means that you should have the securities in your custodian bank account by 5 pm (local time) on the second working day after the day of the trade.

For more information on the settlement process, please contact us.

SALE of securities

Step 1. You should have the securities available in your sub-account with FFBH in the Central Depository registry.
Step 2. You sign and send a sale order to FFBH.
Step 3. FFBH executes a trade on the floor of the BSE-Sofia.
Step 4. FFBH sends you a confirmation with information about the trade immediately after the trade is executed.
Step 5. You sign the necessary document in our office. If you are unavailable to sign the documents in person (e.g. if you reside in a foreign country), you should send back the confirmation by fax or you could send a scanned copy by e-mail.
Step 6. After the above documents are received by FFBH, we start the settlement procedure with the Central Depository.

The settlement period on the BSE-Sofia is T+2. That means that you should have the money in your sub-account with FFBH by 5 pm on the second working day after the day of the trade.

For more information on the settlement process, please contact us.

SALE of securities (when using a separate custodian)

Step 1. You should have the securities booked in an account with a Bulgarian custodian bank.
Step 2. You sign and send a sale order to FFBH.
Step 3. FFBH executes a trade on the floor of the BSE-Sofia.
Step 4. FFBH sends you a confirmation with information about the trade immediately after the trade is executed.
Step 5. You send proper instructions to the global custodian/clearing institution with information about the deal and the settlement of the money. The global custodian then forwards these instructions to the Bulgarian custodian bank.
Step 6. After the instructions are received by the Bulgarian custodian bank, the bank and FFBH start to communicate and send settlement instructions to the Central Depository (CD).

The settlement period on the BSE-Sofia is T+2. That means that you should have the money in your custodian bank account by 5 pm on the second working day after the day of the trade.

For more information on the settlement process, please contact us.

When using FFBH as a custodian
When using a separate custodian

If you are dealing only with us, you should have the funds on your FFBH account before placing the purchase order, or you should initiate a wire transfer to FFBH on the day of the trade at the latest.

If you are using a separate custodian bank, you should have the funds in your custodian bank account before you place the purchase order. For details on how to transfer funds to your custodian account, please contact the custodian bank directly.

On the second working day after the day when the sale is executed (referred to as T+2), at 5 pm local time you should have the money in your

• sub-account with FFBH, if you are using FFBH directly; or
• in your custodian bank account, if you are using a custodian bank

provided that the clearance and settlement procedures are duly completed.

For more information, please see How do I place an order to buy or sell a security?

There is one centralised settlement institution in Bulgaria that settles the securities and the money on Delivery Versus Payment (DVP) or Delivery Free of Payment (DFP) terms. This is the Central Depository (CD). The CD is a joint-stock company whose shareholders are the State and a number of investment intermediaries and banks.

The Central Depository keeps a record of all the assets of every holder of Bulgarian securities and also registries of all trades done at the stock exchange and on the Over-the-Counter (OTC) market. In general, the Central Depository is the keeper of all the securities issued and traded in Bulgaria as long as they are in electronic form.

The settlement of any securities transactions is done by simultaneously transferring the money and the securities within the Central Depository by using the Real Time Gross Settlement system (the RTGS). Thus for the settlement process to be completed, the trade details of any transaction should be sent to the CD by both counterparties that have executed the trade (the intermediaries of the buyer and the seller), which ensures the consistency of the transaction details and the minimisation of trading errors.

Each investment intermediary has an account with the Central Depository and as many sub-accounts as are its clients and the securities that they own. The legislation stipulates that the clients’ securities are kept separately from the proprietary securities of the investment intermediary, so each client has a separate sub-account with the Central Depository for each security he owns.

The money of investors is kept in banks. Each investment intermediary is obliged to have at least one separate bank account exclusively designated for the money of its clients, so that the funds of the broker and its clients are held separately and in no circumstances mixed. It is also forbidden by the legislation for the intermediary to access the clients’ money for any other purposes but trading on the clients’ behalf and for the clients’ account and upon the clients’ explicit orders. This, also ensures that should a broker run into financial trouble or even go bankrupt, the clients’ money is separate and safe.

This depends on the type of service you are using at FFBH. To get a quote, please call in contact us.

All investors on the BSE are considered the same and requirements for registration and trading are the same for both local citizens and foreigners.

However, if you reside outside Bulgaria, you will most likely need to use a custodian to keep your money and securities. See ‘What choice do I have with custodian services?’ for more information.

You should also know that foreigners are subject to taxation on capital gains and other income from securities other than listed shares traded on the regulated market and rights issued by listed companies. These gains are subject to a 10% profit tax. Note that such taxable securities include fixed income securities, block trades and other transactions on unregulated markets (for example, trades with the shares of a non-listed company). For more details on tax, see ‘What are the tax implications of investing on the Bulgarian Stock Exchange?’

There are two ways to subscribe for custodian services:

 - use the services of a custodian bank and use a financial intermediary, such as us, as a broker.

 - use FFBH as a custodian and a broker

According to Bulgarian laws and regulations, client accounts (money, shares, etc.) are legally and physically separated from FFBH’s, so this way of dealing is generally as safe an option as the former alternative.

Yes, through COBOS system. You still need to register with a broker, though. FFBH will set your access to the real-time trading platform COBOS.

COBOS is an internet-based application for an authorised and secure access to the BSE Trading System in real time, allowing BSE-members' clients and participants on the regulated market to enter orders and to transact after receiving a confirmation from their broker. ‘Real time’ means that the COBOS applications contact the security server at BSE-Sofia and become updated at least every 15 seconds.

For more detailed information, please visit the Bulgarian Stock Exchange site and explore the COBOS menu on the right hand side, or call in contact us.

Capital gains are tax-free on the BSE-Sofia. This includes trading on the regulated market in listed shares, rights, units in collective funds, real estate investment funds and securitisation SPVs (incl. REITs), UCITs (mutual funds) and subscription rights.

Capital gains are NOT tax-free on OTC trades, fixed income securities (bonds), compensatory instruments (vouchers) and shares in non-public enterprises. Those are subject to the applicable corporate tax (in the case of local corporations), income tax (in the case of local individuals) and withholding tax (in the case of foreign individuals and enterprises).

Dividends to local and foreign individuals and to corporations incorporated outside the EU, Norway, Iceland and Liechtenstein, are taxed at 5%, withheld at source. Dividends to local corporations and corporations, based in the EU, Norway, Iceland and Liechtenstein, are not subject to dividend tax. Additionally, income from dividends is not subject to corporate tax or income tax. 

Interest on Bulgarian bonds is tax-free for local individuals and individuals based in the EU, Norway, Iceland and Liechtenstein. Other foreign individuals are subject to a 10% withholding tax. Interest on any bonds for local and foreign corporations is subject to corporate tax.

Please note that the tax legislation in Bulgaria changes annually. The review process usually takes place in the second half of the year.

• Liquidity, despite having improved considerably, is still low compared to developed countries and to larger international markets. The liquidity issue is particularly acute when dealing with securities of smaller cap companies.
• Despite the fact that the financial regulator (Financial Supervision Commission) has made the battle against insider trading and market manipulation one of its top priorities, leakages of internal information to insiders can and do happen.
• Good investor relation practices are still not very common, although the level of transparency and investor-friendliness is improving. Certain companies are notorious for being openly disregardful to investors.
• The shareholder structure of many of the listed companies in Bulgaria is dominated by one controlling stakeholder, which contrasts to the diversified structure of most listed western, and especially US corporations. The free float of most of the Bulgarian listed companies is low (at about 10% - 35% of the capital).
• Investors should be aware that the management of many of the listed companies is directly or indirectly also the majority owner of the company;

Additionally, please be advised that:

• INVESTMENTS IN EMERGING MARKETS INVOLVE HIGH RISKS.
• Past performance is not necessarily indicative of future results.
• Each potential or existing investor should consider the appropriateness of any investment decision having regard to their own circumstances, the full range of information available and appropriate professional advice, and should consult their advisors to make sure all involved risks are fully understood.

Contact us on +359 2 810 64 00 for any further enquiries.