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

Introduction

While the new legislation introducing FDI screening entered into force on March 12, 2024, the relevant foreign investors' obligation to file for FDI clearance was not effective until the executive branch instituted additional implementing regulations. This occurred in 2025, and as of July 22, 2025, all in-scope investments are subject to clearance by the Screening Council.

Summary of major changes in 2025

In July 2025, the Bulgarian Council of Ministers (the "Bulgarian Cabinet") adopted the Regulation for Amendment and Supplementation of the Regulation for Implementation of the Investment Promotion Act (the "Implementing Regulation"). The Implementing Regulation was promulgated in the State Gazette on July 22, 2025, and as of that date the Bulgarian FDI screening mechanism became operational. The Implementing Regulation sets out, among other things, further details regarding the institutional framework and procedural aspects of FDI screening and provides a template screening application.

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 the EU ("non-EU persons") and includes any individual who has made, or intends to make, an FDI in Bulgaria, provided the individual is 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) that, 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 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: (1) result in the acquisition of at least 10 percent of the capital of an undertaking that operates in Bulgaria, or the investment amount exceeds €2 million; (2) 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 (3) qualify as a "new investment" exceeding €2 million.

The quantitative criteria, however, are disregarded, so that even small but substantively in-scope investments trigger FDI screening, if there is, directly or indirectly, non-EU governmental participation in the foreign investor's capital. This extension of the FDI screening requirement to small investments does not apply where the non-EU governmental participation is linked to "low-risk" countries designated by the Bulgarian Parliament. The Investment Promotion Act (the "FDI Law") currently designates the following as "low-risk" countries: the United States, the United Kingdom, Canada, Australia, New Zealand, Japan, South Korea, the United Arab Emirates, all members of the European Economic Area, Switzerland and Saudi Arabia.

The quantitative criteria also 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 interagency council, the Screening Council, which is composed of specifically designated representatives of various governmental agencies. The Screening Council is supported by a secretariat (the "Secretariat") within the Bulgarian Cabinet.

A template screening application sets the scope of the information required regarding the investor, the investment and the target (if relevant). The screening application must be accompanied by documents substantiating the information provided therein, including, among other things, details on the ultimate beneficial owners of both the foreign investor and the target, the approximate investment amount, the anticipated implementation date and other information. All documents must be provided in the Bulgarian language or with a Bulgarian language translation. Documents originating from other jurisdictions must be duly apostilled or legalized in compliance with applicable bilateral or international treaties.

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 affect 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 a non-EU government, including via public authorities or armed forces; the past involvement of the foreign investor in activities considered to have affected security or 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 and to appoint experts and solicit opinions from third parties and governmental agencies.

Review process timeline

The review timeline is 45 calendar days from registration of the application. There is an option for a single extension of 30 additional days. If the Screening Council does not deliver a decision within this timeline, the investment is considered approved and the investor may proceed with implementation.

An FDI screening application must be submitted to the Bulgarian Investment Agency. The Agency has three days to complete formality checks and up to seven days to request additional documents or corrective steps, if necessary. Once complete, the Bulgarian Investment Agency transfers the application to the Secretariat.

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

The first stage of the review is carried out solely by the Secretariat. Within 14 days of commencement of the review, the Secretariat prepares and submits a reasoned proposal to the Screening Council. The Secretariat may propose one of two options: (1) there is no ground for objection to the FDI; or (ii) the Screening Council should commence a complex assessment of the FDI.

The next stage of the review is carried out by the Screening Council. Within 10 days of receipt of the reasoned proposal from the Secretariat, it either allows the FDI without complex assessment or begins complex assessment. The Screening Council issues a clearance decision where the Secretariat has found no grounds for objection and, within the first seven days after receipt of the Secretariat's proposal, no member of the Screening Council has raised objections. If no objection is raised, the Screening Council issues a clearance decision permitting implementation of the FDI.

If the Secretariat has proposed commencement of a complex assessment or an objection against a "no ground for objection" proposal has been raised, the Screening Council conducts a complex assessment.

Complex assessment is a distinct stage of the review. It is conducted by the Screening Council within the 45 days review timeline, with an option for a one-time extension of 30 additional days. The decision to extend the review period rests solely with the Screening Council. No further extension of the review period is permitted.

Following the conclusion of the complex assessment, the Screening Council either approves the FDI, approves the FDI conditionally, or rejects the screening application, thereby prohibiting the investment.

How foreign investors can protect themselves

Where, during the complex assessment, the Screening Council determines that the FDI may be implemented only subject to conditions, it commences negotiations with the foreign investor. Negotiations must be completed no later than 10 days before the expiration of the review timeline (45 + 30 days). The negotiations are conducted in writing and conclude with execution of a written document either (1) setting out the terms of the agreed conditions or (2) setting out the lack of agreement on appropriate conditions. If an agreement setting out the terms of the agreed conditions is reached, the Screening Council issues permission for implementation of the FDI with 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, information security, 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 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.

Penalties

Where a qualifying FDI has been implemented without prior clearance, the Screening Council may impose a fine on the respective foreign investor equal to 5 percent of the investment amount, but not less than €25,565. In such cases, the Screening Council may impose appropriate corrective measures, such as unwinding of control, termination of activity, termination of the FDI or other measures that may be deemed appropriate.

The Screening Council may also impose pecuniary fines equal to 5 percent of the investment amount where the foreign investor:

• has provided inaccurate, incomplete or misleading information; or
• has not implemented corrective measures imposed by the Screening Council with an approval or a fining decision.

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