After the Liberation, trade legislation included a Law on Commerce, Law on Market-Places, Law on Cooperative Partnerships, Law on Stock-Exchanges, Law on Limited Liability Companies, Commercial Shipping Law, Sea Trade Law, Pre-Bankruptcy Work-Out Agreement Law, and others. A subsidiary source of economic activity regulation were the general civil laws, most notably the Law on Obligations and Contracts. Commercial law provided the necessary legal framework of economic relations in Bulgaria, which were based on private property, equal treatment of commercial entities, and the competition under a market economy.

Following 1944, commercial law lost its significance in the context of centrally planned command economy. The nationalization of private industrial and mining enterprises in 1947 and the subsequent adoption of the new Law on Obligations and Contracts in 1951 in fact put an end to commercial law in the time of socialism.

With the repeal of the old commercial legislation, the regulation of the economic activity and relations among commodity producers was covered by civil law and above all, contractual law. A number of instruments designed to regulate commerce, such as the commission contract, shipping and forwarding contracts, the publishing contract, the insurance contract, etc., were covered by contractual law and more specifically, by the Law on Obligations and Contracts, passed in 1951. However, those instruments primarily served a single type of entities, namely the socialist economic organizations, as citizens were generally not allowed to engage in economic activities. A number of special regulations and legislative acts were also passed - Law on Contracts between Socialist Organizations, Foreign Trade Law, Ordinance on Commercial Contracts, Ordinance on Interrelations in the Investment Process, Rules and Regulations on Economic Activity, and others, which regulated the legal status of the socialist commercial entities and the relations among them.

The first attempt to break down the state monopoly on economic activity took place with the adoption of Rules and Regulations on the Collective and Personal Labor of Citizens for Additional Production of Goods and Services (Decree N 35 of 1987 of the Council of Ministers). It granted citizens the opportunity to exercise economic activity and to own means of production of a type and size required for the purposes of that activity. Citizens could own studios and workshops, shops, farming facilities, trucks, and others.

While the Rules allowed the carrying out of a wide range of activities, most of them were subject to special subsequently passed regulations. They introduced a licensing system for the exercise of those activities, as well as a number of formal administrative procedures for the granting of licenses. Foreign-trade activities, for instance, still remained an exclusive monopoly of the state. On the other hand, the forms in which citizens were allowed to carry out economic activities were limited - citizens could engage in the production of goods and services by running small workshops and retail outlets granted for use through auctions and on the basis of contracts concluded for a term of up to 5 years; by organizing small production collectives for carrying out additional activity within socialist economic organizations or the exercise of a craft, manufacture, or retail business, and by supplying services upon registration.

One specific characteristic was the fact that the production of goods and services could only be carried out through personal or collective labor of citizens. Hiring labor force, i.e. the exploitation of another's labor, was prohibited.

In fulfillment of the basic normative act - the Rules and Regulations on the Collective and Personal Labor of Citizens for Additional Production of Goods and Services, it was followed by the adoption of a number of other acts:

Decree N 17 of the Council of Ministers of June 3, 1988, on the Reorganization of Domestic Trade and Services (State Gazette, 46/06.17.1988);
Ordinance N 6 on the Supply of Transport Services by Citizens, issued by the Ministry of Transport (State Gazette, 75/09.29.1987);
Ordinance N 3 on Holding Auctions for the Purpose of Granting Management of Small Objects, issued by he Ministry of Trade and the Ministry of Finance (State Gazette 76/10.02.1987);
Ordinance N 6 on Granting Licenses for the Exercise of a Craft, Organizing Manufactures, Trade, and Supply of Services and on Registration of Licensees, issued by the Ministry of Finance and the Ministry of Trade (State Gazette, 76/10.02.1988);
Ordinance N 7 on Architectural Designers' Services, issued by the Committee on Territorial and Built-Up Area Zoning (State Gazette, 78/10.09.1987);
Ordinance 1 on Software Design and the Supply of Programming Services through Collective and Personal Labor of Citizens, issued by the Information Technology Committee (State Gazette, 80/10.16.1987);
Ordinance N 7 on the Supply of Pedagogical Services, issued by the Ministry of Culture, Science and Education, (State Gazette, 40/05.27.1988);
Ordinance N 7 on Administrative and Legal Services, issued by the Ministry of Justice (State Gazette, 59/08.02.1988);
Ordinance N 1 on Family Run Hotel Businesses, issued by the Ministry of the Economy and Planning (State Gazette, 66/08.26.1988);
Decree N 53 of the Council of Ministers of September 15, 1987 on Establishing a Table on the Size of Fees of Persons Supplying Services
Ordinance N 7 on Determining the Fees and the Income Tax on Incomes Acquired under the Conditions of the Rules and Regulations on the Collective and Personal Labor of Citizens for Additional Production of Goods and Services, issued by the Ministry of Finance (State Gazette, 76/10.02.1987).

The next step in abolishing state monopoly on economic activity was made with the adoption of Decree N 56 on Economic Activity, which introduced the so-called company organization. The company organization of economic activity was an attempt to restore, or reestablish rather, market economy principles in the context of centralized, planned economy.

Decree N 56 on Economic Activity prescribed the entities that individuals could form or participate in, in the exercise of their right to take part in economic life. The first text of Decree 56 allowed citizens to form only one-man or collective companies, and partnerships, with only the latter having the status of legal persons. It was not until 1990 that individuals were allowed to form or participate in limited or unlimited liability companies and joint-stock companies. At the same time, the restriction limiting participation to 2 companies at the most was still valid.

The use of "hired labor" was allowed for the first time, though the number of workers that could be employed was limited to 10.

Citizens were purportedly free to choose, register and exercise any objects of activity. However, this liberal system was immediately constrained by the condition that should there be a law, or a decree or other act of the Council of Ministers prohibiting the exercise of a particular economic activity by citizens' companies, courts would deny statement of that activity in the objects of the company upon its registration. Thus very soon, a number of government acts and regulations reestablished a restrictive system with respect to the possible objects of private companies. For instance, speculative activity was prohibited, meaning any activity involving buying of goods for the purpose of reselling them. In such cases companies could be terminated upon request by the competent state authority or the public prosecutor.

On the other hand, according to the initial text of the Rules for the Implementation of Decree N 56 on Economic Activity, citizens' companies were restricted with respect to the foreign trade activities they could engage in. The one-man and collective companies could engage in import and export through companies that were legal persons. At the same time, citizens' partnerships, which had legal person status, were prohibited from carrying out trade representation in the country and abroad, as well as from exporting goods manufactured by other companies, or importing goods other than those required for the purposes of their own activity.

Subsequently those restrictions were lifted and private companies were allowed to engage freely and independently in foreign trade activities with no permissions from state authorities required, except in the cases when the Council of Ministers set import and export quotas and conditions with respect to certain goods, or prohibited the import and export of certain goods, or established licensing with respect to certain foreign-trade transactions. The freedom of private companies to engage in foreign-trade activities was expressed in their right to negotiate and conclude contracts with foreign contracting parties, to make and receive payments, to contract for the accessory activities involved in foreign-trade transactions - freight, insurance, commissions, and others.

The rigid interpretation of speculative activity was also dropped. With respect to foreign trade, it was possible to export both the private company's own products, and goods produced by other companies. The restrictions on imports were also lifted - private companies could import goods required for their own activity, as well as goods meant for sale in the country's retail network, for renting out, etc.

At the same time, however, private companies were still facing the problem of the established foreign exchange system. According to the provisions of Decree N 32 of the Council of Ministers of April 10, 1990, convertible currency transactions at market exchange rates were organized by the Bulgarian Foreign Trade Bank through auctions. Private one-man and collective companies and partnerships were required to sell to the Bulgarian Foreign Trade Bank 50 per cent of their foreign currency results from the export of goods and services, reexport, etc., at the current market exchange rate. The currency results were calculated after deducting the value of imported materials and packaging paid in foreign currency for the production of the exported goods, expenses for transport, insurances, commissions. The remaining sum after the sale of 50% of the foreign currency revenues was left at the disposal of the respective private company. The companies receiving income in convertible currency from international tourism sold 80% of their currency earnings to the Bulgarian Foreign Trade Bank at the market exchange rate, with the remaining 20% left at their disposal. The conditions were even more unfavorable for the companies licensed to sell imported goods and services in convertible currency or which received income in foreign currency by acting as representatives, intermediaries, or agents. They were required to sell 90% of their currency earnings to the Bulgarian Foreign Trade Bank at the market exchange rate, with barely 10% remaining at their disposal.

There existed a number of regulations and legal possibilities meant to place private companies on an equal footing with other companies. However, they were insufficient in themselves in the absence of guarantees about their application. The negative attitude and common practice of underestimating and neglecting private economic initiative in fact thwarted the emergence of truly equal business conditions.

Nevertheless, following the adoption of Decree N 56, there occurred a number of positive changes regarding the independence of commercial entities.

In accordance with the Law on Obligations and Contracts, the economic activity of companies and their interrelations were realized on a contractual basis. That was a considerable step forward compared to the former system of state commissions and obligatory planned deliveries.

The Law on Obligations and Contracts was created in 1951 and though its purpose was to regulate contracting between persons in the context of socialist planned economy, its provisions, particularly after the amendments and additions made in 1993, generally meet market economy requirements as well. The chief instruments of civil law which have been adopted and regulated by the Law constitute the basis for the development of private law relations. According to the stipulations of the Law, in their capacity of contracting parties, the commercial entities are free to determine the content of the contract at will, on the sole condition that it is not against the law. The contract has effect between the parties and with respect to third parties can only have effect in cases specified by law.

One of the most consequential legislative reforms for encouraging private sector development consisted in the adoption of the Law on Commerce.

The first two parts of the Law are devoted to the legal and organizational forms of carrying out economic activity. A definition is provided of the trader as a commercial and legal entity. The term "firm", which is quite meaningless from a legal point of view and which used to denote the commercial entity in the text of Decree N 56, has been dropped. It is now used to signify the name of the commercial entity. The various types of commercial entities have been defined - the sole trader, state-owned and municipal enterprises, as well as the commercial companies, including the general partnership, the commandite partnership, the limited liability company, the joint stock company, the company limited by shares. However, it is the Cooperatives Act that provides for the cooperatives as independent entities. The Law on Commerce also provides for trade representation.

Part three of the Law on Commerce, which is to regulate trade transactions, has still not been adopted, but as pointed out above, the relations between the commercial entities are subject to the provisions of the Law on Obligations and Contracts.

Part four of the Law on Commerce - Bankruptcy - was adopted in 1994 and regulated the legal procedure of adjudication of bankruptcy and/or insolvency.

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