1991 - 1995 PROGRAM HIGHLIGHTS:
- Organized two constitutional law seminars with the
participation of foreign experts and members of the Grand National
Assembly which facilitated the process of enactment of Bulgariaнs
new Constitution;
- Provided the government with expert comments on
more than thirty draft laws in the following areas: copyrights,
patents, commercial transactions, bankruptcy, privatization,
commodity exchanges, trade, chambers of commerce, judicial
structure, administrative justice, the bar, waste, protection of
sea waters, criminal code, special investigative means, protection
of information, etc.;
- Provided the government with five concept papers
containing leading world and international concepts on drafting
laws on money laundering, investment funds, foreign trade
regulation, government procurement and securities regulation;
- Coordinated four policy oriented legal
seminars/discussions involving government officials and
representatives of the public, covering bankruptcy, copyrights,
lawyersн code of ethics and accreditation of law schools;
- Organized a series of educational legal seminars on
international sale of goods, franchising, joint ventures,
alternative dispute resolution, commercial arbitration, purchase
and sale of an on-going business, leasing, and copyrights and
trademarks, GATT, ;
- Conducted two Training for Trainers workshops;
- Initiated and supported a successful effort to
draft a new law on non-profit organizations for Bulgaria;
- Participated in the drafting of a Law on Registered
Pledges, passed by Parliament in November 1996;
- Prepared six publications on topical legal issues
including foreign investment law, in-kind contributions in
commercial companies, privatization, government structure and
operations.
The Law Reform and Comparative Law program was
established in the early spring of 1991. It started out as a
facilitator of the law reform process in Bulgaria and focused its
efforts mainly on establishing and supporting the contacts between
the Government and foreign assistance institutions. The initial
focus of the Program was constitutional law reform. With the
enactment of the new Constitution in the spring of 1991, the
emphasis in the activities shifted towards commercial law reform.
During the past four years the Program gradually developed into a
legal reform agent with a considerable law drafting record. It now
works on substantive legislative reform projects attracting its own
expert resources.
The Program has in its record the Law on Registered
Pledges, developed in cooperation with IRIS-Bulgaria, and passed by
the National Assembly in November last year. The Draft Law on
Non-Profit Organizations, which was also developed by the Program,
has been approved and endorsed by the Government, and is awaiting
consideration in Parliament. As a follow-up, the Program is
presently working on the development of the tax legal framework for
non-profit organizations and government procurement laws.
Particular focus is also placed on issues of approximation of
Bulgarian law to EU legislation.
I. Legislative Reform
1. Reforming the Legal Framework for NGOs in
Bulgaria
A. Law on Non-Profit Organizations
For the past three years, CSD has been working on
drafting a Law on Non-profit Organizations in Bulgaria. The Draft,
developed with the expert resources of the Law Program and endorsed
by the Ministry of Justice, is about to make its way into
Parliament. Throughout the year, the Draft went through a series of
discussions with NGOs and government officials. Such networking was
an important vehicle for improving the draft law and ensuring its
adequacy to the needs of the non-profit sector.
Among the government agencies dealing with NGOs, the
Ministry of Finance is to play a key role in backing up the Draft
on its way to becoming a Law. In view of this, in June CSD
organized a workshop for Discussing the Position of the Ministry of
Finance on the Draft Law on Non-Profit Organizations. As the
Ministry of Finance will also be a key enforcement agency, the
workshop provided a broad discussion basis where representatives of
the Ministry could meet other experts and share views on the Draft.
The Ministry's position was presented by Mr. Istillian Simeonov, an
expert in Corporate Taxation Department of the Ministry of
Finance.
In order to receive feedback on the Draft Law and to
prepare the ground for proper future implementation of the law, CSD
organized a number of training seminars.
Training Seminar on the Law on Non-Profit
Organizations for NGO Managers, April 23
The seminar was part of a series of events organized
by the CSD for the development of NGOs and their capacity to
function and grow in a new environment. Participants were invited
with the active participation of the Civil Society Foundation, the
Union of Bulgarian Foundations and Associations and the Open
Society Fund through its community network. The members of the
drafting task force at the Ministry of Justice gave a short
explanation on the Draft's final version as well as on some future
implementation issues. The discussion focused on the impact of the
present legal, political and social situation on the Draft and its
future enforcement.
Training Workshop on the Law on Non-Profit
Organizations for Judges, April 28
The courts will be a crucial component of the future
implementation of the NGO law as the life of every NGO starts and
ends in a court procedure. The workshop was attended by judges from
all instance courts, including all the Registry Departments of the
29 District Courts in Bulgaria, and three Supreme Court justices
dealing with registration appeals. Sofia City Court Judge Borislav
Belazelkov, Mr. Stephan Kyutchukov and other members of the
drafting task force participated as panelists and resource persons
providing background on the motives of the law. The result of the
workshop was a better understanding by the participating judges of
the principles of the proposed legislation which is a key component
for its most effective enforcement in the future.
In order to further facilitate the proper
implementation of the Law on Non-Profit Organizations when enacted,
in October CSD initiated a process of Drafting a Commentary to the
Future Law. An expert commentary made it possible for the creators
of the Law to express in "layman's" terms the fundamental concepts
and legal techniques embodied in it. The comments include case
examples of the existing court practice and a comparison between
the newly introduced and the repealed legal frameworks. The
commentary will be particularly useful for both practicing lawyers
and NGO activists.
B. Reforming the Tax Environment for NGOs in
Bulgaria
Alongside the effort for facilitating the enactment
of the Draft for a Law on NGOs, in 1996 CSD launched a follow-up
project, supported by the European Union Phare Democracy Program,
aimed at reforming the relevant collateral legislation. While the
Law on NGOs will provide the core of the framework by rules on the
creation, status, organization and functioning of NGOs, the
collateral legislation will complete and make operational the
required legal framework. It is by virtue of this legislation that
certain tax breaks and other incentives for NGOs and charitable
giving will be established in Bulgaria.
The current tax environment is not favorable for the
functioning of NGOs. Tax laws do not provide for a harmonized
treatment of natural and judicial persons subject to Income or
Corporate Taxation, as regards incentives for their donations
to NGOs. There are no relieves for NGOs with respect to customs and
excise duties, with a few exceptions provided for certain
organizations.
The Task Force
The CSD task force, which includes also managers of
leading Bulgarian NGOs, representatives of academia, auditing
companies, courts, and private practitioners with expertise in the
field of taxation, are developing recommendations for specific
amendments to the existing tax laws. The proposals elaborated by
the task force were coordinated with experts from the Ministry of
Justice, Ministry of Finance and other relevant institutions.
The task force meetings were preceded by extensive
collection of information on NGO taxation and tax treatment of
donations to NGOs, particularly in the US and West European
countries. Some relevant extracts of materials on this topic were
translated into Bulgarian in order to be accessible to a larger
audience in Bulgaria.
Public Outreach
Discussions with the Relevant Government Agencies
on Income Tax and Local Taxes
At a meeting with representatives of the Ministry of
Finance in October, the drafting task force presented the idea of
introducing equal tax treatment of charitable giving by employees,
on the one hand, and freelances and sole proprietors, on the other.
The Ministry officials introduced the participants to the relevant
ideas under the Draft Law on Income Tax being elaborated by the
Ministry. The discussion was of substantial importance for
clarifying the positions of both representatives of the non-profit
sector in Bulgaria and government representatives in the sensitive
area of taxation.
Conference with Representatives of Bulgarian
Non-Profit Organizations Regarding Proposed Amendments to the Law
on Income Tax and Law on Local Taxes, November 18
Following the discussion with government
representatives, the proposed amendments were discussed at a
workshop held at CSD with the participation of over thirty
representatives of Bulgarian NGOs, and legal experts in the field
of NGO law. The discussion provided valuable input to the drafting
process as it allowed the task force members direct contact with
future beneficiaries and outside expertise.
Proposed Amendments at the First Stage of the
Project:
- Law on Corporate Tax. The working group
focused on the development of amendments to the existing corporate
tax law with a view to creating incentives for corporate charitable
giving to NGOs.
- Law on Value Added Tax; Custom and Excise
Duties. The activities of NGOs usually depend on support and
donations from abroad which include literature, educational and
medical equipment and the like. Goods received as donations from
abroad are subject to value added taxation and customs duties. In
view of this, the task force started drafting legislative
amendments providing for relief in the fields essential for
NGOs.
- Law on Income Tax and Law on Local Taxes and
Fees Concerning Charitable Donations. The proposed amendments
are aimed at making tax relieves for charitable giving. The
suggested mechanism represents both a means of limiting tax
relieves only to cases of evident benefit to society, and a means
of introducing reliable control devices.
C. Research and Technological Development
The Ministry of Education, Science and Technology,
the TEKLA private Consortium and CSD elaborated an analysis of the
existing legal framework on scientific and technological research
and drafted a concept paper on the need and directions of its
development. The partners launched the elaboration of a draft law
on research and technological development aimed at developing the
country's scientific potential and promoting the economic reform in
general.
2. Approximation of Bulgarian Law to European
Legislation
In 1996, CSD continued its effort to facilitate the
process of approximation of Bulgarian law to European Union
legislation as well as to European conventions and international
agreements. The approximation aspect has been a key consideration
in all activities of CSD aimed at reforming Bulgarian law.
SME Legislation
During the drafting of a Policy Recommendation
Paper on Small and Medium Enterprise Sector in Bulgaria
(described in more detail below), CSD's Law Program analyzed the
legislative recommendations in the paper against the background of
the Europe Agreement and the relevant EU legislation.
The policy recommendation paper paid special
attention to the existing EU legislation on SMEs, such as the First
Directive of March 9, 1968 regarding public availability of
commercial registry information and Recommendation of April 3, 1996
concerning definition of SMEs.
European Social Charter
In conjunction with the Information and
Documentation Centre on the Council of Europe-Sofia, the Law
Program translated the European Social Charter into Bulgarian. A
task force was set up to prepare an analysis of the compatibility
of Bulgarian legislation with the Charter. An expert was appointed
to write a paper on the degree of compatibility which could provide
the basis for future decision on the signing of the European Social
Charter by Bulgaria. The revised Bulgarian version of the European
Social Charter was formally approved by the Ministry of Foreign
Affairs.
3. Commercial Law
Law on Registered Pledges
In 1996, the CSD/IRIS-Bulgaria Project task force
finalized its work on the Draft Law on Registered Pledges. The
Draft was passed into Law by Parliament in November, which
exemplified the significant pro-legislative impact of the informal
sector in democratic societies.
The team of experts finalized its one-year effort
which involved dynamic interaction with experts of the World Bank,
the International Monetary Fund and the European Bank for
Reconstruction and Development. The opinion of academic experts
from Germany, the United States, Poland and Hungary was used as
well. The team of experts worked closely with the Bulgarian
Ministry of Justice, the Council of Ministers and the National
Assembly Committees thus ensuring government support for the
project. In 1997, the necessary supporting legislation will be
developed jointly with the Ministry of Justice to enable the
Central Registry for Pledges, envisaged by the law.
With the passage of the Law on Registered Pledges,
Bulgaria became the third European country, together with Norway
and Hungary, where a modern non-possessory pledge system with a
central pledges registry is being implemented.
II. Public Outreach Activities
The use of a public outreach mechanism is of
particular importance for achieving the desired impact of the
overall legal reform efforts of the Program. In this way, it
solicits the support of the target communities and receives
valuable feedback for its priorities.
Roundtable Discussion of the Legal Issues
Affecting Small and Medium Size Businesses in Bulgaria, February
12
The purpose of the meeting was to bring together
representatives of the Bulgarian business community to discuss the
legal impediments to doing business in Bulgaria and to define areas
for legal reform. The discussion was attended by representatives of
the Bulgarian Energy Efficiency Foundation, Union of Private
Economic Enterprises, Bulgarian Chamber of Commerce and Industry,
National Association of Real Estate Brokers, Bulgarian Industrial
Association, EU Phare and the US Department of Treasury. The topics
discussed included finance and tax, creditorsн rights, social
security, pensions and other benefits. The participants shared
thoughts and ideas on ways of coping with the above issues,
including drafting new legislation, amending existing laws,
improving the implementation process.
Technical Discussion on the Legal and Business
Planning Issues Involving the Taxation of Insolvent Businesses,
April 23
Tax experts from the private sector, representatives
of leading auditing companies, and representatives of the World
Bank, ABA/CEELI and CSD discussed net operating losses, as well as
how they are treated in Western systems and under Bulgarian Law.
The discussion also focused on how a debt-equity conversion or the
issuance of new equity affects net operating losses in
reorganization cases.
Roundtable Discussion Workshop on the
Bulgarian Central Depository for Securities, September 15
The purpose of the roundtable workshop was to bring
together the persons responsible for the establishment and
operation of the Depository with representatives of the banks and
financial brokers who may become participants in and users of the
Depository. Participants in the discussion included representatives
of the Ministry of Finance, the Bulgarian National Bank, the Center
for Mass Privatization, the Securities and Exchange Commission, the
Central Depository AD and the Bulgarian Stock Exchange. Also
participating were leading professionals from the US Securities and
Exchange Commission and the National Securities Clearing
Corporation.
Technical Discussion on the Use of Expert
Testimony in Copyright Piracy Prosecutions, June 8
The discussion involved judges from the Supreme
Court and the Sofia City Court, representatives of the private
sector and representatives of NGOs dealing with protection of
intellectual property rights in audio-video products. The
participants discussed the legal provisions on expert assistance
and the use of expert testimony in copyright piracy prosecutions.
Relevant case-law was discussed.
Vesti Newsletter
In late 1996, the Law Program published the fourth
issue of its Vesti newsletter presenting the activities of
the Program. The main topic of the issue was the Program's effort
of reforming the tax environment for NGOs, including expert
analyses, interviews with task force members and presentation of
public events. The newsletter was distributed among judicial NGOs,
the Bar Association and the courts.
III. Training
In 1996, the Law Program continued its efforts at
providing expert training to a number of target audiences,
including NGOs, private and government lawyers, business
associations, etc.
Legal Training Workshops on Bulgaria's
Bankruptcy Laws, February 19-20,
and 22с23
The workshops were co-organized by the Bulgarian
Trustees Association (BTA), Bulgarian Bar Association (BBA),
ABA/CEELI and CSD. These workshops were focused on how to conduct
liquidation and reorganization cases under Bulgarian bankruptcy
law. The workshops used hypothetical case studies of insolvent
companies to illustrate the issues and steps necessary to commence,
administer and close a bankruptcy case. Participants studied the
differences between liquidation and reorganization cases, and the
duties and responsibilities of bankruptcy trustees and judges,
respectively. Instructors to the workshops were distinguished US
bankruptcy experts. The workshops were attended by private lawyers,
government legal advisors and officials, banking executives and
their legal advisors, judges and business people.
Seminar on Advocacy and Governmental
Relations, February 9
This seminar was organized by ABA/CEELI, the
Association of Democratic Trade Unions and CSD. It was focused on
the specific skills and techniques needed by various associations
and organizations to effectively advocate for issues that concern
their members. The topics covered included preparation of a
legislation action plan, building a grassroots organization,
running a grassroots advocacy campaign and publicizing
association's activities. Private lawyers, government legal
advisors, policy makers, non-governmental and trade association
officials attended this workshop.
Training Workshop on Organizational Visioning,
Action Planning and Effective Teamwork, October 20
The roundtable was attended by representatives of
NGOs and was monitored by Dr. Michael Havercamp, State Leadership
Specialist and Associate Professor at the College of Human and
Community Sciences, University of Nevada. The discussion was
focused on negotiation techniques. The participants discussed
issues like creating "win-win" strategies, conflicts resolutions,
effective teamwork, action planning and the like.
VI. Publications
Issues in Bulgarian Law Series, Issue No. 6,
April 1996: A Comparative Analysis of Bulgarian And USA Bankruptcy
Laws by Sandra Mitchell, Esq., ABA/CEELI Liaison
This paper represents a comparison and overview from
a Western perspective of US and Bulgarian bankruptcy laws. It
covers the commencement of proceedings, procedure after petition is
filed, property of the estate issues, debtor and creditorsн claims,
liquidation and reorganization. This paper was prepared after
request of CSD, with a view to providing a starting point for a
Westerner's understanding of Bulgarian bankruptcy law.
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