Shareholders rights are generally regulated by the Commercial Act and in particular - by the Public Offering of Securities Act, providing specific issues related to the rights of the public companies shareholders.
According to the regulations of the Commercial Act, the rights with 1 share can be separated in 2 main groups, depending on their contents. As per this criterion, the rights on the shares are divided to:
- right to receive a dividend;
- right to obtain a liquidation;
- right to subscribe new shares when increasing the capital of the company;
- right to take part in the management of the company;
- shareholder's right to elect and be elected as a member of the company's Management Bodies;
- right to receive information;
- right to require the assignment of a registered auditor;
- right to defend the membership.
- The right to receive a dividend, corresponding to the nominal value of the share is the most important material right of the shareholder, expressed in the right to receive a share of the balance profit of the company, corresponding to his/her share participation in the capital of the public company. According to art. 115b, para. 1 of the Public Offering of Securities Act the right to receive a dividend have the persons entered in the central register of securities as such with the right to dividend on the 14th day after the day of the general meeting at which the annual, respectively financial report and a decision was made to distribute the profit.
The right to receive a dividend can not be cancelled or restricted by any provision of the Articles of Association, Decision of the General meeting or Decision of a management body of the company, but exercising this right is liable to restrictions in the following directions:
1.1. It is not allowed to be distributed a dividend exceeding the amount of the net profit for the respective year, the undistributed profit from previous years, the respective share of the "Reserve" fund and the other funds of the company, exceeding the minimum specified by law or the Articles of Association, and which minimum is reduced with the amount of the accumulated losses from previous years and with the deductions for the "Reserve" fund and the other funds of the company;
1.2. Advanced payment of dividends prior to the approval of the annual financial statement is unallowable;
1.3. At least 1/10 part of the profit of the public company shall be allocated until the resources in the "Reserve" fund reach minimum 1/10 part of the company's capital;
1.4. The right to receive a dividend is under 5 year legal prescription.
The right to receive a dividend is transformed into a particular right of the shareholder to make a claim toward the public company under the following preconditions:
1. Expiration of the financial year;
2. Positive financial result (profit);
3. Approved annual financial statement of the company by the General meeting of shareholders;
4. According to the verified and approved annual financial statement, the net value of the property, reduced by the dividends and interests, subject to payment, is not less than the sum of the company's capital the "Reserve" fund and the other funds compulsory by law or the Articles of Association for the company to set up;
5. Decision of the General meeting of shareholders to distribute the profit by paying off dividends.
- The right to obtain a liquidation share, corresponding to the nominal value of the share is basic material right of the shareholder, included in the membership legal relations, exercising of which presupposes liquidated company. The nature of this receivable requires receiving a certain amount of money. The right to obtain a liquidation share being a particular right, depends only on the availability of remaining property after the creditors of the liquidated company have been satisfied. Rights to obtain a liquidation share have only persons, who are shareholders of the company as of the date of its liquidation. The preconditions for exercising the right to obtain a liquidation share are as follows:
- Liquidation of the company;
- Satisfying (securitization) the company's liabilities;
Expiration of the 6-month period after publishing the invitation to the creditors of the company.
Regarding the shares, issued by public companies, the provision of Art. 111, para. 4 from the Public Offering of Securities Act provides that the public company is not allowed to issue privileged shares giving the right to obtain an additional liquidation share.
The right to subscribe a part of the new shares in the event of company's capital increase, which part is proportionate to the shares held before the increase. The common regulation regarding this right is included in Art. 194 of the Commercial Act. The special conditions related to public companies are provided by Art. 112 and following of the Public Offering of Securities Act, and contain significant diversions from the general rules.
In the event of capital increase through issuance of new shares it is obligatory for the public company to issue rights. These rights are dematerialized securities giving the right to subscribe a certain number of shares with reference to the adopted decision for capital increase of the public company. One right shall be issued against every existing share and the value of the right shall not be obligatory equal to the nominal or emission value of one share. The transfer of rights takes place only on a regulated market. The regulated market, on which the shares of the public company are admitted for trading, is obliged to accept for trading the rights issued by the company. The term for transfer of the rights may not be shorter than 5 working days, and the term for subscription of shares of the new issue shall expire at least 5 working days after the expiration of the term for transfer of the rights.
Right to participate in the capital increase, shall have persons who have acquired shares not later than 5 days after the date of the Decision for capital increase of the General meeting, or if this decision is taken by the management body -the persons who have acquired shares not later than 7 days after the date of publication of the announcement for public offering and its promulgation in the State Gazette.
In the event of capitalization of a part of the company's net profit, every shareholder shall have the right to receive a certain part of the new shares, proportionate to his/her share participation in the capital before distribution of the dividend. Since the right to receive dividend is irrevocable, the allocation of new shares is not to be performed in a different way. Decision of the General Meeting of Shareholders, which contradicts this rule, is invalid.
The preconditions for this right to occur are as follows:
1. Decision of the General meeting, adopted by a majority of ¾ of the presented shares;
The decision is to be adopted within 3-month period after approving the annual financial statement of the company for the previous year.
Although it is not explicitly regulated in the Public Offering of Securities Act, it is accepted that the rules applicable for the capital increase of a public company through issuance of rights, shall be respectively applicable in the cases of capital increase at the expense of the non-distributed profit.
The right to vote is the most important non-material, right of the shareholders, which allow them to adopt decisions at the General meeting regarding all issues, included in the agenda. Every share is entitled to one vote. Public companies are not allowed to issue shares entitled to more than one vote. In event that the owners of the share/shares are more than one person, they exercise the right to vote together through an authorized representative.
The right to vote at a public company's General meeting shall arise for the respective shareholder at the moment of paying up the full emission value of the share/s and after the entry of the company or of the capital increase of the company, respectively, in the commercial register. The right to vote is exercised by the persons registered as such with the right to vote in the central register of securities 14 days before the date of the general meeting art. 115a, p. 1 of the Public Offering of Securities Act.
According to an explicit provision of the Public Offering of Securities Act, the regulated market where the shares of the public company are traded shall immediately announce, upon receipt of the invitation for convention of the general meeting, the final date for concluding share transaction enabling the purchaser to exercise the voting right of the shares at the respective general meeting - Art. 115a, para. 3 of the Public Offering of Securities Act. This date shall not be following the 14th day prior to the date of the general meeting.
Art. 148, p. 1, p. 5, 6, and 7 of the Public Offering of Securities Act explicitly provides the possibilities to transfer the voting right separately from the share. All of these provide that the right is exercised by a person different from the shareholder, and the transfer of the voting right shall be entered in the Central Depository's register.
The right to participate in the management of the company is personal and irrevocable right of every shareholder, notwithstanding the number of shares owned from the capital of the company. Based on this right, every shareholder is to be informed about the convention of a general meeting of shareholders, and respectively to take part in the meeting, as well to pose questions, express his/her opinion and make suggestions. It may be exercised personally or by proxy, based on a power of attorney, applicable for a particular general meeting, which needs to be notary certified, and with the minimum contents, specified by respective ordinance. Re-authorization with rights, as well as a power of attorney, given in contravention of the above stated rules, shall be void.
The right to elect and be elected as a member of the management bodies of the company is included in the voting right, and the right to participate in the management.
The right to receive information is a personal, and irrevocable supervision right of every shareholder which may not be cancelled or restricted based on regulations of Articles of Association or decisions, adopted by the management body or the general meeting of the company. It is expressed in the ability of the shareholders to review all written materials related to the agenda of the general meeting, to receive these materials upon request and free of charge, as well as to receive the protocols and the respective attachments from previous general meetings, which the company is obliged to keep.
Shareholders of public companies have additional rights:
the members of the management and supervisory bodies and the procurator of the company are obliged to answer correctly, comprehensively and essentially to the questions of shareholders, asked at the general meeting regarding the economic and financial status and the commercial activities of the company, except for issues, considered to be insider information;
Public companies shall submit to the Financial Supervision Commission and the Bulgarian Stock Exchange annual and quarterly financial statements and publish respective announcements in a central daily newspaper specifying the place, time and the possibilities for reviewing the statements within a 7-day period following their submission to the commission;
Public companies shall inform the Financial Supervision Commission and the Bulgarian Stock Exchange on other circumstances, specified under Art. 98 of the Public Offering of Securities Act;
The right to request assignment of registered auditors by court, in the event that no such experts have been elected by the general meeting of shareholders, is the personal and irrevocable right of every shareholder of the company. Every single shareholder as well as the Management and Supervisory Boards may exercise this right in the event that the general meeting of shareholders has not assigned a registered auditor until the end of the calendar year and exercising of the right does not depend on exercising the voting right.
The right to cancel decisions of the General Meeting of the company is regulated in Art. 74 of the Commercial Act. Every shareholder can set up a claim against the company in the District Court, in order to cancel decision of the general meeting, whenever the decision contradicts the imperative regulations of the law or the Articles of Association.
The right to defend the membership is regulated in art. 71 of the Commercial Act, and this right gives every shareholder of the company the ability, without any time restrictions, to lay a claim in the regional court where the company's headquarter is registered, in order to defend its right of membership and the separate membership rights when they are violated by the company's bodies.