The Act for Amendment and Supplement to the Commercial Act (AASCA) was promulgated in the State Gazette, issue 105 of 30 December 2016, introducing a number of amendments providing legal certainty for information about facts and circumstances regarding the management and status of companies. The amendments seek to limit frauds committed with filings, deletions and announcements in the Commercial register.

The AASCA aims to prevent abuses with minimal amendments in the legislative framework. A more complex procedure is introduced when appointing managers of companies, transferring company shares or entire companies, capital decrease and increase, as well as disposing of corporate real estates. So far, this has been done only with notary certified signatures. Such legal actions shall now be executed with notary certified signatures and notary certified content of the filed document, carried out simultaneously, unless the Articles of association explicitly provide that these decisions shall be made only in written form. The notary fee due for the certifications shall not be proportional. This would act as prevention against compiling false documents which are the basis of fraudulent schemes and, on the other hand, it would facilitate a prosecution in case of disputes since the original of the contested document shall be stored at the relevant notary’s office.

The new provisions stipulate liability for the Registry Agency for harm caused to individuals and companies from illegal acts, registration officials’ actions or inactions. Registration officials at the Agency are now obliged to carry out mandatory checks on the availability of notary certified notary documents in the electronic system of the Notary Chamber, as they shall bear administrative and criminal liability in case of violations.

In response to the recommendations of the European Commission of 12 March 2014 the amendments to the Commercial Act provide an opportunity for more effective prevention of corporate bankruptcy through recovery, including when there is a real danger of insolvency. For this purpose, a new chapter V “Business Stabilisation Proceedings” is introduced in the Commercial Act. It regulates the possibility of reaching an agreement before opening of insolvency proceedings in order to negotiate the restructuring of the obligations due and thus to create conditions for recovery and stabilisation of the company and continuation of its activities. The chapter stipulates in details the grounds for initiating stabilisation proceedings, their termination, rejection and appealing, the circumstances where they are not applicable and the rights and obligations of all parties and stakeholders. A company that has liabilities mainly to related parties will not be able to take advantage of the stabilisation proceedings. The same applies for public enterprises practising state monopoly or created by a special act, banks and insurers. The implications of stabilisation on possible insolvency proceedings are exhaustively set out.

Regarding insolvency proceedings, the amended Commercial Act establishes presumptions of insolvency and thus aims to facilitate the proving of the state of insolvency and to accelerate the proceedings. For example, a company shall be considered insolvent in case its annual financial statements for the last three years have not been filed in the Commercial Register.

The amendments enter into force on the date of their promulgation in the State Gazette except for those concerning stabilisation proceedings. The latter shall come into force in 6 months.