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Enclosure 12(E12) - Procedure for Levying of Distresses, Establishment of Pledges and other Encumbrances on Securities Registered with CD AD  
     
 

Establishing and Servicing Pledges under the Special Pledges Act (SPA).

1. Special pledges are established and serviced in accordance with the provisions of the Special Pledges Act /SPA/ and of the Rules of the Organization and Functioning of the Central Register of Special Pledges with the Ministry of Justice (the Central Register /CR/ Rules).

2. Initial recordation of the circumstances related to a special pledge established shall take place pursuant to the following documents:

2.1. An application for the registration of a special pledge agreement – Sample 01/E12. The application shall be signed by the Applicant and the Pledgor under the terms of Art. 27 of SPA.

2.2. A declaration by the Pledgor under Art. 264 of the Tax and Insurance Proceedings Code. In case of a legal entity, it should be signed by the company’s representative; in case of a physical entity, it should be signed by the declarer in front of the recordation officer at CD, whereas the officer shall certify with his/her signature that the declarer has signed in his/her presence. When the declaration is not signed in the CD officer’s presence, a notary attestation of the declarer’s signature is required, the date on which should not be earlier than one month before the establishment of the pledge.

2.3. A copy of the Pledgor’s Actual Legal Status Certificate.

2.4. A copy of the Applicant’s Actual Legal Status Certificate.

3. Recordation of changes related to the Pledge Creditor, the Pledgor, the modality, the amount of property pledged etc. shall take place pursuant to the following documents:

3.1. An application for the registration of a special pledge agreement – Sample 01/E12, whereas in Column 1, the registration number shall be stated of the Initial Recordation Order, and the information about the changes shall be filled in the respective groups and fields. In the fields pertaining to data that remain unchanged, the wording “no change” shall be filled in.

3.2. The application under item

3.1 shall be signed by the Pledgor and by the Pledge Creditor. In case the changes are related to partial deletion of the pledge/release of part of the pledged securities, the application may be signed by the Pledge Creditor only.

4. Renewal of the recordation shall take place pursuant to an Application for the Renewal of Recordation – Sample 11/E12, which should be signed by the Pledge Creditor’s representative or a person explicitly authorized by him with an attested power of attorney.

5. Deletion of the recordation shall take place pursuant to a Consent for the Deletion of Recordation – Sample 12/E12, which should be signed by the Pledge Creditor’s representative or a person explicitly authorized by him with an attested power of attorney. In Group No1 of Sample 12/E12, the number of the initial recordation must be entered.

6. Recordation of the proceeding to execution shall take place pursuant to an Application – Sample 05/E12, which should be signed by the Pledge Creditor’s representative or a person explicitly authorized by him with an attested power of attorney.

6.1. CD shall issue a Certificate of Proceeding to Execution Recorded in the Special Pledges Registry, in which [certificate] the following are stated:

6.1.1. Number and date of the recordation;

6.1.2. ISIN code and number of the securities that are subject of the execution;

6.1.3. Data of the Pledgor in accordance with the application for the registration of the pledge agreement;

6.1.4. Data of the Pledge Creditor in accordance with the application for the registration of the pledge agreement.

6.2. The Pledge Creditor shall realize the execution through an Investment Intermediary under the terms of Art. 33 of Ordinance No1 of the Financial Supervision Commission on the requirements related to the investment intermediaries’ activity.

7. Recordation of the delay of execution shall take place pursuant to an Application – Sample No7, which should be signed by the Pledge Creditor’s representative or a person explicitly authorized by him with an attested power of attorney.

8. Blocking/unblocking of the securities which are subject of the established special pledge shall take place according to an explicit written order by the Pledgor, with notary-certified signature.

8.1. The written order shall be in free format and should contain: a request for blocking; the ISIN code of the pledged securities and the name of the issuing company; the number of the securities; the reason for the blocking (a pledge); the name and the identifying code of the Pledge Creditor for the benefit of whom the blocking is taking place.

8.2. In case the Pledgor is a physical entity, the signature on the order should be notary-certified, or placed in the presence of the recordation officer at CD AD, who shall certify the signature under the established procedure.

8.3. In case the Pledgor is a legal entity, the blocking order should be signed by the person who represents this entity and the legal entity’s seal should be placed on it.

8.4. Unblocking of the securities which are subject of the established special pledge shall take place according to an explicit written order in free format, which should contain: a request for blocking; the ISIN code and number of the pledged securities; the name of the issuing company; the name and the identifying code of the Pledge Creditor as stated in Group No4 of Sample No1 – Application for the Registration of Pledge Agreement. This application should be signed by the Pledge Creditor and the Pledgor.

9. CD shall issue certificates and references about the recordation made of special pledges and circumstances related thereto pursuant to a written order by the interested person. The references/certificates shall contain the requisites prescribed in Art. 22 and Art. 23 of the Rules of the Organization and Functioning of the Central Register of Special Pledges. Distresses on Dematerialized Securities.

10. CD shall execute orders to distress securities in accordance with the provisions of Art. 109a, Art. 109в Paragraph 1 and Art. 138 of the Public Offering of Securities Act; of Art. 35, Paragraph 2 of Ordinance No8 of the Financial Supervision Commission; and Enclosure 23 [to the present Rules and Regulations] – Procedure for Completion of Transactions with Securities through Gross Settlement System in Real Time.

11. The recordation of distress shall take place pursuant to a distress notice issued by the respective empowered body – a judicial executor, a private executor or a public executor.

11.1. In case the issue has been registered with CD and the debtor possesses the securities stated in the distress notice, the circumstances related to the levied distress shall be entered in the Special Pledges Registry and the securities shall be blocked.

11.2. In case the securities possessed by the debtor are less than the quantity stated in the distress, then blocked shall be the entire quantity of securities available. The judicial executor body that has levied the distress shall be advised of these circumstances in written form within 3 days.

12. In case the circumstances under item 10 and item 11 are not present, the judicial executor body shall be advised in written form within 3 days that the distress cannot be executed and what the specific reasons are.

13. Distresses shall be discharged pursuant to a notice by the judicial executor body that has levied the distress. The circumstances related to the discharge shall be entered in the Special Pledges Registry and the securities that are subject of the distress shall be unblocked.

14. Special cases.

14.1. In case of transformation of the issuing company which has been registered at CD – transformation meaning result of bundling, merge, separation and partition, or change in the face value of a share by way of split of shares while the total amount of the issue is preserved, - the Central Depository, pursuant to the documents under item 5.1.7 and item 5.1.8 of Enclosure 02 to the Rules and Regulations of CD AD, submitted by the issuer, shall perform the ex-officio recordation of the distresses already levied.

14.2. In case of initial registration – immobilization and dematerialization of securities, - as well as in case of de-registration of securities, the recordation of the distress shall take place ex-officio, under argument of Art. 261г, Par. 2 of the Commercial Code. To this end, in case of registration the issuer shall submit to CD an Application – Enclosure 1b/E02, while in case of de-registration, the issuer shall fill in and deposit with CD the due declaration – Enclosure 11 / E02.

14.3. Payment of dividends, interests etc. on securities that are subject of pledges, distresses and other encumbrances shall take place under the terms of item 9.1.6 оf Enclosure 02 to the Rules and Regulations of CD. Collaterals under the Financial Collateral Agreements Act.

15. Financial Collateral Agreements with Extension of Pledge /Pledge Agreement/.

15.1. In order to note the pledge on the securities account which is subject of the financial collateral agreement with extension of pledge, the Secured Entity and the Securer shall provide to the Central Depository a notary-certified copy of the Pledge Agreement, which [agreement] should contain the following requisites at least:

15.1.1. The title Financial Collateral Agreements with Extension of Pledge.

15.1.2. An explicit mentioning that the agreement is subordinated to the provisions of the Financial Collateral Agreements Act.

15.1.3. Data about the contractual parties /Securer and Secured Entity/: in respect of the trade companies, these shall be the firm/company name, the seat and registered address, the BULSTAT registration number; in respect of the governmental bodies and public institutions, these shall be the name, the headquarters’ address, the status of the person signing the agreement.

15.1.4. The amount of the collateralized financial liabilities.

15.1.5. The nature/type, the issue, the ISIN code, the number of instruments forming the volume of the financial collateral.

15.1.6. The holder and the number of the account to which the amounts shall be remitted of the dividends/interests/principals originating from the pledged securities, in case such payments occur during the terms of validity of the agreement.

15.1.7. The terms and conditions under which the financial collateral should be realized, including the sequence of realization in cases when securities from different issues are pledged.

15.1.8. The term of validity of the agreement.

15.1.9. The date of conclusion of the agreement and the signature of each of the contractual parties. 16. Financial Collateral Agreements with Ownership Transfer /Ownership Transfer Agreement/.

16.1. In order to register the transfer of the securities which are subject of the financial collateral agreement with ownership transfer, the Secured Entity and the Securer shall provide to the Central Depository a notary-certified copy of the Financial Collateral Agreements with Ownership Transfer. The agreement should contain the following requisites at least:

16.1.1. The title Financial Instruments Transfer Agreement.

16.1.2. An explicit mentioning that the agreement is subordinated to the provisions of the Financial Collateral Agreements Act.

16.1.3. Data about the contractual parties /Securer and Secured Entity/: in respect of the trade companies, these shall be the firm/company name, the seat and registered address, the BULSTAT registration number; in respect of the governmental bodies and public institutions, these shall be the name, the headquarters’ address, the status of the person signing the agreement.

16.1.4. The amount of the collateralized financial liabilities.

16.1.5. The nature/type, the issue, the ISIN code, the number of instruments subject to transfer.

16.1.6. The holder and the number of the account to which the amounts shall be remitted of the dividends/interests/principals, in case such payments occur during the term of validity of the agreement.

16.1.7. In case the agreement contains a provision that the Secured Entity should extend – in accordance with Art. 2, Para.3 of the Financial Collateral Agreements Acts /FCAA/ - financial collateral of equal value through instruments registered with CD, the following elements should be included: а/ The nature/type, the issue, the ISIN code, the number of instruments ensuring financial collateral of equal value; b/ The holder and the number of the account to which the amounts shall be remitted of the dividends/interests/principals, in case such payments occur during the term of validity of the agreement.

16.1.8. The terms and conditions under which the financial collateral should be realized, including the sequence of realization of securities from different issues in case of Ownership Transfer Agreement.

16.1.9. The term of validity of the agreement.

16.1.10. The date of conclusion of the agreement and the signature of each of the contractual parties.

17. In case some of the requisites listed under item 15 or item 16 have not been included in the Pledge Agreement or the Financial Collateral Transfer Agreement, the parties on the respective agreement shall submit to CD an application for supplementation of the missing data, which shall be signed by the parties under the agreement.

18. When the term of validity of the agreement has expired or the agreement has been terminated, the parties on the agreement, or the party that is proceeding by right to realization of the financial collateral, shall state in written form in front of CD the holders and numbers of the accounts to which the securities shall be transferred that are subject of the Agreement.

19. In case the parties agree on modifications of the Financial Collateral Agreement’s parameters, each modification shall be certified by way of submitting to CD of an Annex to the initial Agreement. In case cession is realized under the Financial Collateral Agreement, in order to transfer the rights to the respective accounts, it is necessary to submit – along with the statement attesting the new creditor’s data, - also the written consent of the Securer, in accordance with the provisions of Art. 99 of the Obligations and Contracts Act.

20. Regardless of all possible versions of the Financial Collateral Agreement, in case particular conditions and limitations exist concerning the transfer of the securities that are subject of a financial collateral agreement, the transfer of ownership on the securities, the transfer of the securities from one account into another, or the execution thereon can only take place under the terms set in the Articles of Association of the issuing company, and following the vinculation requirements registered with the Central Depository.