News

15 January 2024

Ombudsman Diana Kovacheva approached the Speaker of the National Assembly Rosen Zhelyazkov and the Minister of Justice Atanas Slavov to request that amendments to the legislation be initiated that provide for company registrations causing problems to citizens who seek assistance as companies or single-member companies have chosen for their registered office the address of their own real estate, without their knowledge and consent.

Prof. Kovacheva emphasizes that this practice leads to a number of problems and discomfort for the parties aggrieved. For instance, the service of summons for actions at law, default summons, voluntary payment notices, pressure by controlling authorities, by companies that are contracted to collect receivables following enforcement proceedings, by citizens who have been aggrieved by the companies etc.

The Ombudsman cites as the most recent example the complaint by a citizen who reports that her home address is the registered office of an individual involved in a crime, murder, in early January this year in the capital city. The citizen informs that when she checked for herself, it appeared that her abode is the registered office of more than eighty companies.

“It is important to inform you that the Ombudsman has brought the problem of registered office to the attention of Ministers of Justice with the recommendation that action be taken to discontinue the practice of companies to choose the domiciles of citizens as their management address without these citizens’ express consent. The matter was also brought to the attention of the National Assembly during the presentation of the Ombudsman’s 2021 and 2022 reports,” Diana Kovacheva wrote.

She emphasized that she had repeatedly stated opinions that the texts providing for company registration in the Commercial Register and Register of Non-Profit Legal Persons Act and in the Commerce Act allow to choose for management address any domicile while the businessperson is under no obligation to give legal justification for the choice.

“The registered office (the seat) and the management address, together with the name, are the salient individualizing characteristics of a company. In addition to being salient individualizing characteristics, they have other important functions such as: to enable communication with the company; the registered office plays an important role in the determination of the venue of jurisdiction and in the fulfilment of various obligations when they are not agreed between the parties or are not governed by law,” the Ombudsman writes.

She writes further that the legislating authority did not set any specific requirements concerning the registered office and the management address of companies (which are not bound to show a title of ownership or a lease contract) and this makes it possible for them to give a random address, even a non-existing address that is entered into the Commercial Register.

“Though the provision of Art. 29 of the Commercial Register and Register of Non-Profit Legal Persons Act reads that any person with legal interest, as well as a prosecution officer, may file a statement of action for establishment of entry nullity or inadmissibility, as well as for the non-existence of an entered circumstance, I do not see this as an efficient solution to the problem. First, on account of the difficulties arising and confronting the citizens aggrieved though it was not through their fault who are forced to go to court to seek a solution to the problem, to spend time and money and to make additional efforts. In addition, it is difficult to serve summons to such companies, as the address that they have given is not the address that they really use. Second, as the Commercial Register and Register of Non-Profit Legal Persons Act and the Commerce Act do not outlaw the registration of a company at an address without the consent and knowledge of the proprietor, and even if a claim under Art. 29 of the Commercial Register and Register of Non-Profit Legal Persons Act is granted by the court, there is no statutory bar and prohibition against the registration of the seat the company at the same address after the entry of its deletion. In this way citizens are trapped in a vicious circle,” Prof. Kovacheva states firmly.

Therefore, the Ombudsman insists that a discussion be initiated on the possibilities to find a solution to the problem, including proposals for the required amendments to the legislation.