On February 17, 2025, a draft law was submitted to amend and supplement the Public Offering of Securities Act (“POSA”). Its aim is to establish conditions for the implementation of Regulation (EU) 2023/2631 of the European Parliament and the Council (“the Regulation”) concerning EU Green Bonds.
What are EU Green Bonds
European green bonds represent an option (not a necessity) for a company to designate its bond issue as consisting of EU Green Bonds. The goal is to promote accountability, increase investor confidence, and overall stimulate the market for projects related to environmentally sustainable initiatives, as part of the EU’s “green” policy. The ability to label a bond as an “EU Green Bond” comes with a specific set of requirements regarding the targeted use of the raised funds and transparency in this process.
Requirements
The draft law introduces measures aimed at transparency and accountability to investors purchasing EU Green Bonds. The following requirements are set out:
- Preparation of an information document prior to the issue of green bonds;
- Reports on the allocation of proceeds from the green bond issue;
- An impact report on the European green bonds, along with the results of verification of the reports.
An additional measure to increase investor trust is the requirement for external parties to verify the information document and the allocation report. These verifiers will be registered and under the supervision of the European Securities and Markets Authority (ESMA).
Competent authority
The Financial Supervision Commission is proposed as the national competent supervisory authority. It will oversee compliance with the disclosure requirements by issuers of EU Green Bonds, as well as issuers of environmentally sustainable bonds or sustainability-linked bonds.
When the initiator of a securitization bond is a credit institution, the Bulgarian National Bank will be the competent authority for ensuring compliance with disclosure requirements.
Sanctions
Last but not least, the draft law also introduces administrative penalties for violations of the Regulation. The fines range from a minimum of BGN 500 for breaches related to periodic disclosure requirements after the issue EU Green Bonds, up to BGN 100,000 or double the amount of the realized profit/avoided loss in the case of repeated violations of this kind.
The news above is for information purposes only. It is not (binding) legal advice. For a thorough understanding of the subjects covered and prior acting on any issue discussed we kindly recommend Readers consult Ilieva, Voutcheva & Co. Law Firm attorneys at law.
