The provision of Article 137, paragraph 6 of the Bulgarian Commercial Act provides that shareholders in an Ltd. may vote through a representative only with an explicit written power of attorney, except for shareholders – legal entities and legal representatives. Regarding the content of the concept of “explicit power of attorney”, mandatory explanations are given in Interpretative Resolution No. 5/2014 dated 12.12.2016 on Interpretative Case No. 5/2014 of the Supreme Court of Cassation, according to which, according to the scope of the established representative authority, the types of authorization, respectively – the types of powers of attorney are: general (universal) and explicit (special, specific).
In the case of general authorization, the specific legal actions or transactions that the proxy is authorized to perform are not specified, and the scope of the representative authority is either not limited – it refers to any legal actions on behalf of the authorizer or is determined by specifying more general characteristics.
In the case of explicit (special) authorization, the scope of the representative authority is specifically defined by indicating individual legal actions or the legal consequences that should arise. The classification is conditional, since the criterion – the degree of “explicitness” and concretization – is relative. The motives of the Resolution clarify that in the current Bulgarian legislation there is no general legal norm that establishes requirements for the content of the power of attorney, with a view to the validity of the authorization or the subsequent legal transaction or action performed by the proxy.
It follows from the above that no general requirements have been established by the legislator that such an “explicit” (“special”) power of attorney should have any mandatory content, in which the specific types of dispositional transactions and actions that the proxy is authorized to perform, including their essential elements, are specified and listed. Only when a legal norm explicitly establishes certain requirements regarding the necessary content of a given type of power of attorney, should it meet these requirements.
No other requirements should be placed on a power of attorney for participation and voting at a general meeting, as such an interpretation is without normative support and would encroach on the legally guaranteed opportunity for the authorizer to determine, at his own discretion, the scope and limitations of the representative authority he grants to his proxy.
Regarding the concept of explicit power of attorney in the hypothesis of Article 137, paragraph 6 of the Bulgarian Commerce Act, a permanent practice of the Supreme Court of Cassation has been formed. The acts of the Supreme Court of Cassation assume that the imperatively introduced legislative requirement not only for the presence of a written form of the power of attorney, as a condition for validity, but also for determining the scope of the authorization, leads to the conclusion that in order for a shareholder to vote at a general meeting through a representative, it is necessary to specify not only which meeting the authorization refers to, but also the specific actions of the representative in exercising the right to participate and the right to vote of the shareholder who authorized him.
When assessing the degree of specification of the representative’s actions during his participation in the general meeting of shareholders in a Limited Liability Company, which is necessary for the regularity of the power of attorney, in addition to the mandatory interpretation given in Interpretative Resolution No. 5/2014, the established procedure for convening and conducting the general meeting of partners should also be taken into account.
For the purposes of Article 139, paragraph 1 of the Bulgarian Commercial Act, the delivery of a written invitation containing the agenda within the time limit provided by the law should be considered as proper notification to the partner for the convening of a general meeting. The requirement that the issues to be discussed at the meeting must be included in the invitation should also be applied to the content of the power of attorney. This requirement for the content of the power of attorney corresponds to the level of protection that the provision of Article 139 of the Bulgarian Commerce Act aims to provide and guarantees that the shareholder has information about the decisions that will be adopted at the meeting, has considered that he can participate through a proxy in their voting and has considered what representative authority to grant to the proxy in view of the importance of these decisions.
Therefore, in addition to a full specification of the represented and the representative, as well as the meeting to which the authorization relates, the power of attorney should also contain the issues on which the proxy is authorized to vote. However, specifying in the power of attorney the manner of voting on each issue – yes or no, the specific decisions or nominations that should be supported by the proxy, is not introduced as a mandatory requirement in the law and cannot be considered as a requisite determining the regularity of the power of attorney. Such a requirement would limit the proxy’s ability to take into account the discussions of the meeting, the statements of the other shareholders, their proposals and opinions, as well as any information on the agenda items that will be provided during the meeting. Therefore, it is sufficient to indicate in the power of attorney that the proxy can vote on the agenda items at his own discretion. At the same time, there is no obstacle in the power of attorney to explicitly state how the proxy should vote on all or some of the issues, as the limitations on the scope of the representative authority, when not introduced by law, are left to the will of the authorizer. Such a full specification of the manner of voting on each issue on the agenda would be possible if the shareholder – authorizer has formed his opinion on all issues in advance and the proxy should only convey his will.
In all cases, the assessment of the proxy’s ability to protect the interests of the shareholder who authorized him is paramount. As accepted in the motives of Interpretative Resolution No. 5/2014, the relationship between the authorizer and his proxy is one of trust, and the extent of the representative authority that the authorizer will establish with the power of attorney depends on the degree of this trust.
