A Bulgarian company must establish consolidated accounts especially when it is in one of the three following situations¹:

• It controls more than half of the voting rights of another company;
• It has the right to appoint more than half of the managers or members of the supervisory body of the controlled company;
• It has the right to govern the financial and operating policies of another entity under a contractual relationship.

When a Bulgarian parent company has to consolidate its accounts, then the parent company and all its subsidiaries must participate in the consolidation, regardless of the location of the headquarters of the subsidiaries.

Companies that are subject to a consolidation obligation have to prepare until March 31 of the following year their consolidated accounts.

However the consolidation of accounts is not mandatory for small groups, i.e. when the net figures contained in the annual accounts of the group's companies do not exceed two of the following three criteria:

• Net asset value at December 31 is less than BGN 3 million
• The turnover for the year is less than BGN 6 million.
• The average number of employees for the year is less than 80 people.

The exception to the requirement to consolidate by application of the above mentioned thresholds will not apply to companies whose securities are admitted to a regulated market

¹Some exceptions to the three situations described may exist however, but the complexity of these exceptions is beyond the scope of this summary note.