Opinion on the Draft Law Amending and Supplementing the Non-Profit Legal Entities Act

The position of BESCO – The Bulgarian Startup Association, regarding the draft law amending and supplementing the Non-Profit Legal Entities Act, proposed by the United Patriots political party, is one of clear opposition and does not recognize the need for this legislative proposal.

Moreover, we believe that this draft law:

• will burden the administration and management of NGOs, hindering the effective functioning of the civil sector;
• will unnecessarily increase public administration costs by creating a new register within the Ministry of Finance;
• will impose an additional stigma of “foreign agent” on any NGO funding from an “external source” (the draft law requires that donations exceeding BGN 1,000 be explicitly declared when the source is outside the European Union);
• will create high barriers for membership in the governing boards of NGOs through mandatory asset declarations and direct oversight by the Commission for Counteracting Corruption and Confiscation of Illegally Acquired Property (CPCONPI), effectively stifling the governance structures of the non-governmental sector;
• will damage Bulgaria’s image, threatening the independence of the civil sector;
• represents democratic regression, with the potential for state overreach over the non-governmental sector.

Why is this draft law unnecessary?
We provide a concise overview of the governance and control framework of NGOs. It is clear that the NGO sector is strictly regulated, and concerns about transparency (as stated in the draft law’s motives) are, to say the least, irrelevant.

Following numerous amendments to the Non-Profit Legal Entities Act, the current forms of control and governance over an NGO include:

• Annual financial statements in accordance with the Accounting Act, published in the Commercial Register and the Register of Non-Profit Legal Entities;
• Annual activity report in accordance with the Non-Profit Legal Entities Act, published in the same register – including information on key activities, expenditures, their relation to the organization’s goals and programs, achieved results, the amount of donated assets and income from fundraising activities, details on donations and donors, and financial results;
• Annual report to the National Statistical Institute under the Statistics Act;
• Annual tax return under the Corporate Income Tax Act;
• Internal rules for control and prevention of money laundering and terrorism financing under the Anti-Money Laundering Act;
• Risk assessment under Article 98, paragraph 5 of the Anti-Money Laundering Act (detailed provisions retained as in original text);
• Training plans for employees regarding AML and counter-terrorism financing requirements, including practical training for identifying suspicious transactions;
• Identification of beneficial owners under AML legislation, including detailed criteria for ownership, control, and reporting obligations.

BESCO calls on the Legal Affairs Committee, the Budget and Finance Committee, the Committee on Interaction with Non-Governmental Organizations and Citizens’ Complaints, and the Committee for Combating Corruption, Conflict of Interest and Parliamentary Ethics to carry out an objective and in-depth analysis of the necessity of this draft law.