Bulgarian State Suffers Setback in Plovdiv Fair Ownership CaseBusiness | July 11, 2011, Monday // 16:35| views
Bulgaria’s Economy and Energy Minister Traicho Traikov (R) is pictured here with International Plovdiv Fair majority owner Georgi Gergov. Photo by BGNES
The Plovdiv Appellate Court has overturned the ruling of the Plovdiv Regional Court to annul the two increases of the capital of the International Plovdiv Fair company and to return the majority stake in the Fair to the State.
The latest development came after the Fair's owner, Georgi Gergov, appealed the decision of the Regional Court.
According to the Appellate Court in Bulgaria's second largest city, the two increases of the capital, making Gergov's company "Puldin Tourinvest" owner of the Fair, were made legally.
The Appellate Court rule, however, is not final and can be appealed with the Supreme Court of Cassations.
The two capital increases were made in 2006 and 2007, reducing the State's stake below 50% and making the municipal-private company "Puldin Tourinvest" a majority stakeholder. In 2008, Gergov acquired the majority share package of the company, which was not slated for privatization, by purchasing them from restitution owners.
At the time, Gergov immediately replaced the Fair's management, appointing close associates to key posts under the approving eye of the former, Socialist-led Three-Way Coalition cabinet.
Soon after the cabinet of the Citizens for European Development of Bulgaria (GERB) party came into power, Economy and Energy Minister, Traicho Traikov, declared he would return the ownership of the Plovdiv Fair back to the State. The first idea was to increase the capital, but the move could not be carried out without the agreement of "Puldin Tourinvest."
In April 2010, Traikov submitted the case with the Court after a probe of the deal involving the Fair revealed a number of violations of the trade and privatization laws.
At the end of January, 2011, the Regional Court magistrates made their judgment on the grounds that at the time of the first increase of the capital, the company was no longer a property belonging solely to the State, but a shareholder association thus then Economy Minister, Rumen Ovcharov (from the Bulgarian Socialist Party) did not have the authority to make a single-handed decision about the increase.
In addition, according to the Privatization and Post-privatization Control Act, the reduction of the State capital needed the agreement of the Privatization Agency. The Court had been unable to find such agreement in the documentation of the case, making the capital increase a "hidden" privatization.