Information Services AD is trying to become 100% state-owned

Information Services AD will try to buy out the shares of its minority shareholders and become 100% state-owned. The company, which plays a strategic role for the state as a national system integrator, is entitled to receive in-house orders from all state bodies, but according to lawyers and politicians, this is now illegal as part of the shares are owned by private individuals (0.51%).

The Board of Directors has now convened an extraordinary General Meeting of Shareholders, scheduled for September 4, with a single item on the agenda: the buyback of shares from minority shareholders. The proposal is for the company to buy back a total of 11,598 shares, representing 0.51% of the capital, at a price of BGN 25.25 per share, which will require less than BGN 300,000.

The buyback procedure will continue for up to six months after the decision is entered in the Commercial Register.

As of the date of the General Meeting, Information Services has a paid-in capital of BGN 2,298,495, divided into 2,298,495 dematerialized registered shares with a par value of BGN 1 each, of which 2,286,897 shares (99.49% of the capital) are owned by the state through the Ministry of Electronic Governance.

The proposed terms and conditions for the repurchase are formulated on the basis of Article 187a, paragraph 1, item 8 and Article 187b of the Commercial Law, and the submission of application-contracts shall be made in person or through authorized persons with a notarized power of attorney at the branches of the company. If the maximum number of shares is exhausted before the expiry of the six-month period, the procedure shall be terminated automatically. If a quorum is not reached at the meeting on September 4, it will be reconvened on September 19.

We would like to remind you that in the last days of the Glavchev caretaker government, the state-owned company received additional responsibilities for system integration in the administration. Information Services is now also responsible for the cybersecurity of all state bodies.

In practice, the activities are assigned by the Ministry of Electronic Governance, and the relevant administrations are only beneficiaries. Since the Ministry controls the company, it will be able to conclude in-house contracts with it without going through the Public Procurement Act procedure. However, according to Bozhidar Bozhanov from Democratic Bulgaria, if it is not 100% state-owned, such in-house contracting would be illegal.

IO cannot be contracted in-house because of the private shareholders who own 0.5% of the company. And since our law is unambiguous on this issue, the Glavchev cabinet's decision cites the public procurement directive, which, with a little imagination, allows for interpretation. Of course, it is implemented through local law, not directly, so this is just a balancing act.
In other words, the decision creates a new unlawful procedure for awarding public procurement contracts,“ Bozhanov explained in a publication in March.

We would also like to remind you that the European Commission threatened Bulgaria with infringement proceedings over ”Information Services."

According to Brussels, the Bulgarian Electronic Governance Act contradicts Directive 2014/24/EU, which has special requirements for public procurement above a certain threshold—it must be awarded in accordance with the principles of transparency, equal treatment, and non-discrimination. The EC considers that the direct award of the activities of “Information Services” is taking place without the conditions that would justify such an approach being met.

Translated with DeepL.