In mid-February 2025, a draft law amending and supplementing the Law on the Public Offering of Securities (LPOS) was submitted to the National Assembly of the Republic of Bulgaria. This draft law introduces measures to ensure the implementation of Regulation (EU) 2023/2631 of the European Parliament and of the Council on European Green Bonds and the voluntary disclosure of information about bonds marketed as environmentally sustainable and sustainability-related bonds (Regulation (EU) 2023/2631).
The Regulation introduces uniform requirements for the issuance of green bonds to reduce the risk of misleading claims about their environmental relevance. Issuers have the option of applying different standards for the issuance of green bonds, but if they wish to offer these bonds under the name "European Green Bonds", they should adhere to the requirements of the Regulation.
The regulation aims to provide a clear structure for investor disclosure. Issuers who choose to offer European Green Bonds must disclose additional information:
- an information document prior to the issuance of the bond, as well as the results of the verification of this document;
- reports on the distribution of proceeds from the issue;
- the results of the checks of the reports on the distribution of proceeds from the issue;
- a report on the impact of European Green Bonds;
- the results of the verification of the impact reports of European Green Bonds, where applicable.
To ensure that investors are informed about European Green Bonds, which are securitization bonds, specific disclosure requirements will be introduced. In standard securitization transactions, the issuer of the bonds is a specialized investment vehicle that is legally separate from the originator. The originator, in turn, is the organization that uses the proceeds from the bond to finance economic activities. It will be responsible for the future use of these proceeds, which is described in the prospectus that must be published in accordance with Regulation (EU) 2017/1129.
To increase investor confidence, the Regulation imposes mandatory verification by external verifiers of key documents related to European Green Bonds – the information document and the income distribution report. Additionally, requirements are introduced for the registration of external verifiers and supervision by the European Securities and Markets Authority (ESMA) to increase transparency in the working methods of the verifiers. This will ensure that external verifiers have the necessary qualifications, professional experience, and independence, and will reduce the risk of potential conflicts of interest, ensuring adequate protection for investors. Issuers of European Green Bonds may only use external verifiers that are registered by ESMA.
The Regulation also provides for the possibility of using uniform standard forms for the disclosure of information for bonds that do not meet the criteria for "European Green Bonds" but are marketed as environmentally sustainable or sustainability-related. The application of standard forms for such bonds will make it easier for investors to find the necessary information, as well as to compare and summarize data on these bonds.