Sponsored by CIPE
Operation and Organization of the Bansko Municipal Privatization
Privatization Investment Fund: Rules for Organization and
CHARTER OF OPERATION AND
ORGANIZATION OF THE BANSKO MUNICIPAL PRIVATIZATION FUND
I. LEGAL STATUS
The municipal privatization Fund is being established pursuant to
the provisions of Article 6, par. 2 (3) of the Law on Privatization
and Transformation of State and Municipally Owned Property.
According to this section, "the remainder (from the total revenues
from the privatization of municipal enterprises, entering a
separate account to the respective municipal budget, as set forth
in Article 6, par. 2 of the same law) amounting to 88 percent shall
be set aside in a special Fund under the discretionary authority of
the municipal council, and the funds shall be used in order of
priority to cover uncollected debts incurred by municipal
enterprises, including payment against loans extended for pending
construction projects, as well as for investment purposes. These
funds shall not be used to cover daily operational expenses."
The status of the privatization Fund should be
determined by the fact that the Law allows for considerable
latitude in the manner the municipalities collect and spend
revenues accumulated in it.
There are two possible approaches in defining a
strategy for the development of the Fund. They will predetermine
the Fund's legal status, its structure of governance, etc.
1. If the Fund's major purpose is the accumulation
and spending of revenues collected from privatization, as a
revenues-expenditure balance, with the spent funds not being
renewed, then the Fund will only exist until the municipal
privatization process is completed. The Fund will therefore not be
renewable. If this option is chosen, then the Fund's status and
management are fairly simple and do not require complex regulatory
provisions. The management bodies identified in the annual
privatization program will allocate revenues to the respective
municipal investment projects and the entities making loans to
Among the advantages under this option for the
development of the Fund are the revenue spending possibilities,
clearly unlimited with respect to the anticipated economic effect.
Short-term management objectives thus become the primary goal. The
Fund's management is not burdened with the complexities of a
consistent financial policy, and the funds are used as deemed most
The disadvantages come from the fact that the
revenues are spent inadvertently thus preventing the municipality
from accumulating sustainable and more substantial revenues to fund
larger investment projects which the municipality sees as
particularly important. Revenues from municipal privatization are
scarce as it is, and they cannot cover the entire duration of any
project they could be allocated to. The total revenues accumulated
the Fund for 1993 through 1994 are estimated at 30 million levs,
that is, they could hardly affect the municipal investment program
and the development of local infrastructure.
2. If the Fund is renewable it will continue to
collect revenues and spend funds after the completion of the
Through the privatization process, the municipality will withdraw
from immediate economic activity. However, privatization revenues
could serve as a foundation for local self-government. Through the
privatization investment Fund, the municipality can avail itself of
the possibility to create a fund to stimulate local economic
development, primarily infrastructure. As is known, this is a
matter of general practice in most countries of the European
The primary objectives of this renewable
privatization Fund could be:
- to improve municipal infrastructure thereby
assisting economic development and helping solve social
- to provide incentives for economic activity in the
- to assist in the restructuring of the economy in
- to utilize the advantages of the municipality with
respect to its neighboring municipalities;
- to provide special assistance to less developed
regions in the area of Bansko which require additional efforts from
the municipal authorities;
- to assist in the implementation of environmental
- to assist small businesses and entrepreneurs in the
municipality, through a number of loan incentives and tax
The Fund could thus be incorporated either as a
separate property of the municipality, which is the option followed
in the attached Charter, or as a stock corporation. The latter
implies that the Fund will be a separate legal entity, not attached
to the municipality. The Fund will then be independent and it will
be more difficult to make it serve the purposes of the municipality
Another significant drawback of having the Fund
incorporated as a stock corporation is that the Fund will be very
vulnerable to credit-making institutions: it will be liable for
uncollected debts incurred by municipal enterprises and thus can
end up being used exclusively to cover these liabilities without
being used for investment purposes, as stipulated in the law.
The Fund will undergo three stages of development if
it is incorporated as a separate municipal property. During the
first stage, the Fund will accumulate revenues from municipal
privatization deals and will invest a portion of those in a manner
ensuring returns, while another portion will be used to cover
uncollected debts incurred by municipal enterprises or fund pending
construction projects. Returns could be ensured through purchase of
debt of economically promising municipal enterprises, through
participation in profit-making businesses, including businesses not
owned by the municipality, and through the creation of an
investment portfolio of securities purchased with moneys of the
Fund. Thus the Fund will have revenues coming from sources other
than municipal privatization, while at the same time, through the
acquired property, the value of invested funds will not decrease
The amount of these additional revenues will
increase with time, while the amount of privatization revenues will
gradually decrease. During the first stage, the Fund's moneys will
be used primarily for the purposes set forth in the law, as the
majority will be accumulated from privatization deals. The
provision of the law stating that the funds are to be used "in
order of priority" for the purposes indicated does not preclude the
use of funds for other legitimate purposes, except for daily
operational expenses. The Fund's overhead charges should be covered
by the municipal budget, rather than at the expense of its own
At the same time, with the increase of Fund revenues
from other sources, there will be a wider range of investment
opportunities and objectives. A wider and more diverse municipal
investment policy will have economic and social repercussions, a
new instrument will be created as a component of the foundation of
local self-government. It should be noted that the Fund's
investment policy should not overlap with the municipality's
investment policy. A relative independence of the Fund's investment
programs is required by the objectives of the renewable
The second stage in the development of the Fund will
be the period when the amount of privatization revenues will become
smaller than the amount of revenues from other sources, such as
what will by then be former investments and share participation.
During this stage the Fund will accumulate a substantial amount of
its own funds, and have opportunities for independent project
financing. It is expected that during this stage the Fund's
management will gain substantial experience and an understanding of
the expediency and effectiveness of certain ventures.
The third stage entails the disappearance (or
reduction to negligible amounts) of revenues accumulated from
privatization deals. The Fund will operate as a typical investment
fund, drawing upon resources coming from share participation and
other sources. The Fund will at this stage be free to use a portion
of these in profit-making ventures to further generate revenues,
and another portion will be used to fund projects in accordance
with the policy priorities set by the municipality. This is the
stage when the Fund becomes a truly renewable, financially viable
entity. Instead of inadvertently spending the resources from
privatization deals, the Fund will have secured property as a
constant source of revenues. These can now be used to support the
municipal investment program, for social and other local government
purposes. The Fund's organization and its rules of operation can
change at this point, as a result from the shift in revenue
The Fund's major tasks will be related to the
management of its share participation in multiple ventures, and to
the restructuring of its investment portfolio. The objectives and
the sphere of activity of the Fund could be broadened.
The advantages of having the Fund incorporated as a
separate property are primarily in the opportunity to meet the need
for resources to restructure municipal enterprises, on the one
hand, while on the other, making investments and accumulating
profit-making municipal property as a sustainable source of
revenues to cover long-term projects and support the municipality's
economic and social policies. Other advantages are the reduced risk
of unthoughtful decisions and improper use of funds, as well as the
control mechanisms and the public monitoring over the decisions
taken and the results from their implementation, which is typical
of standard investment funds - those incorporated as stock
Therefore, the fact that the Fund is presently being
incorporated as a separate municipal property does not preclude the
possibility of it being transformed into a standard commercial
The only shortcoming that renewability entails is
the rather complex decision-making procedure.
Following the above arguments, we believe that the best format for
the proposed investment Fund is to incorporate it as a set
municipal asset, without being a legal entity. Along with all else,
this format presents technical and management advantages, in that
the local authorities will conduct the daily operational management
of the fund without having to commit significant additional
resources and undergo substantial administrative complications.
II. FUND ASSETS.
The Fund will compile its portfolio primarily from revenues from
the privatization of municipal enterprises. Insofar as it will
perform almost all operations a standard fund carries out, then its
assets will constitute revenues from investment projects conducted
jointly with other business entities, investment funds from
international financial and other institutions, voluntary
Another very important source of revenues could be participation
in similar European and regional development funds.
Sample structure of the investment portfolio.
1. Short-term instruments.
- state treasury bonds;
- "bad loans" treasury bonds;
- state secured repurchase agreements;
- municipal bonds;
- convertible bonds with share participation
- joint funding contracts;
- discounted bonds guaranteed by the state,
- discounted securities (negotiable certificates of
deposit and bankers' acceptances);
2. Mid-term instruments
- Loans extended to members of the Fund or Fund
3. Long-term instruments
- common stocks issued by state, private and
- share participation in enterprises which are
members of the Fund;
- insurance policies;
- patents, licenses, and other intellectual property
- real estate.
III. FUND LIABILITIES.
The Fund's investment strategy is determined by three major
restrictions: the provisions of the Law on Privatization and
Transformation of State and Municipally Owned Property, its funds,
and the municipality's investment policy.
The municipality is to choose one of two strategies: the strategy
of smaller risks and moderate but certain revenues, or the strategy
of fairly high risks. This is the key to the entire investment
policy of the Fund. It will arrange the Fund's instruments, and
eventually its objectives, in a definite order of priority. It is
therefore appropriate for the Fund to formulate its strategy on a
yearly basis. In defining the Fund's policy, regard should be made
to the experience of the 10 odd investment funds already in
existence in this country.
All of them, including those funded by the
government, have developed strategies prioritizing mid-term
instruments. However, they have in practice been conducting a
policy of smaller risk using short-term instruments, thus being
hardly distinguishable from the banking institutions. Surely under
these circumstances the Fund can attract a number of promising
long-term projects and be fairly successful in the competition for
The Fund will be used to finance primarily
economically difficult initiatives, such as projects where the
returns are expected to be slower, large and long-term investment
projects, and, most of all, high-risk projects. The above could
potentially cause financial imbalance and should be offset by a
number of flexible projects bringing quick returns, thereby
contributing to the Fund's renewability.
A substantial reserve fund is necessary to act as a
cushion to high-risk ventures. The Fund's permanent reserve should
not fall below 10 percent of its annual revenues.
Since the Fund will primarily fund high-risk
projects, a principle of shared responsibility should be followed
where other funds or outside loan-making institutions are involved
in joint initiatives.
Unlike European regional investment funds, whose
major objective is providing support for small and medium-size
businesses, the municipal Fund should set as its key priority all
large infrastructure-building projects, and also provide incentives
to a set number of smaller and medium-size businesses each year.
The social benefits from this strategy will exceed by far any
immediate economic effect. A good public relations strategy would
enable the Fund to gamer strong support from the public and the
As it is, the Fund's primary task is to identify and
fund investment projects. In addition to its economic and financial
objectives, the Fund sets out to support entrepreneurship and
encourage private sector development.
IV. STRUCTURE OF GOVERNANCE AND
The governance of the Fund will be determined by its
legal status and it is clear from the text of the Article 6, par.2
(3) of the Law on Privatization and Transformation of State and
Municipally Owned Property precludes the possibility that the
Fund's initiatives be supported directly by the revenues it will
accumulate. As the Fund is a form of set asset without being a
separate legal entity, all its expenses will be budgeted by the
municipality on an annual basis.
Section 3 deals with the Fund's governance bodies.
The municipality's deputy mayor is in practice charged with the
daily management of the Fund, with the municipal council having a
say in larger projects. This structure of governance is
predetermined by the status of the Fund as a separate municipal
property. A number of considerations apply in this respect.
Division of powers in the Fund's management between the deputy
mayor and the municipal council is in compliance with the principle
of mutual control and coordination of interests. Quite surely, this
division could at times cause delays in the decision-making
process. The adequacy of this division will be best tested in the
course of the Fund's operation. Only persons with signatures
verified at the Municipal Council is vested to manage the Fund, to
assign contracts, to contact prospective investors, as well as to
authorize the local administration to manage the Fund. This reason
therefore, the deputy mayor is entrusted with the functions
The program is considered key to the operation of
the Fund. Its adoption allows for ongoing flexibility in the
decision-making process. In addition, publicizing the program could
encourage support for the municipality's privatization policies,
and contribute to the efforts to attract promising,
revenue-generating projects. A program made available to the public
will lend transparency to the process of revenue and expenditure
allocation carried out in a manner so as to ensure that the
principle of renewability is followed. If the program guarantees
the Fund's renewability throughout the year, then it obviously is
well thought-out and merits the support of the municipal
An important provision in the program is that the
investment projects to be undertaken during the respective year
need not be indicated by name, the argument being that preliminary
information would affect negatively the manner of operation of the
selected companies. Announcing the Fund's intentions to provide
financial support could lead to decrease in motivation among
targeted municipal enterprises, and reluctance to improve their
financial condition. Moreover, it could lead to intentional
increase of debts. It is therefore suggested that the program
indicate investment allocations and eligibility criteria, and not
specific lists of slated companies.
Key to a well-functioning Fund is the procedure for
filing, registration and review of investment proposals, as well as
the manner of submission of proposals to the municipal council. The
requirements are rather stringent and bureaucratically cumbersome,
aimed at avoiding any possible violations by the local
administration. It is of utmost importance to follow strictly the
A wide range of officials is authorized to submit
proposals. A restriction is imposed with respect to the manager.
She may not submit proposals naming specific projects and
companies. This requirement follows from the responsibilities of
the manager who is charged both with deciding on the formal
acceptability of the application papers and with assessing the
overall feasibility and relevance of the projects. It would
evidently constitute a conflict of interest to both submit
proposals and review them. On the other hand, however, the manager
may propose operational investment in securities and expenses
related to ventures of the Fund other than specific companies and
projects, since the possibility of bias is eliminated in this
In addition to the range of persons authorized to
submit proposals, the terms and procedures for submission and
registration, there are certain standard requirements as to
proposal contents and format. This allows for a higher degree of
comparability of projects in assessing competing proposals.
It is imperative that the Fund earns a credible
reputation among investors and the public.
The establishment of a municipal privatization fund
in Bansko is among the first efforts to create a vehicle for
rational and future-oriented use of the revenues from municipal
privatization in this country. Lack of experience and precedents in
the management of separate municipal property of the type set forth
in the attached Charter quite naturally requires that as the Fund
develops and its assets increase, the scope of further activity
will broaden, as will the sources of revenue. If the Fund proves to
be successful, it could be transformed into an independent legal
entity, thus opening up further opportunities for a broader
MUNICIPAL PRIVATIZATION INVESTMENT FUND RULES FOR
ORGANIZATION AND ACTIVITIES
I. GENERAL PROVISIONS
Art. 1. These Rules settle the organization and the activities of
the Municipal privatization fund of the Municipality of Bansko,
hereinafter referred as "the Fund".
Art. 2. (1) The Fund shall be separated property of the
Municipality of Bansko including the part of the income defined in
Art. 6, parag. 2, item 1 of the Transformation and Privatization of
State and Municipal Enterprises Act (TPSMEA), received at the
special account of the Municipal Council from privatization of
municipal enterprises, opened according to Art. 6, parag. 2 of the
(2) All the acquittals of the debts of the municipal enterprises
for credits used, shall also be included in the Fund, if the
Municipality has paid these credits off to the prior creditor by
sums of the fund.
(3) All the liquidation quotas and dividends received for the
participation in enterprises and from securities, as well as from
the sale of securities, shall also be included in me Fund, if the
Municipality has acquired them by sums of the fund.
Art.3. All the expenses regarding the management and the usage of
external services related to the fund's activities shall be for the
account of the Municipal budget.
II. GOALS OF THE FUND
Art.4. The goals of the fund are as follows:
1. Providing funds for the acquittal of bad debts of the municipal
enterprises and the acquittal of the credits for uncompleted
municipal building sites.
2. Financial guarantee of the municipal investment policy.
3. Maintenance of compensating and investment reserve of the Fund
for covering exceptional needs of the municipality, pointed as
priority in Art.6, parag. 2 of TPSMEA.
III. MANAGEMENT BODIES OF THE FUND
Art.5 (1) The management bodies of the Fund are:
1. The Municipality Council
2. The Manager of the Fund.
(2) The operative and technical work related to the fund's
functioning shall be executed by a secretary and two specialists.
The secretary and the specialists of the Fund shall be officials of
(3) Regarding any separate surveys, researches and experts
opinions necessary for the functioning of the Fund, the Manager may
involve additionally consultants and experts working under
contracts for services with the municipality.
Art.6 (1) The competence of the Municipal Council as a management
body shall be:
1. To amend and supplement the Rules for the organization and
activities of the Fund.
2. To accept the annual programme, size and percentage of the
compensating and investments reserves of the Fund and its
3. To accept the annual report for the activities and the
condition of the Fund.
4. To approve the proposals for the transactions involving
financial means of the Fund exceeding 1 min. leva.
5. To appoint arid dismiss the Manager of the Fund and define
his/her remuneration as a certain percent of the vice-mayor's
6. To control permanently the activities of the Manager and the
compliance with the Rules for the activities of the Fund.
Art. 7(1) The competence of the Manager of the Fund shall be:
1. To assign the developing and the current actualization of
Annual Prognosis Analysis (APA) for the income of the Fund on the
basis of the Annual Municipal Programme for Privatization (AMPP)
and the expected income from the other resources envisaged in
parag. 2 and parag. 3 of Art. 2 thereto.
2. To assign the developing and the current actualization of APA
for the credit debts of the municipal enterprises and the dynamics
of the volume of their bad debts (totally and according to the
different branches and enterprises of the capital's economy).
3. To assign the developing and the current actualization of APA
for the necessary financial means of the Fund for certain objects
of the municipal investment programme, for acquittal of credits for
uncompleted building sites and for current investing.
4. To prepare the draft of the Annual Fund's Programme, size and
the percentage of its reserves and budget.
5. To prepare the annual report for the activities and the
condition of the Fund.
6. To prepare the quarterly reports for the activities and the
condition of the Fund.
7. To prepare the necessary documents and draft decisions of the
respective management bodies of the Fund for the approval of the
transactions for investment and for acquittal of credits for
uncompleted building sites and bad debts of municipal enterprises
with means of the Fund.
8. To make proposals for the use of the compensating and
investment reserves of the Fund.
9. To conduct the negotiations and to conclude the contracts for
the redemption of bad debts of the municipal enterprises.
10. To organize the registration and the consideration of the
proposals for investments, acquittal of credits for uncompleted
building sites and of bad debts of municipal enterprises with means
of the Fund, and the execution of the decisions of the respective
management bodies of the Fund regarding these proposals.
11. To sign all the payment documents for settling accounts and
the transfer of financial means belonging to the Fund.
12. To control the Fund's book-keeping.
13. To acquire and deliver information to the municipal
administration regarding the accomplishment of the general
financial and economic policy of the municipality of Bansko and the
achievement of the Fund's goals.
(2) Apart from the rights and obligations defined in parag.1
thereto, the Manager of the Fund shall be obliged to take any and
all other measures and acts to achieve the goals of the Fund and
improve its condition.
(3) Proposals to the Manager of the Fund may be made by the
officials defined in parag.2 of Art.7, and also by the management
bodies of the municipal enterprises.
IV. RULES FOR THE ACTIVITIES OF THE FUND
Art.8 (1) The goals of Fund are to be achieved on the basis of the
1. APA specified in items 1, 2 and 3 of Art. 7, parag.1;
2. The conclusions, assessments and the recommendations to the
activities report of the Fund for the last year;
3. Expert opinions, prognosis and proposals.
(2) On the basis of the materials defined in parag.1 thereto, the
Manager of the Fund shall prepare the draft for the annual
programme of the Fund, proposals for the size and the percentage of
the compensating and investment reserves and the budget of the
Fund, and shall require approval according to the procedure of
Annual Programme, Reserves and Budget of the Fund
Art.9 The annual programme of the Fund shall include the following
1. General part consisting of:
a) Summary of the fulfillment of the Fund's programme for the last
year and the tasks and participation of the Fund that shall be in
effect for the present year.
b) Total volume of the expected income to the Fund during the year
and for each quarter.
c) Characteristics of the income resources and reasoning the
expected changes and the development of the Fund's portfolio.
d) Allocated volume of the funds annually and quarterly for each
of sections 2, 3 and 4 and their percentage of the total Fund's
2. Participation of the Fund in the financing of certain objects
of municipal investment programme and for the acquittal of credits
for uncompleted municipal building. The section shall include for
a) Name, general characteristics and importance of the object;
b) Precise aim and reasons for the necessity of Fund's
participation in the financing;
c) Expected volume of investments from the Fund;
d) Mode and terms of payment;
e) Information for the offeror.
3. Current investments from the Fund. (Portfolio of the Fund) The
section shall include:
a) Branch, territorial, economic and social characteristics of the
enterprises and objects, that shall receive current investments up
to the amount defined in this section.
b) Characteristics and parameters of the financial instruments for
investing in securities.
c) The priority order that shall be applied to the current
investing in relation to the characteristics defined in subsections
"a" and "b".
4. Acquittal of bad debts of municipal companies. The section
a) Branch, territorial, economic and social characteristics the
municipal enterprises should expediently comply with, in order
their bad debts to be acquitted by the means of the Fund.
b) The priority order that shall be applied to the acquittal of
the bad debts in relation to the characteristics defined in
c) The compulsory criteria for the credits that shall be acquitted
through direct repayment to the creditor with funds allocated in
d) The compulsory criteria for the debts that shall be redeemed by
the Municipality with funds allocated in this section.
e) Proportion of the funds for the acquittal of bad debts under
the two regimes in this section.
Art. 10 (1) The Manager shall prepare a proposal for the formation
of the following reserves within the Fund:
a) Compensating reserve;
b) Investment reserve;
(2) The reserves of the fund shall be approved as a certain
percent of the expected income during the year.
(3) The funds allocated at Compensating reserve shall be used for
urgent unexpected needs for acquittal of municipal enterprises'
debts as a result of force major circumstances.
(4) The funds allocated in the Investment reserve shall be
disbursed for urgent unexpected needs in order to remedy the
damages of the equipment belonging to municipal enterprises as a
result of natural calamities, fires, floods and great
Art. 11 The Manager shall organize the preparation of the
draft-budget of the Fund, which income and expenditure part shall
comply respectively with APA for the income and the planned
payments with means of the Fund under investment transactions, for
acquittal of credits for uncompleted building, as well as for
redemption and direct acquittal of bad debts.
Art. 12. (1) The Manager shall prepare the draft for the Annual
programme of the Fund and shall present it for approval by the
Municipal Council for up to one month after the delivery of the
materials defined in Art. 8, parag.1.
(2) In case that the materials defined in Art.9, parag.1 or any of
them are not ready till the end of February during a certain year,
the Manager shall prepare "Preliminary programme schedule" (PPS)
for the activities of the Fund, which has to be approved under the
procedure for the approval of the Annual programme of the Fund not
later than the end of March.
(3) PPS shall be prepared on the basis of the percentage of the
expenditures under different chapters of the Fund's programme for
the previous year, the materials under art. 8, parag.1 accepted
within the term defined in the above parag. and expert opinions. In
PPS no compensating or investment reserves shall be included.
(4) On the grounds of the PPS the Fund shall function until its
annual programme, reserves and budget are accepted.
Acceptance, Registration and Consideration of Offers for
Disbursement of the Financial Means of the Fund
Art. 13 (1) Proposals for disbursement and investment of Fund's
means may be made by:
1. The officials specified in Art. 6, parag.2 in relation to all
goals, objects and activities included in the Fund's annual
2. The management bodies of the municipal enterprises in relation
to the needs of investment and for acquittal of bad debts of the
(2) The Manager of the Fund shall not be entitled to make offers
for the disbursement in. investment of funds regarding certain
municipal objects and enterprises.
(3) The proposals for currently investing and for the acquittal of
bad debts of municipal enterprises shall be made not later than the
30 November of the present year as for the aims and formation of
the annual programme. Additional proposals after this date shall be
(4) The proposals under the section of the Fund's annual
programme, defined in Art. 9, parag.2 shall be made at latest up to
the end of the previous year.
(5) All the offers for disbursement and investment shall be in
writing. Depending on the aim of the expense or the investment the
proposals shall include:
1. For the enrollment in the Fund's annual programme for the
coming year of certain objects from the municipal investment
programme and for the acquittal of credits for uncompleted
municipal building - the requirements specified in art. 9, item
2. For current investment and optimization of the Fund's
a) Characteristic of the object or the issuer with respect to the
importance, reliability of the enterprise and its management.
b) The kind of the financial instruments (securities).
c) The kind of the guarantee.
d) The profitability and the perspectives for the price of the
e) The condition for the reverse buy off or the transfer of the
securities to third parties.
3. For the acquittal of bad debts of municipal enterprises:
a) Individual information for the municipal enterprise.
b) Assessment of the social and the economic importance of the
enterprise's activities for the municipality.
c) Financial Analysis of the enterprise (including the debt to
each creditor) and the reasons for the impossibility to pay them
e) Information for the creditor, the kind and the amount of the
debt, that is proposed to be acquitted by the Fund.
f) The mode of the acquittal of the debt - through redemption by
the municipality or direct pay off to the creditor. In cases that
the redemption of the enterprise's debt by the municipality is
proposed, the analysis under item "c" shall also include a
programme for the financial stabilization of the enterprise with
plan for the acquittal of the debt.
(6) All the proposals made under the provisions of this article
shall include the name and the position of the offeror.
Art. 14 (1) All the proposals made in compliance with the
procedure pursuant to the previous article shall be registered in a
Register for the proposals for investments and expenditures (RPIE)
according to their entrance.
(2) Proposals made by companies or persons other than the defined
in Art. 12 shall not be registered in the RPIE. These proposals
shall be registered in a Register of the external offers (REO).
(3) The secretary of the Fund shall weekly report to the Manager
all the registered proposals and prepared letters according to
(4) In a week after the registration the Manager shall send
letters to the offerors for the elimination of any omissions in the
proposals, registered in the RPIE and letters to the offerors of
the proposals registered in the REO for the order and the officials
their requests and offers should be made through.
(5) The proposals for the sale of securities bought with the means
of the Fund shall be made by the Manager.
Art. 15 (1) In a period of two weeks after the registration the
Manager of the Fund shall prepare a reference for the proposals
registered in RPIE, which are in compliance with the requirement of
Art. 12 and it shall include:
1. Evaluation whether the proposals comply with the requirements
of the annual programme of the Fund regarding the general
characteristics and the compulsory criteria for current investments
and acquittal of bad debts.
2. Evaluation whether it is expediently these proposals to be
approved for arrangement during the present year.
3. Evaluation for the expediency of including the proposals under
Art. 9, item 2 in the Fund's annual programme for the next
4. A proposal for the parameters of the transaction and payment in
case of positive evaluation under items 2 and 3.
(2) When the Manager by himself or by the support of the
specialists from the municipal administration is not able to give a
certain evaluation under parag.1, items 2 or 3, or a proposal under
parag.1, item 4, he/she may engage external experts or obtain
consultancy under a contract for services.
Art. 16 (1) Every last week of each quarter the Municipal council
shall summon a session for the consideration of the materials under
Art. 15, delivered by the Manager.
(2) The Municipal council shall approve or refuse the proposal.
references of the Manager, evaluations and proposals for
transactions and payments, that are within the range of competence
of the Municipal council.
(3) A protocol shall be kept at the sessions of the Municipal
council. At the end of each session an extract of the protocol with
the decisions shall be prepared. This extract shall be signed by
the chairman of the Municipal council and the Manager of the Fund.
In case of dissenting opinion of the Manager for certain decisions
he/she shall be obliged to state his/her arguments in writing not
later than the end of the next working day, which shall be an
integral part of the protocol.
(4) In one month after the registration of the proposals at the
RPIE the Manager of the Fund shall notify the offerors for the
decisions of the respective bodies of the Fund (without the
specified parameters of the transactions), or the reasons for the
delay of the decision.
Realization of the Transactions and the Payments
Art. 17 (1) On the grounds of the approving decisions of the
respective bodies, in compliance with these Rules, the Manager
shall assign the secretary to prepare the necessary documentation,
notifications to the offerors and the parties to the transaction,
payment documents and takes the required actions to put the
transaction and the payments into effect.
(2) When the nature of the transaction requires the conduct of
negotiations with the respective parties, the Manager shall invite
them by a notification in accordance with Art. 16, parag.4.
Art. 18 (1) All proposals registered in the RPIE that has been
approved in compliance with these Rules, shall be classified by the
secretary according to the priority order, defined in the Fund's
annual programme, depending on their characteristics and compulsory
criteria for each section. The Realization of the transactions and
the payments shall be in accordance with order of the
(2) When the approved proposals possess equal characteristics for
priority, they shall be classified according top the order of their
registration in the RPIE.
Art. 19 (1) The payments shall be made in accordance with the turn
of the classification of the approved proposals and the Fund's
income allocated to the account of the respective section of its
(2) The engagements and the participation of the Fund in
transactions-transitions from the previous year shall be completed
prior to all transactions of the present year.
Art. 20 (1) At depletion of the funds allocated at the account of
a certain section, if there is a decision of the Municipal council,
it may be credited by the spare available funds allocated in the
other accounts only in case that the delay of payment because of
the temporary lack of funds at the account would lead to essential
disadvantages for the municipality or to considerable raise of the
cost of the Fund's participation.
(2) If it is necessary to amend the ratios of the funds allocated
in the accounts of the respective sections of the Fund's annual
programme, its Manager shall deliver the Municipal council a
proposal for its amendment.
(3) In case the total sum of the approved proposals for the Fund's
participation in certain objects of the municipal investment
programme and for the acquittal of credits for uncompleted building
sites, exceeds the allocated amounts to this section of the Fund's
annual programme, they shall be completed according to the
registration of the respective proposals at the RPIE. The approved
proposals that have not been completed shall be included in the
Fund's programme for the next year unless the respective management
bodies decide something different.
Accountancy and Control on the Activities of the Fund
Art. 21 (1) The bank accounts of the Fund shall be separate from
the other accounts of the municipality. It shall serve only the
financial operations related to the activities of the Fund.
(2) Separate accounts shall be kept for each different section of
the Fund's annual programme and its reserves. The income from the
resources defined in Art. 2 shall be distributed to the respective
accounts, depending on the percentage of the funds to the total
income planned for the sections of the annual programme.
(3) The accountancy of the Fund shall be kept by the officials of
the "Accountancy" Department of the municipality that have been
appointed by a duly mayor's order.
(4) The Chief accountant of the municipality shall organize and
control the accountancy of the Fund.
Art. 22 All the payment documents regarding the disbursement of
Fund's financial means shall be signed by the Manager of the Fund
and the Chief accountant of the municipality.
Art. 23 (1) The Municipal council shall control the activities of
the Fund through:
1. Quarterly reports for the activities of the Fund presented by
the Manager. It shall include:
a) List of all approved proposals and the condition of the
transactions and payments under them.
b) The volume of the Fund's income totally and separately for each
resource and their distribution to the accounts of the sections of
the annual programme and the reserves of the Fund.
c) The amounts available at the accounts of the program's
d) The expenses for the technical assistance and external services
for the activities of the Fund.
e) Monthly balance sheet of the Fund.
f) Other important circumstances and information related to the
2. The annual report for the activities of the Fund, presented for
the approval by the Municipal Council. It shall include:
a) Summarized data for the transactions of the different sections
of the annual programme (including the purchases of securities),
and for the transactions related to sums from the reserves of the
b) Analysis of the fulfillment of the Fund's annual programme on
the income and expenditures, totally and separately for each
c) Analysis of the expenses for administration, technical
assistance and external services for the activities of the
d) Analysis of the annual balance sheet of the Fund.
e) Analysis of any other important information and circumstances
related to the Fund's activities.
Books and Archive of the Fund
Art. 24 (1) The secretary of the Fund shall keep the following
1. Register of the proposals for investments and expenditures.
2. Register of the external offers.
3. Protocol book for the decisions of the management bodies of the
4. Recording book for the securities bought with sums of the Fund,
which shall specify: the issuer, lot, number, nominal value and the
purchase value and other essential data for the qualities of the
5. Diary for the incoming and outgoing correspondence of the
(2) The secretary of the Fund shall organize and maintain its
(3) In the archive of the Fund shall be kept copies of all
contracts concluded in relation to the activities of the Fund and
further copies of the payment documents for the spent amounts from
the Fund. There shall be also kept all quarterly and annual balance
sheets, annual programs of the Fund and all the analysis, reports
and expert opinions related to them.
(4) A separate file for each concluded transaction with the means
of the Fund shall be kept in the archive, containing all the
documents related to it - from the proposal to the completion of
the Fund's participation.
(5) The books of the Fund shall be filled and kept according to
the general rules for the stringed through and numbered
documentation, and the archive of the Fund shall be organized and
kept according to the rules for the official archives.
V. ADDITIONAL PROVISIONS
§1. A vice-mayor shall be appointed as a Manager of the Fund.
He/She shall be direct superior of the secretary and the
specialists of the Fund.
§2. (1) The appointed vice-mayor shall be entitled to additional
remuneration up to the amount of 70 % of his/her salary for his/her
activities as a manager of the Fund.
(2) All the officials of the municipal administration regularly
engaged in the activities of the Fund shall be entitled to
additional remuneration up to the amount of 60% of the sum,
received by the vice-mayor, who is a manager, as an additional
remuneration according to parag.1.
(3) The proposals for additional remuneration of the officials
under parag.2 shall be presented to the Mayor of the municipality
of Bansko by the Manager of the Fund.
(4) The orders for the amounts of the additional
remuneration of the Manager of the Fund and the other officials
estimated according to parag.1 and 2 shall be issued by the Mayor
of the municipality.
§3. (1) During leaves or at the absence because of official
reasons for longer than a week, the Manager of the Fund shall be
represented by the secretary of the Fund who shall not be entitled
to conduct negotiations and sign payment documents.
(2) At the absence of the Manager for a period longer than 2
months the mayor of the municipality shall propose to elect a
§4. When electing a Manager of the Fund the Municipal council
shall also take decision for the mandate of the manager to conduct
negotiations and to conclude contracts within the frames of the
terms and prices, approved by the higher-standing management
bodies, for each separate transaction with any financial means of
§5. In case that bad debts of a certain municipal enterprise have
once been acquitted with means of the Fund and for the same
enterprise there is again an approving decision for the acquittal
of bad debt the Manager of the Fund shall be obliged to make a
proposal for the termination of the contracts with the management
bodies of the enterprise and realization of their liability.
§6. All circumstances and information related to the conditions,
prices and payments under the transactions of the Fund, further to
the partners and their proposals for the participation of the Fund
shall be official and trade secret. The officials of the Fund, the
involved officials from the municipal administration and external
experts shall sign a declaration for non-disclosure of this
official and trade secret.
VI. TRANSITIONAL AND CONCLUDING
§7. These Rules are issued pursuant to Decision No .........
from Protocol N ........../..... 1994 of the Municipal council of
Bansko in relation
to Art. 6, parag.2, item 3 of TPSMEA.
§8. All questions related to the activities of the Municipal
privatization investment fund, that are not regulated by these
Rules, shall be settled according to the general rules for the
activities of the municipal bodies and administration.
§9. For 1994 the Manager of the Fund shall prepare the annual
programme pursuant to Art. 12, parag.2 within one month after the
adoption of these Rules by the Municipal council.