Who can register a company in Bulgaria?
The founders of a company may be Bulgarian or foreign natural persons or legal entities. There is no requirement for residence or nationality of the shareholders (or partners) and the managers of the Bulgarian companies.
What type of companies may be registered in Bulgaria?
There are five major forms of commercial entities that can be established in Bulgaria:
- limited liability company (abbreviated in Bulgaria: OOD);
- joint stock company (abbreviated in Bulgaria: AD);
- limited partnership (abbreviated in Bulgaria: KD);
- general partnership (abbreviated in Bulgaria: SD);
- partnership limited by shares (abbreviated in Bulgaria: KDA).
Limited liability company (OOD):
- the most common business organization in Bulgaria;
- can be set up by one or more individuals or legal entities;
- requires a capital of at least 2 BGN (1 EUR), divided in minimal nominative parts of 1 BGN each; Where the company is registered with a capital higher than the legal minimum at least 70 % of the capital should be paid up prior to the registration of the company. The reminder of the capital should be paid up within 2 years from registration of the capital;
- the capital is held by the partners and the liability is limited to the amount of the registered capital;
- all partners (depending on their shareholding percentage) have equal rights concerning the management, the profit, and the company’s affairs and the liquidation procedures;
- there are two statutory bodies- the General Assembly which is held at least once per year and the Manager (optional body is the Controller). The General Assembly is the governing body, forming the will of the company. The General Assembly consists of all partners who exercise its powers at meetings. The Manager is the only representative body of the OOD and is elected by the General Assembly. The Manager of an OOD may be only a natural person. His name has also to be entered in the Commercial Register together with a notarized consent signed by the Manager.
- each year the company has to prepare annual financial statement which are announced into the Commercial Register.
Joint stock company (AD)
- JSC in Bulgaria can be founded by one or more individuals or legal entities;
- must have at least BGN 50,000 (25,000 EUR) share capital, with a minimum nominal value of 1 BGN per share. When founding the company, all shares of the capital must have been subscribed and at least 25 % of their value must have been paid up. The remaining part must be paid within 2 years after the foundation.
- two kinds of management structure are possible – the single-stage (Board of Directors) system and the two-stage (Supervisory Board and Management Board) system. Another permanent company organ is the General Meeting. Director of a JSC may be a legal entity;
- the participation of the stockholders does not require personal activity (they are not obligated to participate in the management and consequently neither to loyalty towards the joint stock company). The participation in the company is in a material form; the capital contribution may be monetary or in kind;
- the liability of the partners/shareholders is limited to the shares subscribed in the company’s capital;
- an independent audit is required regarding the annual accounts: annual financial statements and annual activity reports (an independent audit is not required for micro sized enterprise);
- JSCs have easier transferability of shares to third parties compared to the transferability of the LC’s shares to third parties;
Limited partnership (KD)
- the limited partnership represents a partnership agreement to perform commercial activity under common company name;
- may be set up by minimum two partners. There are two categories of partners: one or more of the partners are liable to the company’s creditors limitedly – to the amount of an agreed instalment (Limited partners), while for the other part of the partners no such limitation of liability exists (General Partner);
- the company name of the limited partnership must include the name of at least of one of the General (unlimitedly liable) partners;
- the management and representation of the limited partnership is performed by the General Partners;
- the Limited partners are not entitled to manage, and cannot suspend the decisions made by the General Partners.
General partnership (SD)
- General partnership can be formed by minimum two persons, under a joint trade name;
- it does not require a minimum share capital;
- all of the partners in the partnership are liable with their assets and are joint debtors. Every partners’ liability is persona, subsidiary and unlimited regarding the obligations of their general partnership;
- the trade name of the company has to contain at least the name of one of the partners;
Partnership limited by shares (KDA):
- represents a mixture of a joint stock company and a limited partnership;
- must have at least three limited partners chosen by the general partners from subscribers;
- two types of shareholders take part in partnerships limited by shares: general partners and limited partners whereby the latter ones bear liability only for the company’s obligations.
- it has single-stage management system –General meeting and the Board of Directors. The General Meeting consists of general partners and limited partners who have subscribed shares. The Board of Directors consists only of general partners. Its responsibility may not be limited by the General Meeting;
- the Board of Directors bears the responsibility for the management and its members represent the partnership jointly towards third parties.
All companies in Bulgaria must be registered in the Bulgarian Commercial Register. There are some major steps prior to registering the company into the Commercial Register, such as: (i) reserving a firm name for the company in Bulgaria; (ii) opening a capital contribution account in the name of the company in a bank in Bulgaria; (iii) and payment of the subscribed capital.
Along with the application for the registration, other documents must be submitted, such as: company by-laws, some formal declarations signed by the manager, declaration of actual beneficial owner/s, evidence for paid state fee and deposited capital.
A company can be registered by a local lawyer who can act on behalf of the company in Bulgaria or by a representative, both of which options require a power of attorney. The registration is done using a Standard Application.
The registration procedure before the Bulgarian Commercial Register, as well as any subsequent submission of documents subject to announcement can be done entirely online. The fees of online submission of the required documents are significantly lower than those of hard copy application.
The registration procedure may take from one to three business days.
Subsidiaries and Branches
Foreign companies can establish subsidiaries or branches in Bulgaria which can operate under the rules of limited liability companies (OOD) or joint stock companies (AD). Subsidiaries and branches of foreign companies are registered at the Bulgarian Commercial Registry.
Holding company in Bulgaria
A holding companies in Bulgaria can be set up as limited liability companies (OOD), as joint stock companies (AD) or partnership limited by shares (KDA).
Bulgarian holding companies are required to invest at least 25% of their capital stock in a subsidiary. The holding company will thus own at least 25% of the subsidiary’s shares and will represent at least 50% of the management board of the subsidiary.
There is a special regime for dividend payments that applies for holding companies in Bulgaria. The dividends received by a holding company in Bulgaria can be tax exempt, provided that certain requirements are met.
Joint ventures in Bulgaria
According to the Bulgarian law the establishment of both contractual JVs (a consortium, a general civil partnership) and corporate JVs in the form of commercial companies is possible. A contractual JV is registered in the BULSTAT Register, and a corporate JV – in the Commercial Register.
Foreign merchants may open a representative office (RO) in Bulgaria. ROs cannot carry out business activity in the country and cannot enter into any contract that would qualify their activity as business.
ROs may disseminate information about the products or services of the principal, monitors for violation of IP rights of the principal, carry out market surveys, etc. ROs may hire premises and employ staff in order to carry out their activity.
Sole trader in Bulgaria (Natural person merchant)
Any legally capable natural person whose domicile is in Bulgaria may register as a sole trader/entrepreneur. A sole entrepreneur’s trade name shall incorporate without abbreviation the person’s given name and either the surname or patronymic by which he is generally known. The natural person carries all of the unlimited liability.