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Company Act in Bulgaria

Company Act in Bulgaria

The Commercial Law is the main document to which the Bulgarian Commerce Act submits to. It includes details about the Commercial Register, the types of Bulgarian companies, the commercial transactions and the bankruptcy procedures. The Commercial Law offers information about the available types of the companies foreigners can set up in Bulgaria. They can choose between limited and general partnerships, partnerships limited by shares and two most popular, limited liability companies and joint stock companies. In terms of incorporation of a  firm in Bulgaria, we suggest you address your inquiries to our team of company formation agents in Bulgaria.

How can I set up a DOO in Bulgaria?

For opening an LLC in Bulgaria, or OOD as it is known, the general rules include the existence of at least one shareholder. In case of a limited liability company, the Bulgarian law states that a founder has to contribute its interest. The penalty for not doing it consists of being expelled from the association. In terms of profit, management, and the company’s affairs, all members of the management have equal rights. We mention that the minimum share capital for an LLC in Bulgaria is 1 EUR or BGN 2.

Our accountants in Bulgaria can offer you complete specialized services if you have a company in this country. You will thus align yourself with the legislation in force, at the same time respecting the procedures related to payroll, tax advice and compliance, bookkeeping, audits, and many more. Our team of specialists can also offer you wealth management services if you are interested.

How can I register a joint stock company in Bulgaria?

A joint stock company in Bulgaria requires a board of directors with at least three persons. The company also needs a management board and a supervisory board, both under the rule of minimum three persons. For a joint stock company, the contribution of the shareholder determines the limit of the liability. The capital stock can be increased, lowered or even canceled. Issuing new shares leads to an increased stock capital. It is compulsory for the shareholder to contribute to the shares once he subscribed for them. We remind that our company incorporation agents in Bulgaria are at your disposal with in-depth assistance at the time of company formation.

People who want to open a startup in Bulgaria can benefit from the support of our local agents. Our team can help you prepare documents, open a bank account, register to pay taxes, and apply for the necessary business license. We are here to support you in your endeavor, so do not hesitate to contact us and benefit from complete services.

Registration steps of a Bulgarian company

Once the type of company is chosen, the associates need to start the incorporation formalities at the Commercial Register. The following steps are part of the registration process of a firm in Bulgaria:

  • • the name verification with the Trade Register is made before it is established by the owners;
  • • the Articles of Association need to be prepared and submitted to the authorities;
  • • a provisory bank account is opened for the minimum share capital;
  • • your company needs to have special licenses and permits for certain activities. We can handle the application process.

The procedure is compulsory and requires papers regarding the form of the company, association act, name certificate and the signature specimen from the notary for the person representing the firm. The Trade Register is the institution that keeps all the information about commercial entities in Bulgaria. Therefore, the manager or the representative must notify the institution regarding all the changes related to the company, such as changes in managing bodies, office address or share capital. Once the State Gazette publishes the registration, the entrepreneur has to determine if the company will register for VAT. It is not mandatory for companies with an income under 50,000 BGN.

Can I establish a subsidiary in Bulgaria?

Yes, foreign companies owners can easily set up subsidiaries in Bulgaria which will run under the rules and regulations of a limited liability company. This is an independent legal entity which can be established for most of the activities, as stipulated by the Company Act in Bulgaria. Also, foreign investors can choose join stock companies for opening subsidiaries in Bulgaria, mentioning the minimum share capital of EUR 25,000 that needs to be deposited in a local bank account.

Can I establish a branch in Bulgaria?

Yes, foreign company owners can think of establishing branches in Bulgaria, in compliance with the provisions of the Company Act. This is a dependent structure that must report all the activities to the parent company. The registration of a branch is quite simple, there is no need for a minimum share capital, however a representative must be appointed. In terms of documents, the declaration stating the formation of a branch in Bulgaria needs to be provided by the parent company, alongside a copy of the Certificate of Incorporation, the Articles of Association, etc. These documents need to be sent for approval to the Chamber of Commerce and Industry in Bulgaria. All the formalities for establishing a branch in Bulgaria can be handled by one of our company formation specialists in Bulgaria who can also act as a legal representative of your firm.

Shelf companies in Bulgaria

Many investors choose to avoid the registration of a company from scratch and look for better options for business in Bulgaria. This is the case of shelf companies or ready-made companies in Bulgaria that can be rapidly implemented on the market. These are already registered companies, with no activities and therefore, no liabilities, but ready to be used by both domestic and foreign entrepreneurs. Being incorporated in Bulgaria, shelf companies can be chosen by investors of any kind who will only have to sign the ownership transfer before commencing the activities. Purchasing a shelf company is not a time-consuming process, and you can start your business as soon as you get in touch with us and send us your requests. We will also help you register for VAT and other taxes.

Holding companies in Bulgaria

holding company may represent another business option of a wide range of investors in Bulgaria who are interested in owning a part of the shares in certain established businesses. According to the Company Act in Bulgaria, holding companies can be established as limited liability companies, where at least 25% of the capital of such company must be paid. Owning and managing copyrights and shares are among the purposes for opening holding companies in Bulgaria. More than that, the tax system for holding companies is quite beneficial because the corporate tax is set at 10% rate while the withholding tax imposed on dividends is 5% rate. If you would like to know all the conditions for opening a holding company in Bulgaria, feel free to get in touch with our company formation specialists in Bulgaria.

Can I establish a joint venture in Bulgaria?

Yes, joint ventures are available in Bulgaria and can be established by at least two shareholders or partners, with the condition that at least one of them must be a Bulgarian entrepreneur. Just like in the case of other companies, the Articles of Association will represent the main documents of the firm, with information about the shareholders and their nationality, the activities of the joint venture, the date of incorporation, general rules, voting rights and many more. The registration of a joint venture starts with the Bulgarian Trade Register and complete support provided by our team of company formation agents in Bulgaria. It is also necessary to pay attention to the tax registration for joint ventures in Bulgaria, a matter where our consultants can help.

Making investments in Bulgaria

The significant changes of the business environment in Bulgaria represented a huge step forward in terms of development and encouragements for foreign investments in this country. Furthermore, the appealing tax structure of Bulgaria, the macroeconomic stability, the skilled and multilingual workforce, the excellent geographic location and the multitude of business opportunities represent a plus in front of international investors who want to set up their activities in Bulgaria. Here are some facts and figures that underline the economy and the business direction of Bulgaria:

  1. Approximately EUR 49,276 million was the total FDI stock registered by Bulgaria in 2018.
  2. The World Bank’s recent 2020 Doing Business report ranks Bulgaria 61st out of 190 economies in the world.
  3. Bulgaria has one of the lowest corporate income taxes in Europe, set at 10% rate.
  4. Most of the foreign investments in Bulgaria come from countries like Austria (9.6%), the Netherlands (17.3%) and Germany (6.8%).

Company liquidation in Bulgaria

Companies in Bulgaria can be closed through two main methods: voluntary or compulsory. The Company Act in Bulgaria stipulates all the rules and regulations of how a company can be closed. The compulsory method is adopted when the firm is declared bankrupt, while the voluntary method is determined by the owners of the Bulgarian company. In any case, it is strongly suggested to bear in mind the legal support of an attorney. 

If you need more information about the Company Act, you may contact our company formation agents in Bulgaria.