Company Set Up

If you are an individual or a legal entity considering investment or have already decided on investing in Bulgaria by starting or transferring a part of your business oversees, next lines will reveal what is believed to be useful information to you.

One of the most important issues to resolve the investors face is the form in which to carry on their business. Practice shows that it is almost impossible to carry out commercial activities as a foreign legal entity without a permanent settlement in the country. Therefore most investors establish subsidiaries, new companies, register branches or participate in joint ventures.

Here are two of the most common forms of doing business in Bulgaria.

Bulgarian legislation regulates two principal forms of business organizations: commercial corporations and co-operatives. They differ in their form of legal organization and in the manner of appointing liability. The Commerce Act makes exhaustive provisions for the following types of commercial corporations:

General partnership; Limited partnership; Limited liability company incl. Single-member limited liability company; Joint-stock company; Partnership limited by shares.

Other forms of business organization according to Bulgarian law are: Sole trader; Wholly owned subsidiary; Trade representation office; Co-operative.

Among the forms of organization listed above, the most widespread in practice are limited liability companies and joint-stock companies, in which the members or the shareholders, as the case may be, incur limited liability for the obligations of the company.

A limited liability company may be formed by one or more individuals and\or legal entities that shall be liable for the company’s obligations with their contributions to the company’s registered capital. Each partner is entitled to take part in the management of the company, in the distribution of profits, to be informed of the company’s affairs, to review the company’s books and to liquidation proceeds. The partners must pay up or contribute their interests, take part in the management of the company, provide assistance for the carrying out of its activities, as well as carry out the resolutions of the general meeting. Each partner is to have a company interest in the company’s assets the amount of which is to be determined in proportion to its interest in the registered capital, unless otherwise agreed. Companies’ bodies are: the general assembly and the manager/s. All substantive and organizational issues are responsibility and prerogative of the general meeting. The managers’ responsibilities are to organize and direct the activities of the company. This body convenes the general meeting and execute its decisions, hence its executive origin.

A Joint-stock company is a corporation whose capital is divided into shares. The liability of shareholders for the obligations of the company is limited to the extent of the participating interest they hold in the capital. A joint-stock company may be incorporated by one or more individuals or legal entities, and in case the capital is to be submitted by a single person, a single-shareholder joint-stock company is formed.

The capital of a joint-stock company is divided into shares of identical nominal value. The shares are securities and they could be traded on the stock exchange. Either registered shares or bearer shares may be issued. Both types of shares may be preference. The articles of association may also lay down other conditions for their transfer. Decisions in a joint-stock company are made by a majority vote.

The managing body comprises board of directors (one-tier system), or the supervisory board and the managing board (two-tier system). The members of the board of directors, the supervisory board and managing board (unless initially appointed) are to be elected for up to a five-year term of office, unless a shorter term is provided for in the Articles of Association. Provided by the Articles of Association, a director may be a legal entity. Board members shall have equal rights and obligations, regardless of any internal division of functions among them and the provision of management and representation rights to any of them.

In the Two Tier System the joint-stock company is managed by a managing board which acts under the control of a supervisory board. The members of the managing board are to be appointed by the supervisory board, which shall determine their remuneration and shall have the right to recall them at any moment. In the One Tier System the company is managed and represented by a board of directors that consists of minimum three and maximum nine directors.

Both organizations about can exist in the shape of a joint venture – a corporation with the participation of resident and non-resident persons. No restrictions are imposed on the percentage of the foreign participating interest. The corporation must be incorporated in one of the forms of Commercial Corporation exhaustively listed in the Commerce Act.

Give us as complete and comprehensive information about your desired businesses area as possible.

Based on the supplied data, we at Propriety Legal shall do an in-depth, detailed legal analysis of the situation in the country based on official sources and sources of our own regarding:

1. Legal framework;

2.    Taxation;

3.    Status of the workforce in sector;

4.    All other requirements at clients’ request;

Following our analysis provided we shall advise the most adequate form of establishment of your desired business. Also we shall outline differences in legal forms, stress on their advantages and disadvantages so you can make the right decision.

At the time of commencement of the registration process you should have defined: 1) the name of the entity, 2) the partners and their stakes, 3) the manager/s, 4) the head and registered office (if you have not yet appointed it, we can help by providing options) and 5) the company’s capital.

The registration of a legal entity does not require physical presence in Bulgaria. We will do everything for you.

The services of Propriety Legal comprise inexhaustively the following:

► Reservation of rights over the name of the legal entity. We will inform you whether your chosen name is available and whether you can operate under that name;

► Draw-up of all necessary documents for the establishment of the legal entity at the Commercial Register of the Registry Agency of Bulgaria;

► Application for registration;

► Memorandum of association;

► Articles of association;

► Specimen;

► Management contract;

We at Propriety Legal offer complete post-registration services to legal entities, namely:

► Accounting services assistance;

► Annual financial statements announcement;

► Registration of other acts required by law or by the will of the entity;

► Change in registered entries;

► Preparation of virtually all types of contracts required by entity’s daily regular business, including labour law, civil law, commercial law issues, etc.;

► Consultation and advice to applicants for bank or other types of loans;
► Possible assistance on applying for European projects;

Do not hesitate to contact us by calling one of our telephones and have a consultation with our lawyers or by filling out our Contact Form.

We shall respond within 24 hours.

We shall defend your interests in Bulgaria to the fullest extent.

Read more about our services with regard to company set up and business organization HERE.

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