Bulgaria: Company Setup And Administration In Bulgaria

Congratulations, you have chosen a very perspective country to invest in; one with a stable economy in the last few years, an easy procedure for company registration and a transparent tax system with a short list of taxes and social security obligations. It is our pleasure to assist you in this process; but before you start you have to make some decisions in order to optimize your future business activities.

Choose the legal form of business which suits you the best

The Bulgarian legislation regulates two principal forms of business organizations:

  • Commercial corporations;
  • Co-operatives*

The Commerce Act lists exhaustively the following types of commercial corporations, which could be established:

  • General partnership (SD);
  • Limited partnership (KD);
  • Limited liability company (OOD), incl. Single-member limited liability company (EOOD);
  • Joint-stock company (AD);
  • Partnership limited by shares (KDA).**

For investment purposes, the foreign capital rarely uses the General Partnership, Limited Partnership and the Partnership Limited by Shares as a type, because in these legal entities, either part of the shareholders (KD and KDA) or all of them (SD) have unlimited responsibility for the company's obligations.

The most typical type of companies are the Limited Liability Companies (OOD and EOOD) and the Joint-stock Companies (AD).

How will you finance your newly established company?

Any company can be financed either by the registered capital, via increasing of the share capital or by a loan capital.

The contributions to the capital of the company could be in cash or in-kind contributions.

The in-kind contributions follow a strict procedure before becoming a share capital. Their real value should be estimated by three evaluators, appointed by the Commercial Register. The procedure might take longer compared to the one followed for cash contributions.

The OOD and EOOD legal forms are preferred by the small and medium size enterprises and families as well. The AD legal form is the form of the "big capital", of investments and production.

The establishment of the two types of companies also differs: for the establishment of an OOD the minimum capital requirement is 2.00 (two) BGN, while for AD – 50,000.00 (fifty-thousand) BGN.

The AD legal form also provides more possibilities for attracting a capital: the company could issue bonds, could be listed at the stock-exchange list or could be transferred into a public legal entity.

Will you operate alone or will you prefer to have other shareholders as well?

This is an important question, which demands an honest answer, because it is entirely connected with the risk you will face and shall bear in the future. If you want to take the risk on your own, you will also have all the profits for you but If you choose to be joined by other shareholder/s, you will bear the risk and share the profits together.

Other important question here is the one concerning the votes at the General Assembly. The legislation establishes enough protection mechanisms when taking decisions at the General Assembly for the majority shareholders as well as for the minority shareholders.

Another important difference is that the shares of the OOD/EOOD are transferred only by a contract with a notary certified signatures, and at the same time – the transfer of stocks is much easier procedurally.

Who will manage the company?

The registered ADs can have a one-step management system and a two-step management system. For the One-step management system there is a Board of Directors and a General Assembly, while the Two-step system requires the establishment of a Management Board and a Supervisory Board and a general Assembly.

The Management of an OOD/EOOD could be performed by one person or by a legal entity. If there are more managers, they can manage together and separately or the two of them can manage and represent the company together.

For the management of the company, Eurofast can offer management services, which can be designed entirely for the needs of the newly registered legal entity.

What will be the name of the company?

The name of the company should be unique. Before you start the registration, you should check at the Commercial Register whether the same name is not used by another legal entity.

What documents are needed for the registration?

  • Decision for the establishment of the company;
  • Articles of Association;
  • Declaration-specimen from the appointed Manager/s;
  • PoA for the authorized lawyer to submit the documents;
  • Payment document of the paid registration fee;
  • Certificate for the opened account and the transferred amount of the initial share capital;
  • Certificate of good standing (if any of the shareholders are a legal entity);
  • A decision of the legal entity-shareholder to participate at the establishment of a new company);
  • Other supporting documents;

Which bank to choose?

You can choose one of the 28 commercial banks which operate in Bulgaria. All of them can provide a full range of services: opening an account, online banking, etc. Most of the banks can also issue an electronic signature so that you can operate with the bank account from all over the world.

What are the expenses?

The main expenses to take into consideration include the initial share capital, registration fee, notarization, apostilles, translation, legalization, registration documentation fee, consulting services, bank fees, accountancy services, payroll services, contracts review services, etc.

Do you need any registrations, permissions for the activity you plan to do?

You will have to consider that for certain activities, you need to choose a specific legal form of the legal entity you wish to establish (e.g. banks can be only AD). For being a financial institution, you need to be registered at the Bulgarian National Bank in a special register. For construction activities, you need to be part of the Bulgarian Union of Builders. For doing any commercial activity (restaurant, shop) you need a permission from the respective local municipality.

Administration of the company

Eurofast can provide you with administration services for the purposes of establishment of a company. We can provide you with legal, tax and consultancy services as well as prepare and apply for the registration documentation which may be needed. We know how to support you and how to ensure a fast and secure registration of a new company.

Where should you apply?

The Registration starts with the payment of the share capital at the opened special bank account. Then the registration documents are submitted to the Commercial Register. At the moment when the company is approved to be registered, it also receives a special Unified Identification Code (UIC – EIK is the abbreviation in Bulgaria) which is the unique number of the company with which it is usually identified. The registration documents can be submitted by a legal representative of the company, by a lawyer or by an explicitly authorized third person. The documents can be submitted either at the Commercial Register desk in hard copy or electronically.

As a newly registered company, you will likely not have sufficient personnel to complete all the required actions and operations in order to comply with the local legislation and regulations. Eurofast can give you a hand during this stage of the establishment of the new business in Bulgaria with management, accountancy, VAT compliance and fiscal representation, legal, payroll and employment, audit, AML, Personal Data Protection, transfer pricing, real estate issues, leasing, intellectual property, citizenship and residency services, marketing, etc.

Supporting activities

You need to consider finding an office and/or a place for the commercial, production, service activities which you are going to perform.

You have will have to obtain a stamp of the company.

Additionally, you will need to arrange your relations with the Manager of the company via a written Management Agreement.

In conclusion

You have to be prepared to meet different commercial practices, procedures, additional obligations, different commercial habits, type of correspondence, dress code, administrative services and documentation, etc.

Be sure to have a reliable partner on your side during the whole procedure. At EUROFAST, we have been committed to servicing our clients and partners for over 40 years and can provide a full range of services required for the efficient and successful registration of your business in Bulgaria.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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