The registration period of the new companies in Bulgaria grows beyond common sense!! If you want to register a new company you will have to wait about 2 months. This almost kills any startup business which is not backed up with a great amount of patience and capital.
People who want to start business and have already established business relations may lose their business partners because they can’t register as quick as the market requires. Absolute legislative madness!
As I wrote in my previous posting, the government undertook certain measures but they are not enough. At least the Act for amendment of the Commercial Register Act is finally a fact – it’s promulgated.
The main changes are:
- a company can be registered now with a power of attorney given to a lawyer, registered in a Bar Association
- Not all companies are obliged to re-register up to 30 July, but only those which are under the requirement to publish their annual financial reports. These are primarily big companies with huge income. See the Accountancy Act for details.
- New employees will be hired in the Registry Agency. This should decrease the paper load from the current personnel.
Personally I doubt that the latter will decrease the registration period.
EDIT: Please see Comment #2 below. I have explained the issue with the Annual Financial Statements more precisely.
4 June 2008 10:49 pm
Surely ALL Bulgarian companies (big, small, active, inactive, audited or unaudited) have been obliged to publish their financial statements with effect from the 2007 calendar year? Isn’t this what the Accountancy Act says, in compliance with the First Company Directive?
5 June 2008 9:26 am
John,
In order to avoid overloading of the Registry Agency and frustration in the business, only companies which are subject to independent financial audit have to re-register and submit their annual tax statement this year by 30 June.
Please see Pragraph §28 in the Closing provisions of the Act for amendment of the Commecial Register Act, or Paragraph §9a in the Closing provisions in the full up-to-date text of the Commercial Register Act. I coudn’t find it in English, otherwise I would publish it here.
In brief, the amendments say that small companies (the ones not obliged by the law to be audited by independent financial auditor) are obliged to publish their annual financial statements (AFS), but they can do that after the whole re-registration period expires (e.g. 2011).
Let’s say that your company re-registers in 2010, then it has to submit the AFS for 2007, 2008, 2009. The obligation actually stays, it’s just being delayed until the re-registration.
I will quote the Accountancy act, so you get the idea of which AFS have to be audited:
I hope that I made my thoughts clear.
5 June 2008 3:29 pm
Dear Milen
First of all, I want to thank you for all this information on your site. Very important especially for those, who are living out of Bulgaria, but have property in the country.
Just for to be absolutely sure I want to check this. I think that a company which is set up just in order to buy land in Bulgaria and which has no other activities, is not obliged to be re-registered by 30.6.2008?
So we have 2,5 years left to finish the re-registration and deliver accounts to Trade Register Office after that. Or, we have time to finish the company, which is not needed anymore.
Thank you for your answer.
6 June 2008 11:05 am
Airi Virsu,
A company which is set up just for the purpose of buying property and doesn’t have any activity is not obliged to re-register until 30.6.2008 (unless it is a joint stock company). Such company has to re-register by 2011.
Yes, you have 2.5 more years to re-register, and then publish the AFS for the previous years. However if you want to close the company, you have to re-register first, because the closing proceedings have to be published in the new Commercial Register.
9 June 2008 10:47 pm
I hesitate to disagree with you, Milen, but in effect you are saying that Bulgaria is in breach of the First Company Directive because companies which have not re-registered could delay filing any accounts publicly until 2011.
I agree that para 9(a) is critically important. I thought (applying my limited Bulgarian) that it contained a temporary arrangement so that companies (and the Bulgarian State!) could comply with EU law pending re-registration:-
“(3) Търговците, които до 31 май на съответната година не са пререгистрирани съгласно § 4, ал. 1 от преходните и заключителните разпоредби на Закона за търговския регистър, публикуват до 30 юни на същата година актовете по чл. 40, ал. 1 – 3 за предходната година чрез икономическо издание или интернет независимо от задълженията им съгласно ал. 1 – 2. В този случай се прилага изискването на чл. 40, ал. 5 до момента на обявяването на актовете в търговския регистър. За търговците, които са пререгистрирани през юни на съответната година и през същия месец са заявили и представили за обявяване в търговския регистър актовете по чл. 40, ал. 1 – 3 за предходната година, не се прилагат изискванията на изречения първо и второ.”
I expect I’ve misunderstood it, but could you briefly tell us what that part means, please?
10 June 2008 8:54 am
John,
the Article you have quoted states that:
But it’s crucial to NOTE the next para of the amendments act:
Which means:
Para 3 is not applicable for companies whose AFS is not subject to a mandatory independent financial audit.
Basically if your company is small, you can postpone the AFS until re-registration. John, I hope that you have more clarity about the subject now.
10 June 2008 10:06 pm
We completed the re registration on the 25th May 2008 can you answer the following questions as neither our lawyer or accountant can confirm the next step.
1) How and where do you file the annual accounts
2) How do you know that these accounts have been allocated to your re registered company.
3) Is there any time stipulation beween the re registration completion and the filing of the accounts
10 June 2008 10:58 pm
Milen, Thank you so much for taking the trouble to direct my attention to sub-para (4) – everything is now clear to me.
12 June 2008 6:06 pm
Hi Marilyn Brammer,
regarding your questions, please find my answers below:
1. The FSA are filed in the Registry Agency. They are attached to your company’s file. Physically the action can be done either but submitting a paper application with the enclosed AFS, or online (online application form + scanned FSA), if your company has a digital signature. Usually your accountant can prepare the AFS and submit it. IF he/she can only prepare it, you can search for a lawyer who can submit it for you.
2. When you submit the AFS, you can check the online company file of your company.
3. If you re-register your company between 1 June and 31 December (no matter which year) you have 3 monhts to submit the AFS, starting from the date on which the re-registration is complete.
15 June 2008 4:49 pm
Thank you Milen
I have taken your advice and have successfully visited the Registry Agency and made the necessary application to file the annual accounts,I am told after 1 week I will be able to check online.
1 September 2008 12:03 pm
Hi.
We have re-registered our company, which was completed at the end of July so I believe we have 3 months to file accounts, we have 2 years to file. We have just been told that we have to fill in an A1 form for the accounts to be filed and that it has to be signed in front of a notary, is this true?? We won’t be in Bulgaria to sign this so does this mean we will now have to have a trip to the Bulgarian embassy to sign? Just as I thought everything was sorted out!! Any advice you can offer would be appreciated.
13 December 2008 1:59 am
Hi, I too have registered a company and submitted accounts in May this year via a Bulgarian lawyer. I have no intention of buying property now. What are the implications if I do absolutely nothing regarding this company – the process to de register is very expensive and I am now not in the position to find funds to pay for this – especially with the exchange rate as it is. Am I blacklsted in Bulgaria or do I become a criminal in uk and europe!? Or will it simply go away?