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New changes introduced to the Commercial Register

On 29th April new changes to the Commercial register proceedings were introduced. Most of them are good and fix some of the misunderstandings in the law. The most major amendments include:

Reducing the state fees by 50% if the applications are submitted online

The previous text of the law required 75% of the state fee if documents are submitted online. The new amendment is reducing the fee even more. This will encourage the people and lawyers to submit application online and will reduce the queues in the offices of the Registry Agency. At last some 21st-century-strategy by the Ministry of Justice.

Obligations for removing personal data from the documents that should be published

There has been numerous complaints of personal data disclosure in the Commercial Register. Organizations have been protesting against visible personal details in the companies files. This  apparently had the sufficient public effect and the personal data nondisclosure article of the law is a fact.

Stopping the government supported ripoff

The previous text of the law allowed the employees of the Commercial Register to reject applications and keep the paid state fee for the government. This was considered by the Supreme Bar Council and many courts in the country as ripping off performed by the government. The state fee couldn’t be used  if corrected application was re-submitted. Now the amendment is solving this problem, by obliging the employees of the Registry Agency to give the applicant/lawyer 14 days deadline to correct the defaults of their applications.

Unfortunately the changes will be effective as from 1st January 2012. Apparently the government still want to fill in the state budget by one final ripoff.

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Best regards,

Milen Hristov-lawyer

MHLegal law office
phone: 00359 52 605 997
email: milen@mhlegal.eu
web: http://mhlegal.eu

Bulgaria, Varna 9000
78 Piskyuliev Str,
floor 2 office 6

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Winding up (liquidating) a Bulgarian company

Many foreigners have been setting up limited companies in order to own land in Bulgaria. Now as the year 2012 is approaching, the restriction will be removed and there will be no need of the limited company for this purpose. Many people will prefer to have the property on their own name. So how you can do that? The legal way is to wind up your company and transfer the property on your name.

The liquidation process

If the limited company has been set up only for the purpose of owing a land we assume that the company is a dormant one. The easiest way to find that is to ask your accountant if they have filed nil annual accounts. So, if the company is dormant the liquidation should be a straightforward process.  The biggest disadvantage of the liquidation is the time frame. The minimum legal term is 6 months. Basically the liquidation process can be divided in the following milestones:

  • appointing a liquidator and sorting all outstanding taxes (both state and municipal ones)
  • drafting the initial accounting balance report
  • announcing the liquidation in the online Commercial register and submitting an invitation to all potential creditors of the company to present their claims
  • transferring the property to the capital owners (company owners)
  • drafting the final accounting balance report
  • de-registering the company from the Commercial register

The longest stage is the waiting period after announcing the invitation to the creditors. The minimum legal waiting period is 6 months. This is why the liquidation lasts that long.

Liquidation costs

The liquidation process will involve accounting and liquidator costs, state fees and fees for transferring the property to the company owner(s). The final costs depend on the status of the company- are there any problems with it or its assets, how well the company papers were done during the years etc. A quote  for liquidation costs (without property transfer fees) for well maintained dormant company would be about ?500.

Transferring the property on company owners’ name

This could be done in several ways, but the most common are either by simulating a sale (company sells to the company owner) or by transfer as a liquidation share from the company to the company owner. In both cases the property transfer needs to be recorded in the Land Registry.

MH Legal law office provides professional company winding up (liquidation) services. Mr. Milen Hristov, besides being a solicitor, is also a state certified liquidator with the Bulgarian Registry Agency. We provide company liquidation services in Varna region, but also all over Bulgaria.

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Re-registration deadline extended to 31 December 2011

Yesterday the official amendment of the law was promulgated and subsequently entered in force. Now the new deadline for re-registration of companies in Bulgaria is 31 December 2011. This amendment came by surprise preceding the actual bill of amendment of the Commercial register Act.

This extension is actually done by amending the Trade Act, rather than amending the Commercial Register Act itself. This is rather unusual way of the parliament to do it as it confuses the people who expect the actual law which regulated the re-registration process to be amended. In the end, this amendment will cause the actual bill for amendment of Commercial Register Act to be amended to match the new re-registration term. Once again we can see the legal ignorance of the ruling party’s members.

It was quite interesting to observe, at least in Varna, how the Registry Agency was trying to convince people of the deadline extension, when the actual promulgation of the extension was not done. This was quite risky as there was a chance the new deadline not to be adopted as an amendment to the law. Lawyers know that a law enters in force after it has been adopted by the parliament AND promulgated in the State Gazette. Sometimes people forget that the president has a right to “veto” the bill. Hopefully this didn’t happen with the re-registration deadline extension.

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Re-registration of companies deadline extended to 30.06.2011

  • 01.12.2010
    • , by 
  • by Milen Hristov
  •   2 Comments

The Bulgarian parliament has extended the deadline for company re-registration. The new deadline is 30 June 2011. The bill for extension is not yet voted on the second hearing and not yet promulgated in State Gazette . However it is a matter of time this to be done.

This is good news to all companies that hasn’t been re-registered yet. However it is not a good idea for company owners to wait to the end of the new deadline.  Ask your lawyers to prepare all necessary documents and re-register your companies. In our practice we face various obstacles for re-registration like missing documents, deceased shareholders, shareholders’ disputes etc. So generally it is a good idea to start the re-registration as soon as possible, because you never know if the process will go as smooth as you thought.

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The bill for extension of company re-registration deadline still pending

The bill for extension of company re-registration deadline is still pending. The parliament website bill section (English Google translation) shows that the bill is still in discussion stage with the Legal commission of the Parliament. The Bill was submitted to the Parliament on 18 October 2010.

Normally Bill discussions take more than 2 months, however this Bill needs to be voted as soon as possible since a lot of companies will be liquidated because they will fail to re-register.

Lawyers in Bulgaria are keen this Bill to be accepted as there will be benefits for the clients. When the Bill is voted the clients won’t lose their state fees if their company applications are rejected. This was a very bad practice by the Commercial register, but was punished by several Supreme Court resolutions, defining the register’s practice as illegal.

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Company registration getting slower

I just wanted to update all who are still to register/re-register their companies. The Commercial Register now is 18 days behind the normal deadline for application processing. As the end of the year comes closer, the company registration will  take longer. The solution would be that the Commercial Register to hire more people to process the applications.

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Registration of companies: Commercial register overloaded

The registration, re-registration and changes in the files of the companies is delaying again. The reason is that the Commercial register receives more applications than they can handle. The result is one and a half weeks delay in processing the applications. This is valid for all type of applications, no matter if they are for registration, re-registration of companies or just application for filing changes to the companies files. I wonder what will happen in the end of year 2010, when thousands of companies will file their applications at once. The Commercial register will suffer a lot and most probably the business will suffer too. that’s why they need to change their management and hire more employees who will process the applications and the documents. The lawyers will need to explain the situation to their clients, as the deadline for re-registration is coming and this issue will arise.

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