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Liquidation of Bulgarian limited company

  • 03.02.2012
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  • by Milen Hristov
  •   1 Comments

The biggest issue with the compulsory liquidation of the Bulgarian limited companies is the communication with the state appointed liquidator. Since the Registry Agency appoints liquidators from their liquidators lists, no one considers whether the company owner is foreigner or does he speaks Bulgarian. Some liquidators are not diligent enough when they see that the company owner is not Bulgarian. Sometimes they will not make efforts to contact the latter. One a separate note, this is difficult because the company owner address is spelled in Cyrillic letters and it is very difficult to restore the right English spelling.

Normally the the newly appointed liquidator will try to contact the capital owner(s) and request all company documentation i.e. contracts, bank account balance, court papers (if any), past years accounting reports etc. These will be needed to find out if the company has any outstanding debts and to repay them. Only then the rest of the company assets will be cashed and distributed among the company capital owners. Upon request of the capital owners and if available, any property left can be transferred to the company owner(s) without being cashed.

The latter is an exemption rather than a normal procedure. Therefore the company owners need explicitly and formally to request this transfer from the liquidator. If this request is not made in a formal way, the liquidator will sell the property on public tender/auction. As solicitors, we ensure that the formal request is submitted to the liquidator on time and no foreigner loses their property just because a formal request hasn’t been made to the liquidator.

Having said the above, I strongly encourage all Britons and Irish who still haven’t re-registered their companies – you still can keep your properties! The only effort you need to make is contact us with details of your Bulgarian limited company. We will take care of the rest.

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If your company is subject to compulsory liquidation

  • 31.01.2012
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  • by Milen Hristov
  •   5 Comments

The deadline for re-registration has passed. Now all companies that have failed to meet the deadline will be liquidated. Most Britons have registered companies as holdings of their property in Bulgaria. the compulsory liquidation will put their properties on tender and will sell them before the company is closed. So what they can do?

Make sure you have someone to check your company file on a regular basis. This way you can find who is appointed by the Commercial register as a company liquidator. Once you know his details, you can contact him and discuss with him the options to transfer the property to the company owner without actually putting it on tender. This is one of the options the Commercial Act gives to the company owners i.e. instead of cashing the company assets, the liquidator can distribute the assets to the shareholders after he has paid the liquidation expenses, taxes and liquidator’s remuneration. you need to be persistent on this, since not every liquidator will agree to do it. Therefore it is advised that you hire a solicitor to negotiate on your behalf.

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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 €400.

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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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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115 days until all unregistered companies will be liquidated!

Once again, all Brits that have companies and still are not re-registered, please do it by the end of the year. If you don’t do it, your company will be liquidated and they will lose all company’s assets.

The re-registration takes about couple of weeks, depending which is the registration court of the company.

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Liquidation of company in Varna

  • 07.08.2010
    • , by 
  • by Milen Hristov
  •   6 Comments

There are many disappointed UK investors in Bulgaria. Some of them are leaving the country and want to sell their investment and recover at least some of the money they have put in property or business. The problems each foreigner is facing are:

  1. How to sell the property at a decent price so that at least 70% of the investment is recovered and
  2. What will happen to the Bulgarian company

As the first problem is connected mainly to the market demand, the second problem can be resolved with a help of a lawyer. Usually when you sell you property the company is becoming dormant and you are not trading anymore. IF you intend to leave the country for ever it will be not so good idea to leave a company with your name in it. Sooner or later the National Revenue Agency might want to make an inspection and will find out that you haven’t submitted annual tax declarations. This will be quite suspicious so your company will be marked as one to be surveyed. The tax and financial information in the EU is quite easy transferable. It might turnout  that you will be charged with the Bulgarian fine in UK, which is quite unpleasant experience for your UK tax record.

The solution to get rid of the Bulgarian company is to close it by liquidation. The liquidation process takes about 6 months, having in mind that the company has no public or other debts. A liquidator has to be appointed who will take care of the whole process, prepare and submit the necessary documents, so your company will be removed from the Companies register of Bulgaria. Since I am professional liquidator I take care of all the procedures and have your company closed as smooth as it should be. No  stress, no problems for you. I am also a registered liquidator with the Registry Agency of Bulgaria. My office is based in Varna so should you have a company registered in Black sea region, do not hesitate to contact me.

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The mass liquidation of companies in Bulgaria

The mid year passed and the deadline for re-registration all Bulgarian companies is fast approaching. January 2011 will become nightmare for company owners who haven’t reregistered. Their companies will be forced into liquidation by the court and the all company assets will be sold on public tenders. Moreover, the court will appoint a liquidator and the company owner will have to pay their monthly salary. IF the company assets are not enough, the company owners will be liable for both company debts and for liquidator’s salary.

Therefore we strongly urge all foreigners who still haven’t reregistered their company to do it as early as possible.

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