Business clusters in Bulgaria

Business clusters have been developing in Bulgaria rapidly during the recent years. The main reason is that there are many small companies and sole traders who cannot stand the competition of the big companies. The small business in Bulgaria is not protected, as the government doesn't care about family, small and medium enterprises.  Although the Bulgarian Small and Medium Enterprises Promotion Agency exist just for the purpose to support the small companies, they virtually do nothing.

Therefore business clusters started to appear. Now there are some major clusters and many small ones. Having in mind that there is no legislative clusters regulation whatsoever, the clusters founders "wraped" the clusters in the existing company/NGO forms, allowed by the Bulgarian law.

The two major business cluster forms are:

  • non government organization (NGO)
  • consortium
NGO

NGO registration and activity is regulated by the Law on Non-Profit Legal Entities. A Business cluster can exist as an NGO. The major disadvantage, however, is that NGOs in Bulgaria cannot do business, they can not gain profit. So the main activity of an NGO cluster is to safeguard its members, to urge them, to act as an intermediary between its members and third parties. It also can be holder of intellectual property, it can organize conferences, organize learning courses for qualification and many more. NGOs have certain tax benefits, depending on their

CONSORTIUM

The consortium legal entity is regulated in the Bulgarian Commercial Act. The consortium can be either a Limited Liability Company (or JSC) or Partnership. The difference between the NGO and the consortium is that the consortium can directly trade i.e. it is like an ordinary company. However consortium is used to join economic and fund powers of two or more separate companies. The joining of business powers is the essence of the business clusters.

Registration specifics

Registration process of both the NGO and the Consortium depends on the particular needs of the business partners. Each partner can participate by making money or in-kind contributions (real estate, intellectual property etc.), the shares ratio also can vary. It is crucial that before making a business cluster, the partners know what they want to achieve - what the business cluster main goals will be. Having that figured out, the lawyer will be able to give proper consultation and draft the registration documents in the best way for all partners.

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