Starting business in Bulgaria
If you are planning to start new business in Bulgaria, this is the right place to start.
First, you need to know your options. If you already have a company in your home country, and want ot connect your business to the new one, you would probably like to establish:
- separate subsidiary company in Bulgaria (ltd, jsc etc.)
- a branch of your main business
- or a Trade Representative Office
The first option is the preferred one by most foreigners coming to Bulgaria. There are certain differences both in taxation and legal status in the above mentioned three legal entity forms .
Limited Liability Company
Probably your obvious first choice would be limited liability company. Bulgaria allows both sole owned limited companies and companies with many shareholders. In the former case, the owner is usually the sole director of the company. In case you are establishing a subsidiary limited company, the owner of the shares would be your main business in your home country, and you could appoint anyone as a director of the subsidiary. As the name implies, shareholder liability is limited to the value of the company capital.
There are some exceptions from this rule, which were added just recently (end of 2019). If you are selling your company to someone else, should should have paid all your employees the agreed wages in full and there shouldn't be any outstanding social security instalments to the tax office. If you fail to do that, the shareholder and the director are jointly liable for the damages cause to the employees and the revenue.
The minimum registered and paid capital of the limited company in Bulgaria is two Bulgarian Levs (approximately one euro). This needs to be paid into a dedicated contribution bank account before the registration application is submitted to the Companies Register.
Structure of the limited company
The company can be managed by one or more directors, who are appointed by the shareholders. The director is responsible for all day to day work fo the company. It's important to not that the director can't give a general power of attorney to a third party for all the matters concerning the company activity. Bulgarian authorities, including banks, refuse to credit any general power of attorneys du to security risks of fraud. If a director can't meet it's day to day obligations in Bulgaria (e.g .becuase the latter is not living in the country), the company should appoint a local resident to take care of the communication with the government and the local authorities. Such person needs to be appointed as a procurist. The powers of the procures are specifically listed in a notarised power of attorney which is then published in the company file in the Companies Register.
General meeting of shareholders
The main body of the LLC is the General Meeting of the Shareholders ("GMS"). Its obligations are to adopt/amend the Articles of association, to appoint/discharge managers, increase/decrease the capital of the LLC etc. It is required by the Commercial Act, that at least once per year, а GMS has to be convened. Additional extraordinary GMSs can be convened, depending on whether certain actions need to be taken.
Sole owner of the capital
If the capital of the LLC is solely owned by one person/entity, there shall be no GMS, and the sole owner shall adopt resolutions about major company issues: increasing and decreasing of the capital, appointing manager(s) etc.
Registration procedure of LLC (updated)
As from 01 January 2008 the new Commercial Register Act entered into force in Bulgaria. The companies are now being registered in the Registry Agency and no additional registration is needed.
If you plan starting business in Bulgaria, see what MHlegal law office can assist you on.