{"id":2257,"date":"2016-04-19T14:32:19","date_gmt":"2016-04-19T11:32:19","guid":{"rendered":"http:\/\/91.196.126.206\/soapi\/?page_id=2257"},"modified":"2019-05-07T16:26:15","modified_gmt":"2019-05-07T13:26:15","slug":"register-a-business","status":"publish","type":"page","link":"https:\/\/investsofia.com\/en\/register-a-business\/","title":{"rendered":"Register a Business"},"content":{"rendered":"
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REGISTER A BUSINESS<\/h2>\n[\/vc_column_text][vc_column_text]Establishing new business<\/strong> entity, including with foreign participation, or acquisition of shares<\/strong> of an existing local entity in Bulgaria, is governed by the Commercial Act<\/strong>. There is no limitation on the share participation of foreign legal entities and individuals.\u00a0The most popular forms of business associations are the limited liability company (OOD) and the joint stock company (AD):[\/vc_column_text][vc_column_text]\n

Limited Liability Company (OOD)<\/strong><\/h3>\n
    \n
  • The minimum required capital is EUR 1<\/li>\n
  • Should have at least 1 Director and 1 Shareholder<\/li>\n
  • No restrictions for nationality of Directors or Shareholders<\/li>\n
  • Company incorporation takes 3-4 working days<\/li>\n<\/ul>\n

     <\/p>\n

    Joint Stock Company (AD)<\/strong><\/h3>\n
      \n
    • \u041cinimum required capital – EUR 25 000<\/li>\n
    • Minimum required paid-up capital – 25% of the total capital<\/li>\n
    • Annual audit<\/li>\n
    • Should have at least 1 Chairman, 3 Board Members and 1 Shareholder<\/li>\n
    • No restrictions for nationality of Board members and Shareholders.<\/li>\n<\/ul>\n

       <\/p>\n

      In the following drop-down menu you can read additional information.<\/strong>[\/vc_column_text][vc_tta_accordion active_section=”0″ css=”.vc_custom_1555322006801{padding-right: 20px !important;padding-left: 20px !important;}” collapsible_all=”true”][vc_tta_section title=”Register a business” tab_id=”register-a-business”][vc_column_text css_animation=”top-to-bottom”]Establishment of new business entities or acquisition of shares in existing entities<\/strong><\/p>\n

      Bulgarian law provides for the establishment of entities with foreign participation or for the acquisition\u00a0of shares in existing local entities. Such companies must take the form of entities under the Bulgarian\u00a0Commercial Act. There is no limitation on the share participation of foreign legal entities and individuals.<\/p>\n

      Under the Bulgarian Commercial Act, the following entities can be set up and have foreign investor\u00a0participation:<\/p>\n

        \n
      • Unlimited partnerships<\/li>\n
      • Limited partnerships<\/li>\n
      • Limited liability companies (solely-owned limited liability companies)<\/li>\n
      • Joint-stock companies (solely-owned joint-stock companies)<\/li>\n
      • Limited partnerships with shares<\/li>\n
      • Sole traders.<\/li>\n<\/ul>\n

        Generally, no prior permission from governmental institutions is required for the establishment\u00a0of an entity of the above types, except for cases involving banking or insurance activities, investment\u00a0funds, management companies or investment intermediaries, or special concession rights and others.<\/p>\n

        Branches<\/strong><\/p>\n

        Foreign legal entities or unincorporated entities may register branches in the Republic of\u00a0Bulgaria, if they have received permission to conduct business activities under the terms and conditions\u00a0of the laws of their home country. Branches are entered in the Commercial Register at the Registry\u00a0Agency.<\/p>\n

        Though part of a foreign company, branches are considered independent and therefore must\u00a0keep separate accounting books and prepare balance sheets. However, registered capital is not required\u00a0for the establishment of a branch.<\/p>\n

        Representative offices<\/strong><\/p>\n

        Foreign legal entities and individuals who have received permission to conduct business activities\u00a0under the terms and conditions of the laws of their home country are allowed to establish representative\u00a0offices in the Republic of Bulgaria. They are not treated as separate legal entities and are not entitled to\u00a0conduct business activities as defined in Bulgarian law.<\/p>\n

        Representative offices are registered at the Bulgarian Chamber of Commerce and Industry and\u00a0may engage in marketing, informational and promotional activities.<\/p>\n

        Capital markets<\/strong><\/p>\n

        The emergence of capital markets in Bulgaria is a direct result of the structural, economic and\u00a0social changes in the country since 1989. The legislative basis of the capital market was established in\u00a01991 with the adoption of the Commercial Act. Currently, the legislation comprises numerous laws and\u00a0regulations, the most important of which are the Markets in Financial Instruments Act, the Public\u00a0Offering of Securities Act, the Commercial Act, and ordinances on the activities of investment companies,\u00a0management companies, investment intermediaries and others.<\/p>\n

        Bulgarian Stock Exchange<\/strong><\/p>\n

        The first trading session on the Bulgarian Stock Exchange took place on 21 October 1997 with\u00a0shares in companies privatized as part of the mass privatization program.<\/p>\n

        The Bulgarian Stock Exchange (BSE) is a joint-stock company. The majority of its shareholders are private\u00a0local or foreign legal entities and individuals. Its shareholders elect the Board of Directors, which is\u00a0responsible for the day-to- day operations of the BSE. More than two-thirds of its private shareholders\u00a0are credit and financial institutions \u2013 banks, financial intermediaries, insurance companies and others.<\/p>\n

        Market supervision<\/strong><\/p>\n

        The Financial Supervision Commission (FSC) is responsible for stock market supervision. The Commission\u00a0is an independent state authority whose mission is to protect investors\u2019 rights and to enhance the\u00a0development of a transparent and efficient capital market.<\/p>\n

        The FSC has the exclusive right of approval in respect of prospectuses for public offerings of securities or\u00a0take-over announcements. Issuers are obliged to file prospectuses and to register them with the FSC\u00a0before going public. Once registered, they are required to periodically disclose information about their\u00a0activities and financial status.<\/p>\n

        Trading procedures<\/strong><\/p>\n

        The BSE operates a continuous order-driven trading system. Orders are matched automatically according\u00a0to time and price priority. The minimum lot size is currently one share. There are daily limits on share\u00a0price movements for both the official and the free market.<\/p>\n

        The BSE\u2019s fully automated trading system, launched in 2008, is designed to provide market transparency,\u00a0liquidity and reflect price announcements. The period of the trading session is from 10:10 to 16:55. Apart\u00a0from the trading session there are also pre-trading and post-trading sessions. During these two sessions,\u00a0the participants can enter, amend or delete their orders which shall be executed on the next trading<\/p>\n

        session. The pre-trading session is from 9:30 to 10:00, while the post-trading session is from 17:00 to\u00a017:30.<\/p>\n

        Concessions<\/strong><\/p>\n

        The Constitution of the Republic of Bulgaria, promulgated in 1991, states that under the conditions of a\u00a0separate law the state can grant concessions for certain objects or activities that are exclusive state\u00a0property or subject to sovereign state rights. These conditions are prescribed in the Concessions Act,\u00a0effective from 1 July 2006.<\/p>\n

        The Concessions Act regulates the common terms for granting concessions. There are special rules set\u00a0out in the Underground Resources Act, governing the terms for granting concessions for mining of\u00a0underground resources, and the Waters Act, governing the terms for granting concessions for mining of\u00a0mineral water.<\/p>\n

        Licensing<\/strong><\/p>\n

        Licensing regime in electronic communications<\/p>\n

        The Electronic Communications Act, effective from 22 May 2007, reflects the need to establish unified\u00a0rules for regulation of the common European electronic communications market, part of which is\u00a0Bulgaria.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”Company Law” tab_id=”Company-Law”][vc_column_text css_animation=”top-to-bottom”]There are five forms of business association in Bulgaria under the Commercial Act:<\/p>\n

        Unlimited partnership (sabiratelno druzhestvo \u2013 SD)<\/p>\n

        Limited partnership (komanditno druzhestvo \u2013 KD)<\/p>\n

        Joint-stock company (aktsionerno druzhestvo \u2013 AD)<\/p>\n

        Limited liability company (druzhestvo s ogranichena otgovornost \u2013 OOD)<\/p>\n

        Limited partnership with shares (komanditno druzhestvo s aktsii \u2013 KDA)<\/p>\n

        All types of business association are recognized as legal entities. The founders may participate in one or\u00a0more companies provided that the law does not prohibit such participation. Founders may be Bulgarian\u00a0or foreign companies and\/or individuals. Irrespective of the nationality of its founders, each type of\u00a0company is considered to be Bulgarian.<\/p>\n

        The most usual forms of business association for foreign investors are the limited liability company\u00a0(OOD) and the joint-stock company (AD).<\/p>\n

        Rules applicable to all forms of business association\u00a0<\/strong>Articles of Association<\/strong><\/p>\n

        The adoption of the Articles of Association is an initial step in the establishment of a company.<\/p>\n

        The Articles of Association must contain:<\/strong><\/p>\n

          \n
        • Trade name, seat and address of the company<\/li>\n
        • Scope of the company\u2019s activities<\/li>\n
        • Management and representation of the company<\/li>\n
        • Identity of the partners\/shareholders of the company (except for the AD)<\/li>\n
        • Type (cash or in-kind) and amount of partners\u2019 contributions (for SD and KD), and\/or the amount\u00a0of company\u2019s capital (for OOD, AD and KDA), and<\/li>\n
        • Other matters as regulated by the Commercial Act which may differ for each form of company.<\/li>\n<\/ul>\n

          In cases when a partner or a shareholder intends to make an in-kind contribution, the Articles of\u00a0Association must state the name of the contributor, the full description of the in-kind contribution, its\u00a0monetary value, and the grounds for the contributor\u2019s rights.<\/p>\n

          In the case of a limited liability company, a joint-stock company or a limited partnership with shares, the\u00a0in-kind contribution must be valued by three experts appointed by a registration official from\u00a0Commercial Register with the Registry Agency. The conclusion of the experts must contain a full\u00a0description of the in-kind contribution, the method of valuation, the valuation and its consistency with\u00a0the share of the capital or the number, the nominal and issuing value of the shares being subscribed for\u00a0by the contributor. The monetary value of the in-kind contribution stated in the Articles of Association\u00a0may not exceed the experts\u2019 valuation.<\/p>\n

          Registration<\/strong><\/p>\n

          A newly established company comes into legal existence with its entry in the Commercial Register with\u00a0the Registry Agency. The standard registration application form must be filed by the appointed\u00a0management body. The managing directors of the company have an obligation to notify the Commercial\u00a0Register with the Registry Agency, within seven days, of any change in the circumstances already\u00a0registered. If the managing director fails to perform their duties, they are subject to an administrative\u00a0fine.<\/p>\n

          Pre-company status<\/strong><\/p>\n

          Prior to registration with the Commercial Register, the founders may reach an agreement on the actions\u00a0that must be taken in preparation for incorporation. The founders\u2019 actions create rights and obligations\u00a0for the persons who have undertaken the said actions. The latter are held liable jointly and severally for\u00a0these obligations. Eventually, with the registration, these obligations are automatically assumed by the\u00a0newly established company.<\/p>\n

          Announcement of the annual financial statements<\/strong><\/p>\n

          All forms of business associations under the Commercial Act, including sole proprietors, are obliged to\u00a0present their annual financial statements for the previous financial year to the Commercial Register. The\u00a0deadline for announcement is different for the different types of associations \u2013 by 31 May of the year\u00a0following the reported year for sole proprietors, by 30 June of the year following the reported year for\u00a0limited liability companies, and by 31 July of the year following the reported year \u2013 for all other forms of\u00a0business associations.<\/p>\n

          Termination of business associations<\/strong><\/p>\n

          There are several grounds for the termination of a company:<\/p>\n

            \n
          • Expiration of the term of the company or other grounds\/circumstances provided for in the\u00a0Articles of Association<\/li>\n
          • Resolution by the shareholders\/partners of the company adopted with the qualified majority\u00a0prescribed by the law or the Articles of Association<\/li>\n
          • Resolution of the respective district court for declaring the company insolvent<\/li>\n
          • Transformation of the company in certain cases<\/li>\n
          • Termination by a resolution of the district court in cases provided by the law (e.g. where the\u00a0company pursues objectives against the law)<\/li>\n
          • In the case of an AD \u2013 when the company\u2019s net asset value drops below the amount of the\u00a0registered capital and, within one year, the company has not resolved to reduce its registered\u00a0capital or to transform the company in accordance with the requirements of the law<\/li>\n
          • Other specific grounds regarding the SD, KD and KDA (e.g. insolvency of a partner).<\/li>\n<\/ul>\n

            When one of the above occurs, the company undergoes liquidation proceedings unless an insolvency\u00a0procedure has already been initiated. The company loses its legal status being deleted from the\u00a0Commercial Register.<\/p>\n

            Transformation of business associations<\/strong><\/p>\n

            Chapter 16 of the Commercial Act regulates mergers, consolidation of two or more companies,\u00a0demergers into two or more companies, the spin-off of certain operations into a new company, and\u00a0transformations whereby the type of the company changes.<\/p>\n

            The applicable provisions specify and classify the types of business transformations, the procedure for\u00a0execution of the transformation, and the rights and obligations of the companies and their\u00a0partners\/shareholders.<\/p>\n

            Prior to adopting a resolution authorizing a transformation, companies must draft a transformation plan\u00a0or conclude a transformation agreement, depending on whether initially there is one or more\u00a0participating company. The transformation agreement\/plan must be in writing and it must be signed\u00a0before a notary public by the official representatives of the participating companies. It must specify the\u00a0terms and conditions of the intended transformation, as well as the obligations of the participating\u00a0companies with regard to the transformation. The content of the transformation agreement\/plan must\u00a0be in compliance with the mandatory requirements of the Commercial Act.<\/p>\n

            The transformation agreement\/plan must be reviewed by controllers appointed by the management\u00a0bodies of each of the companies involved in the transformation. Upon a request from the companies\u00a0involved, an official from the Registry Agency may appoint a joint controller for all companies. The\u00a0controller must be a registered auditor. The controller must also meet other requirements set in the law,\u00a0which guarantee the auditor\u2019s independence from the merging companies, e.g. the companies are not\u00a0allowed to appoint auditors who have audited them during the last two financial years, or who have\u00a0performed a valuation of an in-kind contribution to the capital of any of the companies. The controller is\u00a0not allowed to audit any of the merging companies for a period of two years following the date of the\u00a0merger.<\/p>\n

            The review of the transformation agreement\/plan is not obligatory, if all shareholders of the companies\u00a0participating in the transformation express their explicit written consent that no audit of the\u00a0transformation is to be performed. In this case, the written consent must be announced at the<\/p>\n

            Commercial Register with the Registry Agency.<\/p>\n

            The management body of a limited liability company, a joint-stock company, or a limited partnership\u00a0with shares is required to adopt a report on the transformation. The report must contain a detailed\u00a0economic and legal explanation of the terms and conditions of the transformation, as specified in the\u00a0transformation agreement\/plan.<\/p>\n

            The adoption of a report on the transformation is not obligatory, if all shareholders of the companies\u00a0participating in the transformation express their explicit written consent that no adoption is necessary.<\/p>\n

            In this case, the written consent must be announced at the Commercial Register with the Registry\u00a0Agency.<\/p>\n

            The report and the transformation agreement\/plan must be announced at the Commercial Register with\u00a0the Registry Agency simultaneously by each participating company and at least 30 days prior to the date\u00a0of the General Meeting which will vote on the resolution for transformation.\u00a0The transformation agreement\/plan, as reviewed and approved by the controller, must be approved by\u00a0the General Meeting of Shareholders of each of the companies involved in the transformation. The\u00a0resolutions must be adopted by a qualified majority of three-quarters of the capital in the case of an\u00a0OOD, or a qualified majority of three-quarters of the presented voting shares of the capital in the case of\u00a0an AD.<\/p>\n

            The transformation enters into force from the date of its registration into the Commercial Register with\u00a0the Registry Agency.<\/p>\n

            The Commercial Act also outlines simplified transformation procedures, provided that certain conditions\u00a0are met.<\/p>\n

            When all participating companies are solely owned and the sole owner of their capital is one and the\u00a0same person, the transformation is performed on the basis of a resolution adopted by the sole owner.<\/p>\n

            The rules regarding: (i) the appointment of an independent controller, (ii) the reports to be prepared by\u00a0the management bodies of each participating company, and (iii) the approving resolution by the General<\/p>\n

            Meeting of Shareholders\/ Partners do not apply.<\/p>\n

            Insolvency<\/strong><\/p>\n

            A company is considered insolvent when it is unable to meet its monetary obligations or in the case of\u00a0over-indebtedness. The company\u2019s management body must file an application with the relevant district\u00a0court for commencement of insolvency proceedings within 30 days of becoming insolvent or over-indebted (the assets of the company are not sufficient to cover its liabilities). The application may also be\u00a0filed by any creditor of the company.<\/p>\n

            If there are grounds to initiate insolvency proceedings, a trustee must be appointed by the court.<\/p>\n

            Immediately upon appointment, the trustee represents and manages the current affairs of the company,\u00a0collects its receivables and converts its assets into cash and subsequently distributes the cash to the\u00a0company\u2019s creditors.<\/p>\n

            Liquidation<\/strong><\/p>\n

            The liquidation procedure, in contrast to insolvency, is voluntary, except for a liquidation by a court\u00a0decision in cases provided for by law, and is initiated in the case of expiration of the term of the\u00a0company as set out in its Articles of Association, or by a resolution of the members\/shareholders of the\u00a0company.<\/p>\n

            The General Meeting of Shareholders (or the Partners in an SD or KD) must appoint a liquidator. The\u00a0latter is responsible for inviting the company\u2019s creditors to claim their receivables through\u00a0announcement at the Commercial Register with the Registry Agency. After the satisfaction of the\u00a0creditors\u2019 claims, the remaining assets are distributed to the partners\/shareholders, but not before six\u00a0months have elapsed from the date of announcement of the notice to the creditors at the Commercial\u00a0Register. When all liabilities of the company have been settled and the remaining assets distributed, the\u00a0liquidator applies for deletion of the company from the Commercial Register.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”Limited liability company (OOD) ” tab_id=”Limited-liability-company”][vc_column_text css_animation=”top-to-bottom”]The OOD is a commercial company whose shareholders\u2019 liability is limited to the unpaid portion of their shares *. An OOD is liable to its creditors only to the extent of its own assets.<\/p>\n

            This form of enterprise is convenient for small and medium-sized business activities because of the advantages it offers over the other types of business associations:<\/p>\n

            * The English word \u201cshare\u201d does not explain the difference between a share in an OOD and a share in an AD. The most important differences are that the share in an OOD is not freely transferable and is not necessarily of equal value, while the AD can issue only shares of equal value and these are more easily transferable. In addition, the shares of an AD are securities. For simplicity, shares in an OOD will be referred to as an \u201cinterest.\u201d<\/em><\/p>\n

              \n
            • The minimum capital required is relatively low \u2013 BGN 2<\/li>\n
            • Shareholders\u2019 personal assets are protected from business debt because their liability is limited to the amount of their contribution into the capital. By contrast, unlimited partnership partners are liable to creditors with their entire property<\/li>\n
            • The OOD avoids the higher publicity requirements and the complex incorporation procedures applicable to an AD company.<\/li>\n<\/ul>\n

               <\/p>\n

              Because of these advantages, the vast majority of foreign-owned companies operate in this legal form.<\/p>\n

              The Bulgarian OOD resembles the German and Austrian \u201cGmbH\u201d (Gesellschaft mit beschr\u00e4nkter Haftung), the French \u201cSarl.\u201d and the English private company limited by shares.<\/p>\n

              Formation <\/strong><\/p>\n

              An OOD can be formed by one or more persons. The Bulgarian Commercial Act does not provide for a minimum or maximum number of shareholders in an OOD. It should be taken into account that a large number of shareholders will make the company\u2019s management cumbersome, since all important decisions must be taken unanimously or with a majority of shareholders representing 75% of the OOD\u2019s capital.<\/p>\n

              The specific formation rules applicable to the OOD are as follows:<\/p>\n

                \n
              • All the capital must be subscribed on incorporation and at least the minimum statutory capital (BGN 2) must be paid in before the standard registration application form is submitted to the Commercial Register<\/li>\n
              • The founders must appoint managing director(s) of the company. The managing director does not necessarily have to be an OOD shareholder, Bulgarian citizen or resident<\/li>\n
              • In the case of an EOOD (single member limited liability company), an Incorporation Deed must be drawn up instead of Articles of Association.<\/li>\n<\/ul>\n

                 <\/p>\n

                Capital <\/strong><\/p>\n

                The statutory minimum capital of an OOD is BGN 2. The capital of the company is divided into interests and the size of each shareholder\u2019s interest determines their rights and obligations concerning the company. It is possible for the interests of the individual shareholders to be of unequal value. The interests of shareholders in an OOD are not securities.<\/p>\n

                One of the main characteristics of the OOD is related to the transfer of shareholders\u2019 interests. The transfer of an interest from one shareholder to another is unrestricted but the transfer to a third party is subject to a more complex procedure. The new shareholder has to be admitted by the General Meeting of Shareholders of the company following a written application stating that they accept the terms of the Articles of Association.<\/p>\n

                In the case of admittance by the General Meeting of Shareholders, a Transfer of Interest Contract must be notarized and the transfer must be registered in the Commercial Register with the Registry Agency.<\/p>\n

                Management <\/strong><\/p>\n

                The OOD is managed by the General Meeting of Shareholders (the sole owner in case of an EOOD) and by the appointed Managing Director(s).<\/p>\n

                Each OOD must hold at least one General Meeting of Shareholders each calendar year (Annual General Meeting). It is usually convened at the Managing Director\u2019s discretion, but it can also be convened upon the written request of shareholders whose interests amount to at least one-tenth of the company\u2019s capital.<\/p>\n

                Apart from the Annual General Meeting, the Managing Director may convene additional meetings commonly referred to as Extraordinary General Meetings. An Extraordinary General Meeting must be called immediately when the losses of the company exceed one-fourth of the registered capital or if the company\u2019s net asset value falls below the amount of the registered capital. There is no limit to the number of General Meetings a company may hold each year.<\/p>\n

                The General Meeting is the company\u2019s highest management body. It is empowered to make key strategic and executive decisions regarding the company. The shareholders are authorized to decide on the admission and expulsion of shareholders, the appointment of Managing Director(s), a capital increase or reduction, approval of the annual report and balance sheet, distribution of profits, etc.<\/p>\n

                The day-to-day management of an OOD is conducted by at least one Managing Director. The Managing Director represents the OOD in court and in dealings with third parties. He\/she is financially liable for damages caused to the company. For example, in the case of over-indebtedness or insolvency, the Managing Director must file an application initiating insolvency proceedings. If the Managing Director does not perform their duty, they commit a criminal offence and may be held liable for damages to both the company and its creditors.<\/p>\n

                The managing director(s) in an OOD is\/are required to have written management contracts executed with the company. The management contract must be signed by a person authorized by the General Meeting of Shareholders or, in the case of an EOOD, by the sole owner of the capital.<\/p>\n

                In the case of an EOOD, the sole owner of the capital manages and represents the company either personally or through an appointed Managing Director(s). When the owner is a legal entity, the Managing Director of the legal entity or a person designated by him\/her manages the company.<\/p>\n

                 <\/p>\n

                Distribution of profits <\/strong><\/p>\n

                Shareholders cannot claim their interest back while the company is in operation. They are only entitled to receive profits in proportion to their interest, unless otherwise agreed by the shareholders.<\/p>\n

                Payment of interest on the shareholder\u2019s profits is explicitly prohibited.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”Joint-stock company (AD) ” tab_id=”Joint-stock-company”][vc_column_text css_animation=”top-to-bottom”]A joint-stock company is a company whose capital is divided into shares. The AD\u2019s liability to its creditors is limited to the amount of its assets. Foreign investors prefer this type of business association when larger amounts of capital need to be raised, particularly when public capital markets need to be tapped. The Bulgarian AD resembles the French \u201cSociete Anonyme,\u201d the German and Austrian \u201cAG\u201d (Aktiengesellschaft) and is similar to the English public company limited by shares.<\/p>\n

                Formation <\/strong><\/p>\n

                An AD is incorporated by a Constituent Assembly whereby all persons, who subscribe for shares into the capital of the new company, decide to constitute the company and adopt its Articles of Association. These resolutions must be unanimous if several legal entities and\/or individuals are involved. An AD may also be formed by an individual or legal entity. In the case of a single member joint-stock company, the sole owner decides on the issues otherwise addressed by the Constituent Assembly.<\/p>\n

                The AD is registered in the Commercial Register with the Registry Agency by filing its Articles of Association and other documents evidencing that:<\/p>\n

                  \n
                • Its capital is fully subscribed<\/li>\n
                • A portion of the value of each share stipulated by the Articles of Association, but not less than 25% of the nominal or issuing value, has been paid<\/li>\n
                • The Board of Directors or, respectively, the Managing Board and Supervisory Board have been appointed, and<\/li>\n
                • The remaining requirements of the law have been fulfilled (e.g. banks, insurance and investment companies have to obtain the necessary licenses granted by the Bulgarian authorities).<\/li>\n<\/ul>\n

                   <\/p>\n

                  Capital <\/strong><\/p>\n

                  General rules <\/em><\/strong><\/p>\n

                  The statutory minimum capital of an AD is BGN 50,000. A higher statutory minimum is required for credit and financial institutions, investment companies, insurance and health insurance companies.<\/p>\n

                   <\/p>\n

                  The capital of the company is divided into bearer or registered shares. Within these two types of shares, the AD may issue ordinary and preference shares. An ordinary share entitles its holder to one vote. Preference shares may provide a guaranteed or additional dividend or a specified share in the company\u2019s assets in the case of liquidation. Non-voting shares cannot represent more than 50% of the company\u2019s capital. Multiple voting shares are permitted only if provided for in the Articles of Association. ADs can issue dematerialized 2 shares.<\/p>\n

                  The shares in an AD can be traded on the stock exchange if the company is registered as a public company under the Public Offering of Securities Act.<\/p>\n

                  The AD must set up a reserve fund mainly to cover losses. At least one-tenth of the company\u2019s profit must be set aside until the fund\u2019s assets reach at least one-tenth of the company\u2019s registered capital. In addition, any premium over the par value for shares and debentures obtained upon their issuance must be included in the reserve fund.<\/p>\n

                  The Bulgarian Commercial Act has a requirement that regulates the capital-credit ratio of joint-stock companies. The net value of the assets of a joint-stock company, i.e. the difference between the value of the assets and liabilities of the company according to its balance sheet, cannot fall below the amount of the registered capital of the company. If this ratio is not observed, then the shareholders are obliged to adopt a resolution either to decrease the company\u2019s capital, or to transform the joint-stock company into another form of business entity. If this is not done within one year, then a court ruling issued upon the request of the public prosecutor can terminate the company.<\/p>\n

                  Increase of capital <\/em><\/strong><\/p>\n

                  A company\u2019s capital may be increased in one of the following ways:<\/p>\n

                    \n
                  • Issuing new shares<\/li>\n
                  • Increasing the nominal value of shares already issued, or<\/li>\n
                  • Converting debentures into shares.<\/li>\n<\/ul>\n

                     <\/p>\n

                    The resolution to increase the capital must be taken by the General Meeting of Shareholders.<\/p>\n

                    The Articles of Association may empower the Management Board (Board of Directors) to increase the company\u2019s capital up to a specified amount. Under this provision, new shares may be issued within five years from the date of the company\u2019s incorporation. A resolution which allows for the issue of new shares may also be passed by amending the Articles of Association of the company. If this is done, then the Management Board (or Board of Directors) may increase the company\u2019s capital up to the amount specified in the amending resolution for up to five years from the date of registration of the amendment in the Commercial Register.<\/p>\n

                    ** Dematerialized shares have no physical substance and are issued in a book-entry form.<\/em><\/p>\n

                    \u00a0<\/em><\/p>\n

                    Decrease of capital <\/em><\/strong><\/p>\n

                    A company\u2019s capital may be decreased through either of the following:<\/p>\n

                      \n
                    • Reduction in the nominal value of shares, or<\/li>\n
                    • Cancellation of shares.<\/li>\n<\/ul>\n

                       <\/p>\n

                      A capital decrease requires shareholders\u2019 approval. The resolution of the General Meeting of Shareholders on the capital decrease should be announced in the Commercial Register. By its announcement, it is presumed that the company is committed to secure or repay all creditor claims. Creditor consent is assumed if no written objections are filed within three months from the date of announcement of the resolution for capital decrease with the Commercial Register.<\/p>\n

                      Management <\/strong><\/p>\n

                      General rules <\/em><\/strong><\/p>\n

                      The joint-stock company\u2019s governing bodies are the General Meeting of Shareholders and the Board of Directors (one-tier system), or the Supervisory Board and the Management Board (two-tier system). There are no requirements regarding the nationality or residence of members of either board. A member of the Management Board may not be a member of the Supervisory Board. The members of the Board of Directors, the Management Board and the Supervisory Board may be shareholders. All Board members are held liable jointly and severally before the company for damages caused in the course of their duties.<\/p>\n

                      In a single member joint-stock company, the owner is empowered to decide on all issues otherwise handled by the General Meeting of Shareholders.<\/p>\n

                      The General Meeting of Shareholders consists of all shareholders entitled to vote. The first General Meeting of Shareholders must be held within 18 months of incorporation. Subsequently, a regular General Meeting of Shareholders must be held at least once a year, not later than 30 June. General Meetings of Shareholders are usually called by the Board of Directors\/Management Board or by the Supervisory Board, or upon a request of shareholders representing no less than 5% of the company\u2019s capital.<\/p>\n

                      The General Meeting of Shareholders may amend and supplement the Articles of Association, transform and dissolve the company, elect and recall members of the Board of Directors or the Supervisory Board, appoint and dismiss registered auditors, approve the annual financial statements as certified by the appointed registered auditor and resolve other matters which fall into its prerogatives by law or by virtue of the Articles of Association.<\/p>\n

                      Two-tier system <\/em><\/strong><\/p>\n

                      The company\u2019s constituent Supervisory Board must be elected prior to company registration. Subsequent members of the Board are appointed by the General Meeting of Shareholders. The total number of Supervisory Board members may vary from three to seven.<\/p>\n

                      The Supervisory Board does not effectively take part in the management of the company. Its primary function is to represent the company in its relations with the Management Board. The Supervisory Board appoints the members of the Management Board and exercises control over its activities and resolutions. The Management Board must report on its activity to the Supervisory Board quarterly.<\/p>\n

                      Members of the Supervisory Board and the Management Board are required to execute management contracts with the company. Management contracts with members of the Supervisory Board must be signed by a person authorized by the General Meeting of Shareholders or by the sole owner of the capital of the company, in the case of an EAD. All management contracts with members of the Management Board must be executed on behalf of the company by the chairperson of the Supervisory Board or by their authorized representative.<\/p>\n

                      The day-to-day management of an AD with a two-tier management system is carried out by the Management Board under the control of the Supervisory Board. The number of members of the Management Board may not exceed nine and not be less than three. Subject to Supervisory Board approval, the Management Board may effectively delegate the company representation to one or several of its members.<\/p>\n

                      If provided in the Articles of Association, certain resolutions of the Management Board may require prior approval from the Supervisory Board.<\/p>\n

                      One-tier system <\/em><\/strong><\/p>\n

                      One-tier system companies are managed and represented by a Board of Directors. It consists of a minimum of three and a maximum of nine persons. The Board of Directors delegates the actual management and representation of the company to one or more of its members who are subsequently designated as executive directors. They serve at the discretion of the Board of Directors and can be replaced at any time. The executive director of a joint-stock company is required to have a written management contract with the company. The management contract must be executed on behalf of the company by the chairperson of the Board of Directors.<\/p>\n

                      Non-executive members of the Board of Directors can conclude management contracts with the company at the company\u2019s discretion.<\/p>\n

                      .[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”Other forms of business association ” tab_id=”others”][vc_column_text css_animation=”top-to-bottom”]European forms of business association <\/strong><\/p>\n

                      The European forms of business associations are unions of legal entities, individuals or both, from EU Member States. The EU legislation regulates the following forms of business associations: (i) European company, established as a European joint-stock company; (ii) European cooperative society; (iii) European economic interest grouping. In Bulgaria, these entities are mainly regulated by the Commercial Act, the Cooperatives Act and the Commercial Register Act, all in conformity with EU legislation.<\/p>\n

                      Unlimited partnership (SD) <\/strong><\/p>\n

                      The unlimited partnership is an entity formed by two or more partners who are jointly and severally liable to the entity\u2019s creditors. Their liability for the entity\u2019s debts is unlimited. There is no capital requirement.<\/p>\n

                      The Bulgarian unlimited partnership (unlike the German and Austrian general partnerships for example) is a separate corporate entity from its partners.<\/p>\n

                      Each partner is entitled to take part in the management of the partnership\u2019s business unless the Articles of Partnership have assigned the management to one or several of the partners or to a third party.<\/p>\n

                      Limited partnership (KD) <\/strong><\/p>\n

                      Limited partnerships include general and limited partners. General partners are fully liable for the company\u2019s debts while the liability of limited partners does not exceed their contribution to the partnership. General partners must manage and represent the entity.<\/p>\n

                      Limited partnership with shares (KDA)<\/p>\n

                      Limited partnerships with shares are formed by at least three limited partners whose liability is limited to the amount of their contributions to the company\u2019s capital. There are also general partners with unlimited liability.<\/p>\n

                      The formation of a KDA is initiated by the unlimited partners. They have the right to select the limited liability partners as subscribers of the company\u2019s capital.<\/p>\n

                      KDAs are managed by a General Meeting of Partners and a Board of Directors. The General Meeting of Partners consists of all partners. Only limited partners have voting rights. The day-to-day management of the partnership is carried out by the Board of Directors which includes only general partners.<\/p>\n

                      Sole proprietor \u2013 ednolichen targovets (ET) <\/strong><\/p>\n

                      A sole proprietor may be any capable individual who has permanent residence in Bulgaria. A person may register only one trade name as a sole proprietor.<\/p>\n

                      Commercial Register <\/strong><\/p>\n

                      While the Commercial Act regulates the method of incorporation of business associations in Bulgaria, the Commercial Register Act (CRA), which came into force on 1 January 2008, regulates the registration of business associations as each newly established entity begins its legal existence with its entry into the Commercial Register.<\/p>\n

                      The Bulgarian Commercial Register is a centralized electronic register where all mandatory registration matters, with regard to Bulgarian traders and foreign entity branches, are kept.<\/p>\n

                      The registration procedure is assigned to the Registry Agency at the Ministry of Justice which is the registration authority. The Commercial Register is available to the public, including via the internet \u2013 www.brra.bg. The Registry Agency also manages the reservation of company names and announcement of documents and facts such as annual financial statements, Articles of Association, invitations to shareholders and others. By virtue of the CRA, the need for promulgation of corporate documents in the State Gazette is replaced by documents being recorded at the Commercial Register.<\/p>\n

                      The CRA determines the registration procedure of all five main forms of business associations, namely: unlimited partnership, limited partnership, joint-stock company, limited liability company and limited partnership with shares. Furthermore, the CRA regulates the registration procedure of sole proprietors, cooperatives and branches of foreign companies. It does not apply to partnerships, foundations, NGOs and others.<\/p>\n

                      Following registration with the Commercial Register, companies obtain a registration number \u2013 Unified Identification Code (UIC) which is used for taxation, social security and statistical purposes. Once received, this UIC remains unchanged until termination and\/or cancellation. Upon re-registration, the BULSTAT number of the existing companies is transformed into their UIC.<\/p>\n

                      Apart from the registration of a company, the CRA also regulates subsequent corporate changes such as entry into the Commercial Register of a procurator, pledge of shares, pledge over a commercial enterprise, termination and liquidation of a company, transfer or transformation of a commercial enterprise, change of the company\u2019s representatives, seat or name and others.<\/p>\n

                      However, the district courts retain their competency regarding insolvency procedures.<\/p>\n

                      As from 1 January 2015, the Bulgarian Registry Agency provides free SMS notifications to traders and branches of foreign companies when an application for registration of changes has been submitted to the Commercial Register.[\/vc_column_text][\/vc_tta_section][\/vc_tta_accordion][vc_single_image image=”16961″ img_size=”full” alignment=”center” onclick=”custom_link” img_link_target=”_blank” link=”http:\/\/investsofia.com\/wp-content\/uploads\/2019\/03\/Sofia-Business-Guide-2019-English-web.pdf”][\/vc_column][vc_column width=”1\/6″][\/vc_column][\/vc_row]\n<\/div>","protected":false},"excerpt":{"rendered":"

                      [vc_row full_height=”yes” content_placement=”middle” css=”.vc_custom_1557235515907{padding-top: 200px !important;padding-right: 5% !important;padding-bottom: 60px !important;padding-left: 5% !important;}”][vc_column width=”1\/6″][\/vc_column][vc_column width=”2\/3″][vc_column_text] REGISTER A BUSINESS [\/vc_column_text][vc_column_text]Establishing new business […]<\/p>\n","protected":false},"author":9,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":[],"tags":[],"acf":[],"yoast_head":"\nRegister a Business | Sofia Investment Agency<\/title>\n<meta name=\"description\" content=\"Register a business in Sofia. 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