The limited liability company is the most common commercial form in Bulgaria (abbreviation in Bulgarian: “OOD”). It may be incorporated by one or more persons who are liable for the obligations of the company with their share contribution in the company’s capital [1]. If the capital of the company is owned by one person, the company is called a single-shareholder limited liability company and respectively, this person is sole owner of the capital (abbreviation in Bulgarian: "EOOD").
Following are the main are the main aspects of incorporating a limited liability company in Bulgaria in accordance with the applicable legislation and case law.
Each company is entered in the Bulgarian Commercial Register and Register of Non-Profit Legal Entities ("CR"), including the following general company data:
Each company must operate with a specific commercial name, which is determined by its founders and through which the company is identified. The name is written in Bulgarian and must contain the designation OOD respectively, EOOD. The founders may indicate the name of the company in a foreign language in Latin letters.
The company must have a registered seat and management address in the Republic of Bulgaria. The indication of a valid address is essential, because it is where the company will receive all official correspondence – documents from government agencies, court papers, letters from counterparties and others. If the specified address is not valid or there is no authorised representative of the company to receive the relevant documents, then a number of unfavourable legal consequences may occur.
The company must have a subject of activity that will be realised through its commercial activity. The subject of activity can have different scopes and it can include a variety of activities. The only condition is that it does not contradict the law and good morals. If the performance of an activity requires a license, then it may be necessary to submit it.
Each company is represented by a Managing Director who carries out the daily management of the company in accordance with the law and the decisions of the Shareholders’ General Meeting or respectively - of the sole owner of the capital. According to the applicable case law, the Managing Director of a limited liability company can only be a natural person (unlike a joint-stock company, where a legal entity can be entered as member of the Board of Directors / Management Board). The Managing Director is elected and appointed by the Shareholders' General Meeting / sole owner of the capital and he / she submits to the CR a written notarised specimen of his / her signature containing his / her consent to be appointed as Managing Director. When more than one Managing Director is appointed, the Shareholders' General Meeting / sole owner of the capital determine(s) the manner of representation.
As already specified, a limited liability company may be incorporated by one or more persons. If the founders are two (or more persons), they are called shareholders. If the founder is one person, he / she is called sole owner of the capital.
Upon entry of the shareholders / sole owner of the capital in the CR, they submit information identifying them as such.
In case the shareholder / sole owner of the capital is a legal entity, its competent body submits a duly adopted resolution for participation in the company which is being incorporated.
In case the shareholder / sole owner of the capital is a foreign legal entity, a Certificate of good standing should be submitted, accompanied by the relevant legalisation (certification by a competent authority, apostille) and an official translation in Bulgarian.
The minimum amount of capital for the incorporation of a limited liability company in Bulgaria is BGN 2 (two). It is deposited in a capital account opened in the name of the company for which the respective bank issues a document (usually a certificate). The certificate is submitted to the CR upon entry of the company.
The entry of the company in the CR includes the submission of Articles of Association, which contain basic information about the company: name, seat and management address, subject of activity, term of the company, capital, management and manner of representation, rights and obligations of the shareholders.
In case the shareholder / sole owner of the capital is a foreign legal entity, then in accordance with the applicable AML rules, the company is obliged to indicate information about the ultimate beneficial owner of the capital, which should be a natural person, as well as about the legal entities which exercise direct and indirect control over the newly incorporated company.
It should be noted that this information is not necessary for the incorporation and entry of the company in the CR, but must be submitted immediately thereafter under the corporate lot of the company. Also, such information will most likely be required by the bank, which opens the company capital account.
The expenses for the incorporation of a company can vary depending on several factors – the amount of the capital, bank fees, legalisation and official translation of foreign documents.
Currently, the state fee for entry of a company in the CR by electronic means is BGN 55 (fifty-five).
After the incorporation and entry of the company in the CR, it receives a unique identification code ("UIC") - a unique registration number via which the company identifies itself to third parties.
The foregoing information presents the main aspects when incorporating a limited liability company in Bulgaria. There can be many features of a limited liability company related to the voting rights of individual shareholders, distribution of dividends, participation in the capital and more. For this reason, each case should be approached individually and according to the wishes of the founders, taking into account a number of circumstances, which in turn requires mandatory consultation with a relevant professional.
(1) Art. 113 of the Bulgarian Commerce Act: "A limited liability company may be incorporated by one or more persons who are liable for the obligations of the company with their share contribution in the company capital".
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