The current Bulgarian legislation provides different scenarios for establishing a business presence in Bulgaria. The legal forms available are as follows:
Except for the branch and trade representation office, all other legal forms are deemed Bulgarian legal entities.
The incorporation of a Bulgarian entity requires registration with the Commercial Register.
The two types of Bulgarian companies most commonly used by foreign investors are: (i) Limited Liability Company and (ii) Joint-Stock Company. These companies are capital by nature (i.e. they have registered capital divided by shares) and the liability of the shareholders is limited to the contribution into the capital.
Limited Liability Company
Foundation
The limited liability company is formed by one or more legal entities or individuals.
Shareholders
There is no restriction on foreign participation. The number of the shareholders is unlimited.
Minimum capital
The minimum authorized capital of a limited liability company is BGN 5 (thousand) at least 70% of which must be paid up before registration.
The entire amount of the authorized capital should be paid-up in a two-year term as from the date of incorporation of the company.
Statutory bodies
The General Meeting of the shareholders is supreme governing body.
The company is represented and managed by one or more manager(s). The nationality of the manager is not restricted.
Joint Stock Company
Foundation
Joint-stock companies may be founded by one or more individuals or legal persons.
Shareholders
There is no restriction on foreign participation. The number of the shareholders is unlimited.
Minimum capital
Joint-stock company capital must be at least BGL 50 thousand. The authorized capital must be fully subscribed, 25% of the par value of each share must be paid up prior to the actual incorporation.
Types of shares
Shares may be issued in registered and in bearer form.
Preference shares may also be issued. (Preference shares may guarantee additional dividend or share in the company’s assets in cases of liquidation.)
Bonds
Joint-stock companies may issue bonds two years after their incorporation.
Statutory Bodies
General Meeting of the Shareholders – supreme governing body Bulgarian joint stock companies may choose between a one-tier system of management (i.e., a Board of Directors) and a two-tier system (i.e., a Managing Board and a Supervisory Board).
- One-tier System
Under the one tier system, companies are managed and represented by a Board of Directors, which consists of at least 3 but no more than 9 persons.
The Board of Directors elects one or more of its members to be executive director(s) i.e. members having signatory rights. The number of executive directors must not be more than the remaining members of the Board
For example:
3-member Board of Directors: max. 1 executive director (1< 2)
5-member Board of Directors: max. 2 executive directors (2 < 3)
- Two-tier System
Under the two-tier system, the company is managed by a Managing Board under the supervision of a Supervisory Board. The members of the Managing Board are elected and dismissed by the Supervisory Board. Their number is determined by the Articles of Association but cannot exceed 9 persons. The Managing Board is required to report its activities to the Supervisory Board.
The Supervisory Board cannot take part in the management of the company per se. It represents the company in its relations with the Managing Board. The Supervisory Board is elected by the General Meeting of the Shareholders (the sole shareholder) and consists of 3 to 7 persons.
The same person may not be elected as a member of both the Supervisory and the Managing Boards.
The Management Board with the consent of the Supervisory Board shall elect one or more of its members to be executive directors i.e. they will have signatory rights.
