The Bulgarian branch office is not a separate legal entity but a part of the foreign company. As a result, share capital of the branch is not required and the foreign company is liable for the liabilities incurred by the branch.

Legal Representative of the Bulgarian Branch

Though the Bulgarian branch office is not a separate legal entity and appointment of a director is not required, the authorization of a legal representative of the branch is mandatory. The representative powers of the legal representative are determined by a power of attorney granted to him by the foreign company.

Registration with the Bulgarian Commercial Register

Under Bulgarian legislation branches are required to be registered with the Bulgarian Commercial Register. The necessary documents to register a branch in Bulgaria include:

• official certificate of good standing of the foreign company;

• official incumbency certificate containing the particulars of the persons authorized to represent the foreign company and their representative powers (if not contained in the certificate of good standing);

• resolution of the foreign company to establish a branch in Bulgaria (the persons competent to adopt such a resolution are determined by the national corporate law of the foreign company);

• constituent act/articles of association of the foreign company;

• notarized power of attorney granted to the legal representative of the Bulgarian branch;

• notarized written consent and specimen signature of the legal representative of the Bulgarian branch;

• declaration under art.13, para. 4 of the Bulgarian Commercial Register Act.

Accounting

Under the Bulgarian Commerce Act following the successful branch office registration, the branch is required to maintain its own bookkeeping as well as to prepare a balance sheet.

Taxation

Under the Bulgarian tax legislation the profit generated by a foreign company’s branch established in Bulgaria is subject to corporate income tax.

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Bulgarian Company Transformation procedure:

• Preparation of a notarized transformation plan by the director(s) of the company

The main purpose of this plan is to outline the mechanism of the company transformation. In other words, it should provide information about the name and address of the joint-stock company, about the share exchange ratio (i.e. how much shares in the joint-stock company will obtain each shareholder in the limited liability company) as well as information about the terms and conditions for the handing-over of the shares in the Bulgarian joint-stock company. A draft of the statute of the joint-stock company to be formed after the transformation of the Bulgarian limited liability company should also be attached to the transformation plan.

The plan must be published with the Bulgarian Commercial Register at least 30 (thirty) days prior to the planned date of the general meeting of the shareholders in the limited liability company that is to be transformed at which the transformation will be discussed and put to a vote.

Preparation of such a plan is not required when the limited liability company is a solely owned limited liability company.

• Sending a notification to the National Revenue Agency (NRA)

The execution of the said transformation of a Bulgarian limited liability company or solely owned limited liability company requires a notification to the NRA of the planned reorganization which should be notified when transforming companies in Bulgaria. The NRA is expected to issue a certificate evidencing that it has been duly notified of the transformation within 60 (sixty) days as of filing the notification.

• Appointment of a registered auditor and preparation of a report for the transformation of the Bulgarian company

The main task of the auditor appointed by the manager(s) of the Bulgarian limited liability company due to be transformed is to prepare a report containing an assessment of the adequacy of the exchange ratio. The auditor is also required to check whether the share capital of the joint-stock company is supported by the relevant assets of the company.

• Adoption of a resolution for the company transformation

The next step of the transformation process is the adoption of a resolution by the general meeting of the shareholders in the Bulgarian limited liability company. The resolution is adopted only if the shareholders who own at least three-quarters of the share capital vote in favour of the transformation of the company into a joint stock company in Bulgaria. At this meeting should also be adopted the statute of the joint-stock company. Appointment of the managing bodies of the joint-stock company is also necessary.

• Handing-over of the issued interim share certificates/shares to the shareholders

After the adoption of the resolution for the transformation of the limited liability company / solely owned company, the managing body of the joint-stock company is required to appoint a depository. The depository is a natural or legal person to which the issued interim share certificates/shares are handed. The depository should hand them over to the shareholders of the joint-stock company within 2 (two) months as of registration of the transformation with the Commercial Register in Bulgaria.

• Registration of the transformation with the Bulgarian Commercial Register

The transformation is finalized with its registration with the Bulgarian Commercial Register. As of the date of this registration the transformed limited liability company is deemed wound up and the joint-stock company is deemed established. As a result, the shareholders in the limited liability company become shareholders in the joint-stock company and all the assets and liabilities of the limited liability company is transferred to the joint-stock company as a universal successor of the limited liability company.

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