The Commercial Law lists the following types of legal entities, which could be established in Bulgaria:
• Joint-stock company (AD);
• Partnership limited by shares (KDA);
• Limited liability company (OOD), including. Single-member limited liability company (EOOD);
• General partnership (SD);
• Limited partnership (KD).
For long-term investments, foreign companies rarely use the General Partnership, Limited Partnership and the Partnership Limited by Shares as a type, because in these legal entities, either part of the shareholders (KD and KDA) or all of them (SD) have unlimited responsibility for the company’s obligations.
The most typical type of companies used by foreign capital, are the Limited Liability Companies (OOD and EOOD) and the Joint-stock Companies (AD).
What will be the name of the company?
The name of the company should be unique. Before you start the registration, you should check at the Commercial Register whether the same name is not used by another legal entity.
What documents are needed for the registration?
You will need to prepare with a local consultant/ lawyer’s support a certain set of documents to be submitted to the Commercial Register. You do not need to be in the country to write and sign them, but it is preferable to do so.
Which bank to choose?
You can choose one of the 28 commercial banks which operate in Bulgaria. All of them can provide a full range of services: opening an accrual bank account, opening a current bank account, online banking, etc. Most of the banks can also issue an electronic signature so that you can operate the bank account from all over the world.
How will you finance your newly established company?
The contributions to the capital of the company could be in cash or in-kind contributions.
The already established company could be financed in three possible ways: by the registered capital, via increasing of the share capital or by using loan capital from a third party.
The in-kind contributions have to be evaluated before they become part of the capital of any company. The procedure is very strict. The real value of the in-kind contributions should be estimated by three evaluators, appointed by the Commercial Register. The procedure might take longer than the one followed for cash contributions.
The OOD and EOOD legal forms are preferred by small and medium-sized enterprises and families. The AD legal form is the form of the “big capital”, of investments and production.
The establishment of the two types of companies also differs: for the establishment of an OOD the minimum capital requirement is 2.00 (two) BGN, while for AD––50,000.00 (fifty-thousand) BGN.
Will you be Sole shareholder or will you choose to have other shareholders as well?
This is a general question, which demands a realistic answer, because it is entirely connected with the risk you will face. If you want to take the risk on your own, you will also have all the profits, but if you choose to be joined by other shareholders, you will bear the risk and share the profits together.
It is also an important issue, because via the owned shares you might be able to take decisions on your own, or you will need the support of the other shareholders as well. The Bulgarian legislation has some requirements, following which you will be able to protect your interests, no matter if you have a minority or the majority of the shares with a right to vote at the respective company General Assembly.
Who will manage the company?
The registered ADs can have a one-step management system or a two-step management system. For the One-step management system there is a Board of Directors and a General Assembly, while the Two-step system requires the establishment of a Management Board, a Supervisory Board and a General Assembly.
The management of an OOD/EOOD could be performed by one person or by a legal entity. If there are more managers, they can manage together and separately or the two of them can manage and represent the company together.
For the management of the company, Eurofast can offer management services, which can be designed entirely for the needs of the newly registered legal entity.
What are the expenses?
The main expenses to take into consideration include the initial share capital, registration fee, notarisation, apostilles, translation, legalisation, registration documentation fee, consulting services, bank fees, accountancy services, payroll services, contracts review services, etc.
Do you need any additional certifications, registrations, or permissions for the activity you plan to do?
You will have to consider that for certain activities, you need to choose a specific legal form of the legal entity you wish to establish (e.g. banks can be only AD). For being a financial institution, you need to be registered at the Bulgarian National Bank in a special register. For construction activities, you need to be part of the Bulgarian Union of Builders. For doing any commercial activity (restaurant, shop) you need permission from the respective local municipality.
Administration of the company
Eurofast can provide you with administration services for the purposes of establishment of a company. We can provide you with legal, tax and consultancy services as well as prepare and apply for the registration documentation which may be needed. We know how to support you and how to ensure a fast and secure registration of a new company.
Where should you apply?
The registration starts with the preparation, signing and notarial certification of the respective, not all of them, documents. Then the payment of the share capital at the opened special accrual bank account. Then the registration documents have to be submitted to the Commercial Register.
When the company is approved to be registered, it receives a special Unified Identification Code (UIC––EIK is the abbreviation in Bulgaria) which is the unique number of the company by which it is usually identified. The documents can be submitted either at the Commercial Register desk in hard copy or electronically.
As a newly registered company, you will likely not have sufficient personnel to complete all the required actions and operations in order to comply with the local legislation and regulations. Eurofast can give you a hand during this stage of the establishment of the new business in Bulgaria with management, accountancy, VAT compliance and fiscal representation, legal, payroll and employment, audit, AML, Personal Data Protection, transfer pricing, real estate issues, leasing, intellectual property, citizenship and residency services, marketing, etc.
You need to consider finding an office and/or a place for the commercial, production, service activities which you are going to perform.
You have will have to obtain a stamp of the company.
Additionally, you will need to arrange your relations with the manager of the company via a written Management Agreement.
You have to be prepared to meet different commercial practices, procedures, additional obligations, different commercial habits, type of correspondence, dress code, administrative services and documentation, etc.
Be sure to have a reliable partner on your side during the whole procedure. At Eurofast, we have been committed to servicing our clients and partners for over 40 years and can provide the full range of services required for the efficient and successful registration of your business in Bulgaria.
For more information, contact:
Senior Legal Adviser,
Tel: +359 2 988 69 77
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