Company formation in Bulgaria or Company formation in European Union ( Bulgaria is member of EU since 2007 )
We can register a Bulgarian company for you and to keep its accounting. For your information please find below the basic steps of the procedure and namely:
A Limited Liability Company ( LLC )
The limited liability company is the type of business organization most widely used among investors because of the minimum capital requirements and the simplicity of its corporate governance structure. An LLC can be established by one or more persons, individuals and/or legal entities. As a type of LLC, the solely owned LLC is subject to the same regulation as the LLC, with certain exceptions relating to its specific structure of shareholding. Shareholders in an LLC may be Bulgarian and/or foreign individuals and/or legal entities.
The minimum share capital required by the Commerce Act for incorporation of an LLC is BGN 2 (two Bulgarian Leva) (equal to appr. EUR 1 (one Euro)), distributed in shares with value of not less than BGN 1 (one Bulgarian Lev) each.
The shareholders can make both cash and in-kind contributions. The in-kind contribution is subject to mandatory evaluation by three independent experts, appointed by the Bulgarian Registry Agency.
The shares in an LLC are not tradable instruments. They may be transferred by a notarised share transfer agreement. The transfer of shares between shareholders does not require a resolution of the general meeting, while a transfer of shares to a third party, as well as the admission of the new shareholder(s), requires such a resolution.
The corporate governance structure of an LLC consists of: (i) a general meeting of the shareholders; and (ii) one or more managers who manage the company and represent it vis-á-vis third parties. Under Bulgarian law only an individual may be appointed as manager of the LLC. The manager can be a shareholder, as well as a third person and there are no restrictions for a foreign person to be appointed as manager of an LLC.
The basic steps in the formation process are as follows:
1. Reservation of the name of the company and issuance of a certificate for uniqueness of the name. ( https://public.brra.bg/CheckUps/Verifications/PreservedCompanies.ra );
2. Composing Articles of association or founding a deed for a single-member;
3. Formation of company's share capital & issuance of bank deed certifying that at least BGN 2= 1 EUR of the registered capital has been paid;
4. Appointment of managing body;
5. Registration in the Bulgarian Commercial Register of the relevant district court by the appointed manager who possesses representative power;
6. Issuance of a permit (if Law require for specific company activity - e.g. investment broker ) from the competent body for performing specific commercial activity before entry into the commercial register ;
Registration of a Joint-Stock Company (JSC)
The joint stock company is another widely used type of business organisation. It is preferred because of the lack of statutory restrictions on the transfer of shares and the absence of personal engagement of the shareholders in the operation of the company. However, the corporate governance structure is more complex compared to the one of the LLC and the Commerce Act sets forth mandatory rules governing the formation of a reserve fund, distribution of profit and minority shareholders rights. A JSC may be established by one or more Bulgarian and/or foreign individuals and/or legal entities. As a type of a JSC, the solely owned JSC is subject to the same regulation as the JSC, with certain exceptions relating to its specific structure of shareholding.
The minimum registered capital required for establishment and operation of a JSC is BGN 50,000 (fifty thousand Bulgarian Lev), which equals to approximately EUR 26,000 (twenty six thousand Euros). However, special legislation may require higher minimum share capital for carrying out certain types of activities, for example banking or insurance activity. The share capital of a JSC must be distributed in shares with a nominal value of not less than BGN 1 (one Bulgarian Lev) each. At the time of incorporation of the company and as a condition precedent for such incorporation, at least 25% of the nominal value (or issuance value determined in the by-laws) of each share must be paid in and the rest of total amount of the capital shall be paid in within two years. Similarly to the LLC, the shareholders of a JSC can also make both cash and in-kind contributions.
The corporate governance structure of a JSC consists of: (i) a general meeting of the shareholders, and (ii) a board of directors (in the case of a one-tier governance system), or a supervisory board and a managing board (in the case of a two-tier governance system).
The shares of a JSC are tradable instruments. The shares of a JSC may be: (i) registered or bearer shares; (ii) common or privileged shares, (iii) materialised or book-entry form shares.
Registered shares are transferred by endorsement, whereas bearer shares are transferred by mere delivery. The transfer of shares in the JSC is not subject to registration in the Commercial Register. The transfer of registered shares must be entered into the book of shareholders of the JSC to have effect against the company. In most cases new shareholders may easily enter the JSC. Nevertheless, restrictions on the transfer of shares may be provided for in the by-laws of the company, and such restrictions shall be binding on the company and on the shareholders. Restrictions on transfer may relate to any type of shares.
Persons entitled to request registration-only the relevant managing body of the company could request registration in the Commercial register. The basic steps in the formation process are, as follows:
1. Reservation of company name and obtaining a certificate for uniqueness of the company name;
2. Holding a Constitutive Meeting, where the memorandum of association is accepted and the managing bodies are voted. At the meeting all shares of the JSC capital should be subscribed;
3. Founders Contributions, which must be made by the founders-in money or non-cash.
Branch
The incorporation of a branch is one of the alternatives to the establishment of business operations of a foreign company in Bulgaria. Foreign companies registered abroad, as well as foreign individuals or persons that do not qualify as legal entities can register a branch in Bulgaria, provided that they are properly incorporated and/or entitled to conduct business under the national law of their home country.
A branch of a foreign company is established by means of registration into the Commercial Register. After its proper registration according to Bulgarian law, the branch of a foreign company, although not a separate legal entity, has a certain degree of independence from the parent company. Thus, it is required to keep commercial books as a separate business establishment and prepare a separate balance sheet. However, as the branch is not a separate legal entity, its assets and liabilities are deemed to be assets and liabilities of the parent company. Therefore, the branch is not required to comply with capital registration requirements or to have separate by-laws or a distinct management structure, except for a manager. From tax point of view a branch of a foreign company is considered a “permanent establishment” and it triggers corporate income tax liability in Bulgaria for the foreign parent company.