Company Setup and Administration in Bulgaria

Ioannis Kesisis

Bulgaria is a very attractive country to invest in; with a stable economy, an easy procedure for company registration and a transparent tax system with a short list of taxes and social security obligations. It is our pleasure to assist you in this process; but before you start you must make some decisions in order to optimise your future business activities.


Choose the legal form of business which suits you the best

The Bulgarian legislation regulates two main forms of business organisation:

  • Commercial corporations
  • Co-operatives*

The Commercial Law exhaustively lists the following types of commercial corporations which can be established:

  • General partnership (SD)
  • Limited partnership (KD)
  • Limited liability company (OOD), incl. Single-member limited liability company (EOOD)
  • Joint-stock company (AD)
  • Partnership limited by shares (KDA)**

For long-term investments, the 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 with foreign capital are the Limited Liability Companies (OOD and EOOD) and the Joint-stock Companies (AD).          


How will you finance your newly established company?

The already established company could be financed in three possible ways:

  • by the registered capital;
  • via increasing of the share capital; or
  • by loan capital.

The contributions to the capital of the company could be cash or in-kind. The in-kind contributions must 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 compared to the one for cash contributions.

The AD legal form is typically chosen by companies with a sizable starting capital and those who are active in the investments’ and production sectors.

The OOD and EOOD legal forms are preferred by the small and medium size enterprises, as well as by families. The AD legal form is typically chosen by companies with a sizable starting capital and those who are active in the investments’ and production sectors.

The establishment of the two types of companies also differs: for the establishment of an OOD, the minimum capital requirement is BGN 2, while for an AD it is BGN 50,000.

The AD legal form also provides more possibilities for attracting capital: the company could issue bonds, could be listed at the stock-exchange list or could be transferred into a public legal entity.


Will you operate alone, or would you prefer 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 in the future. If you want to take the risk on your own, you will also have all the profits for yourself, but if you choose to be joined by other shareholders, you will bear the risk and share the profits together.

Another important issue to address concerns the votes at the General Assembly. The legislation establishes enough protection mechanisms when taking decisions at the General Assembly for the majority shareholders as well as for the minority shareholders.


Who will manage the company?

The registered ADs can have one-step or two-step management systems. 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 separately, or they 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 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 being used by another legal entity.


What documents are needed for the registration?

You will need to prepare — with a local consultant’s or lawyer’s support — a set of documents to be submitted to the Commercial Register. You do not need to be in the country to sign them, although 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 provide a full range of services, including opening an account, online banking, etc. Most of the banks can also issue an electronic signature so that you can operate the bank account from anywhere in the world.           


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 registrations, permissions for the activity you plan to do?

For certain activities, you need to choose the specific legal form of the legal entity you wish to establish (e.g. banks can be only AD). For 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 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 establishing 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?

Registration starts with the preparation, signing and notarial certification of the documents. The next step is the payment of the share capital at the opened special accrual bank account. Then the registration documents must be submitted to the Commercial Register. The moment the company’s registration is approved, it receives a Unified Identification Code (UIC – EIK is the abbreviation in Bulgaria) which is the unique number of the company with which it is usually identified. The documents can be submitted at the Commercial Register desk either in hard copy or electronically.

As a newly registered company, you will likely not have enough 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.


Supporting activities

You need to consider finding an office and/or a place for the commercial, production, or 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.    


In conclusion

You must 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 a full range of services required for the efficient and successful registration of your business in Bulgaria.


XLNC MAGAZINE | No. 03 | May  2019

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