Registration of commercial company in Bulgaria
If you want to start your own business or you are engaged in commercial activity, the Commercial Act requires that you should register a commercial company or yourself as a sole merchant. It is recommended that you seek professional advice so as to choose the most suitable commercial form for your activity.
Pursuant to the Commercial Act one person can participate in an unlimited number of companies. The companies themselves can be established by individuals or legal entities. After the company is established, it can be converted from one type to another.
There are several forms of business registration you can choose from.
Commercial company registration forms
- OOD (Ltd). – Limited Liability Company
To establish this type of company, there must be a minimum of two founders. he founders do not need to participate with equal capital. One share of the capital cannot be less than one Bulgarian lev.
- EOOD – Sole proprietorship with limited liability
This is a limited liability company that is established by one natural or legal person.
- ET - Sole merchant
Only an individual can be registered as a sole merchant. The firm of the sole merchant must include the first name and the surname or the father’s name of the individual.
- SD – general partnership
This company is established by two or more natural or legal persons. The partners in the company are jointly liable and each of them bears unlimited liability.
- KD – limited partnership
This company unites two or more natural or legal persons who together carry out commercial activities under a common firm.
- AD – joint stock company
In this company, the authorized capital is divided into shares. Partners receive shares in exchange for their contributions - they are shareholders in the company. Shareholders are not liable for the obligations of the company.
Registration of OOD or EOOD instead of ET is preferable
If you intend to develop a small business, we advise you to register an OOD or EOOD. It could generally be said that a small business needs a capital below 50,000 Bulgarian leva. OOD or EOOD can be registered with only 2 (two) Bulgarian leva capital.
If state fines are imposed on you as an ET or you deal with dishonest counterparties, you bear unlimited liability for your business activity, with all your personal property. If you are registered as an OOD or EOOD, you will only be liable up to the amount of capital with which you registered your participation in the company.
Personal and capital commercial companies
In personal companies, such as SD and KD, the personal participation in the business activity of each of the partners is required. If one of these partners leaves, the company ceases to exist unless otherwise agreed in its founding act. The participation of partners in the company is non-transferable.
In capital companies, such as OOD or AD, each partner/shareholder is required to contribute to the company’s capital. However, in contrast with the shareholders in an AD, the OOD partners are obligated to take personal participation in the business. The participation of the partners/shareholders is transferable. If a partner/shareholder leaves, this does not lead to the termination of the company.
Filling out the registration documents
Preparation of the registration documents has its specifics, so it is recommended that you use the services of a law firm practicing commercial law. Incorrect documents could lead to a delay in the registration process or even result in the rejection of your application by the Registry Agency. In case of rejection, the registration fee you have paid will not be refunded. Following the rejection, you will have to start the registration procedure from the beginning and pay the registration fee again.
The procedure for opening a company is relatively simple and fast. As it lays the foundation for your business, it is good to be familiar with the legal requirements.
The first step is to choose the most suitable legal form for your company. Most often, companies are registered as OOD or EOOD, since the procedures are lighter and the partner’s liability is limited. Then you should select a name (firm) of the company, and decide on the amount of capital, the headquarters address, and the scope of business activity.
If you want to be certain that all the registration documents have been prepared properly, you can contact us. By doing so, you will have the opportunity to focus your efforts on developing your business.
This article has been prepared for the purposes of general information only and does not constitute legal advice with respect to any particular subject or situation. For specific legal advice you should contact an attorney-at-law. Stoeva, Tchompalov & Znepolski is not responsible for any legal action undertaken on the basis of the information contained herein.