Variable Capital Company introduced by Bulgarian Parliament

Recent amendments to the Bulgarian Commercial Act of 1 August 2023 introduced the regulation of the Variable Capital Company (“VCC”), which is expected to enhance the conditions for the registration of startups in Bulgaria and make fundraising easier. However, this will not happen before 30 June 2024, when is the deadline for the Registry Agency, which manages and maintain the Commercial register, to provide the technical opportunity for the implementation of these amendments.

The VCC will be an alternative to the limited liability company (“LLC”) and the joint stock company (“JSC”), combining their advantages and being a mix of personal and capital companies.

What are the main characteristics of the VCC?

  • No need to specify the capital of the company upon its establishment. The amount of the capital will be acknowledged by the General meeting of shareholders for each financial year.
  • The minimum nominal value of the shares may be BGN 0.01 (EUR 0,005) per share
  • It is allowed to issue privileged shares (additional dividends or rights to vote in the General Meeting, right of veto, higher liquidation quota, without voting rights, etc.)
  • A special book of shareholders will be kept as the one required for the JSC  The certificates issued to the shareholders, stating the amount of the share capital and the privileges (if any) will not be considered securities
  • The founders are free to choose in the Article of Association whether the shares will be transferred with a simple agreement in writing or notary certification of the signatures and content will be required;
  • The founders could be one or more natural persons or legal entities
  • The company will be managed by a Management Board or by one or more General managers. There is no requirement regarding the members of the MB, but as in the JSC, the executive members must be fewer than the total amount of the Board members.
  • The names of the representative must be entered into the Commercial register while the name of the shareholders shall not be entered.
  • The shareholders’ liability will be limited to the amount of their equity, but controlling equity shareholders could be personally responsible in certain cases
  • General meeting of the shareholders will decide on the most important corporate matters as it is provided for the LLC and JSC

What is specific for the VCC

For the first time, explicit regulation is provided for:

  •  Incentive scheme in favour of the company employees and managers and the limit of the acquired shares is set to 15% of the company capital
  • Tag-along and drag-along options
  • Right to buy-back of shares
  • Lock-up period during which the transfer of the shares is prohibited
  • The VCC should have less than 50 employees, an annual turnover that does not exceed BGN 4 mln (approx. EUR 2 mln), and/or the value of its assets should not exceed BGN 4 mln. When one of these criteria is not met, the VCC should be transformed into LLC or JSC in accordance with the Commercial Act. The regular annual meeting of the shareholders is competent to check if the company meets the requirements as of the end of the preceding financial year.


The amendments are expected to have positive effects on the economy, boost the local and foreign investors’ activity, the growth of innovative startups in Bulgaria, and foster a more favorable environment for entrepreneurs by diversifying the sources of financing and solving some problems encountered by the LLC and JSC.

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.