Winding-up and liquidation of a company

Company registration is a relatively easy and fast process in Bulgaria, while its deletion is much longer and more complicated. If you want your company to be deleted from the Commercial Register, you need to go through a winding-up procedure that takes longer.

How long does it take

The liquidation of a company goes through different stages, and each stage requires compliance with certain legal deadlines, regardless of whether the company operates or not. It takes at least 8 months for the final deletion of a company from the commercial register. If the National Revenue Agency ("NRA") initiates a tax inspection or audit, these deadlines may be extended.

The liquidation period may not be less than 6 months pursuant to the law. It starts running from the date of announcement of the invitation to creditors in the Commercial Register.

What is the procedure

The procedure begins with a decision of the competent corporate body to terminate the company, open liquidation proceedings and appoint a liquidator.

The next step is to notify the competent territorial directorate of the NRA that the company will be liquidated. Within 60 days from the date of notification, the NRA should issue you a certificate under Article 77, paragraph 1 of the Tax Procedural Code, which is mandatory for the submission to the Commercial Register. Within the 60-day period, the company might be inspected and must make available the required accounting documents.

After receiving the certificate from the NRA, you need to submit an application to the Commercial Register requesting the entry of termination and liquidation of your company. 

After the liquidation is registered, it is necessary to announce in the Commercial Register an invitation to the outstanding creditors of the company to invite them to file their claims. This is the moment when the minimum 6-month period for liquidation begins to run.

During liquidation, the liquidator must complete all current transactions, terminate all existing contracts, collect all claims, convert the company's property into money, pay all debts, and satisfy all creditors. 

The liquidator should terminate all employment contracts with employees if any, as well as submit to the National Social Security Institute applications-declaration and submit certain employment documents. The procedure in the NSSI ends with the receipt of a certificate, which is necessary for the final deletion of the company.

When the liquidation period expires, the liquidator draws up a liquidation balance sheet and distributes the remaining property to the owners.

What happens after the liquidation of the company

After passing the procedure of liquidation and distribution of property among the owners, the company is deleted from the Commercial Register and ceases to exist. The final deletion of the company is carried out by an application to the Commercial Register, and with its registration, the company is deleted.

Within 30 days from the date of deletion of the company in the Commercial Register, a tax return under Article 162, paragraph 1 of the Corporate Income Tax Act for the last tax period must be submitted to the NRA and the corporate tax due must be paid.

Who can be the liquidator of the company

The liquidator is the one who takes all actions related to the liquidation of the company - regulates the relations with its creditors and notifies the relevant state institutions.

The liquidator may be the manager of the company, one of the partners or an authorized person, for example, a lawyer specialising in the field of commercial law.  

What about all the company's obligations?

If the company has public debts, they must be repaid after the procedure for deletion of the company has begun.

All outstanding loans and liabilities of the company must be repaid within the framework of the liquidation.

If the company does not have enough assets to cover its liabilities, it goes bankrupt and then the liquidator should ask the court to open insolvency proceedings.

If you only want to cease business operations, but the company continues to exist as a legal entity, you can "freeze" the company. In this case, it is not deleted from the Commercial Register, but it is necessary to submit a one-time declaration under Article 38, paragraph 9, item 2 of the Accountancy Act, declaring that the company does not operate.

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.