Closing down a Bulgarian company – dissolving and liquidation
The process of closing down a Bulgarian company is not an easy process but a rather complicated procedure involving numerous actions before different authorities (public bodies).
If the company was registered before the 1-st of January 2008, it should be noted that, prior to starting the process of closing it down, the company must be re-registered into the Trade Register. This is required under the new legislation for establishing of commercial companies enacted on the 1st of January 2008. According to the new law, after the 1st of January 2008 the companies are registering before a new body- the Trade Register instead of the Bulgarian court (as it was prior to this date). Therefore, as the court is no longer dealing with registration of companies and the changes in their status, in order for any action to be initiated in relation to a company, this company must first be re-registered in the Trade Register. All existing companies must be re-registered within the three years following the 1st of January 2008. If a company was registered on or after the 1st of January 2008, it is not necessary for it to be re-registered as its registration would have been made before the Trade Register under the new legislation.
When a company has been registered or re-registered before the Trade Register, there are a number of requirements which should be fulfilled for the purpose of closing it down. These requirements form the two main stages of the liquidation process of a company.
The first stage of this process is the dissolution of the company which could be initiated by passing a resolution by the shareholders for closing the company down. Such decision must be voted by a majority of 3/4 of the capital shareholders in the company and the resolution should be registered in the Trade Register. For the purpose of dissolving the company, it is also necessary for the manager of the company to notify the Tax Office of the dissolution process. The Tax office then issues a certificate under art.77 of the Tax Code certifying that the company does not have tax obligations towards the State. The above Certificate should be sent directly by the Tax Office to the Trade Register. It is also necessary for the General Assembly of the shareholders to appoint a liquidator and to determine the deadline for liquidation which could not be less then 6 months. All documents related to the above actions should be presented before the Trade Register. If they are correctly prepared, the Trade Register should change the status of the company from “active company” to a ‘company in process of liquidation”. In the case where there are missing documents or incorrectly prepared documents there is a possibility that the Trade Register will refuse publishing the above circumstance. To avoid such complications we strongly recommend that the documents for liquidation are prepared by a lawyer.
As at the time of starting the dissolution process, the company would still be in business relations with third parties and such relations could not be terminated immediately, for the duration of this process the company would still exists as a legal entity. Its commercial activity however could be stopped. Whether the company will be active during the process of its liquidation depends on the decision made by the shareholders (The General Assembly) on the General Meeting. If the shareholders decide so, during the process of its liquidation, the company would not be allowed to participate in any commercial transactions or to sign any commercial contracts. However, they could decide instead that the company shall participate in the commercial transactions. In any event this decision of the General Assembly should be published in the Trade Register.
The dissolution process should be finished within a specified deadline –a minimum of 6 months. In every individual case this deadline is specified by the shareholders in the General Assembly but it is always at least 6 months. The main goal of this time period is for the existing business relations between the company and third parties to be concluded and for the assets and shares to be divided between the shareholders.
After this deadline expires, the second stage of the liquidation process commences, The General Assembly is summoned again and the relevant legal documents for the final liquidation and deleting the company from the Trade Register are prepared. Along with the respective Protocol from the General Assembly’s meeting, the company should present before the Trade register a Certificate from the National Insurance Institute, notifying that the company has no obligations towards the National Insurance Institute ( it actually means that the national insurance of the employees has been paid by the company). The company is also obliged to present before the Trade Registry the specified in the Commercial Code accountancy documents.
Upon receipt of all documents and a satisfactory check, the Trade register would erase the company’s entry from its records.
This article was created by Valova&Angelova law firm.