Limited liability Company in Bulgaria

The most popular forms of foreign investment in Bulgaria are the acquiring of a share or interest of a commercial company and transactions related with acquiring of property.
According to the terms of Bulgarian Commercial Act the share participation in Bulgarian commercial companies could be acquired in the following types of commercial companies:
General partnership (unlimited partnership)
Limited partnership
Partnerships limited by shares
Limited liability company
Single-owner limited liability company
Joint-stock company
Single-owner joint-stock company
In addition to the above listed types of commercial companies, other forms of business organization recognized under the Bulgarian law are:
Joint Venture
Branch
Trade representative office
The preferred type among the above listed commercial companies usually is the Limited liability Company (LLC). This offers a number of advantages for foreign persons. The partners in it are not liable for the debts of the company; they risk at most loosing the contributions made. From this point of view this legal and organization form is appropriate for the conduct of business activity by foreign persons. Moreover, no permanent residence is required for the participation of foreign persons in a LLC.
At present a new regime for registration of commercial companies in Bulgaria is in force. According to the new Act on Commercial Register all the commercial companies are registered before the Registry Agency – Commercial Register following filing of a special applications approved by the Registry Agency. The rest of the documents required under the Commercial Act shall be prepared in addition, usually by a lawyer, and according to the new amendments in the Act on Commercial Register the applications may be filed by a lawyer authorized under a special Power of attorney prepared in a compliance with the Bulgarian Lawyers Act.

Art. 19 of the Commercial register Act arranges that the registration of the company should be finished no later than the end of the business day following the date of filling the application but our experience in the registration shows that the time necessary for the employees at the Registry Agency to enter the company in the Commercial Register is approximately a month but as a new staff at the Registry Agency was appointed we hope that the company could be registered for a week. The new amendments of the Commercial register act are result of the public discussions and the problems in the registration procedure which were faced by the persons who decide to register a company of re- register of the existing companies. One of the specifics in the new registration procedure is the lack of decision for registration of the new company as it was the Court decision before. So when the company is registered in the Commercial register the only prove for its incorporation is the certificate for trading activity signed and stamped by the registry agency.

If you decide to set up a Limited liability company you should be aware that the state fees approved by the Registry Agency are as follows:

50 BGN for reserving a company name;
160 BGN for entering of the details of the Limited Liability Company in the Commercial Register;
50 BGN for publishing of the Articles of incorporations of the company;
7 BGN for obtaining of certificate from the Registry Agency containing all the details for the registered company;
10 BGN bank commissions’ fees.
Additional fees: 20 BGN fee for obtaining of certificate from the bank certifying the amount of the paid up company` s capital.

According to the Commercial Act the company shall be dissolved:
1. with the expiration of the term set in the articles;
2. upon decision of the partners adopted with a three quarters majority of the interests, unless the articles provide for a greater majority;
3. through a consolidation or merger with a joint-stock company or another limited liability company;
4. upon being declared bankrupt;
5. by a decision of the district court in cases provided for by law.
According to the Commercial Act the articles of incorporation may provide other grounds for dissolution of the company. The company may be dissolved also by a decision of the district court.

In the case of dissolution of a company a liquidation procedure shall be initiated.

The company's liquidator shall be its manager, except where another person has been appointed with the articles or with a resolution of the general meeting.

A company in which the capital is owned by a single natural person shall be dissolved upon the death of such person, except where provided otherwise or where the heirs wish to continue its activities.

Where the capital is owned by a single legal person the company shall be dissolved with the dissolution of that legal person.

The term for completion of the liquidation shall be determined by the General Meeting of the limited liability company and the joint-stock company, and for other companies, by unanimous decision of the partners with unlimited liability. Such a term shall also be determined by the registrar of the Recordation Agency, where the latter appoints liquidators. Where necessary, the term determined as above may be extended.

Upon declaring the dissolution of the company the liquidators must invite its creditors to make their claims. The notice shall be forwarded in writing to known creditors, and shall also be posted in the Commercial Register.
The liquidators shall draw up a balance sheet as of the moment of dissolution of the company. At the end of each year the liquidators shall close accounts and present a financial statement and annual report to the governing body.
The governing body shall resolve on approval of the opening balance sheet, the annual closing of accounts, and on holding the liquidators harmless.
Upon satisfaction of the creditors, the remaining assets shall be distributed among the partners, or among the shareholders as the case may be.
The company's assets shall not be distributed before six months have passed from the date that the notice to the creditors was posted in the commercial Register.
When all liabilities have been settled and the remaining assets distributed, the liquidator shall apply for deletion of the company from the Commercial Register.

Having said the above you should be aware that the dissolving and liquidation of a company registered in Bulgaria takes a lot of time because there are a lot of steps specified the commercial Act which should be observed.

This article was created by Valova&Angelova law firm.