The Commercial Law is the main document to which Bulgarian Commerce Act and Commercial Law submit to. It includes details about the Commercial Register, the types of Bulgarian companies, the commercial transactions and the bankruptcy procedures.
The Commercial Law explains the major forms of the companies one can set up in Bulgaria. An entrepreneur can choose between a limited partnership, a general partnership, a partnership limited by shares and the two most popular, a limited liability company (LLC) and a joint stock company (JSC).
For these two last types of Bulgarian companies, general rules include the existence of at least one shareholder. The bodies of the companies differ, though, as the JCS requires a board of directors with at least three persons. The company also needs a management board and a supervisory board, both under the rule of minimum three persons.
In case of a limited liability company, the Bulgarian law states that a founder has to contribute its interest. The penalty for not doing it consists of being expelled from the association. In terms of profit, management and company’s affairs, all members of the management have equal rights. For a joint stock company, the contribution of the shareholder determines the limit of the liability.
The capital stock can be increased, lowered or even cancelled. Issuing new shares leads to an increased stock capital. It is compulsory for the shareholder to contribute to the shares once he subscribed for them. Otherwise, he owes interest.
Once the type of company is chosen, the association must begin the formalities to incorporate it at the Commercial Register. The procedure is compulsory and requires papers regarding the form of the company, association act, name certificate and the signature specimen from the notary for the person representing the firm.
The Commercial Register is the institution that keeps all the information about commercial entities in Bulgaria. Therefore, the manager or the representative must notify the institution regarding all the changes related to the company, such as changes of managing bodies, office address or share capital.
Once the State Gazette publishes the registration, the entrepreneur has to determine if the company will register for VAT. It is not mandatory for companies with an income under 50,000 BGN.
If you need more information about the Company Act, you may contact our company formation agenst in Bulgaria.