Business in Bulgaria

The Bulgarian Commercial law allows for the following types of business organizations:
an unlimited (general) partnership;
a limited partnership;
a private limited company;
a public limited company (joint stock company);
a public limited partnership;
a sole trader;
a joint venture;
a branch;
a holding;
a co-operation;
a representative office.
The most appropriate types of companies for carrying out business in Bulgaria are: a private limited company, a public limited company, a single-person private limited company, a holding, a branch, and a representative office. All of these (with the exception of a representative office) have to be entered into the commercial register kept with the relevant district court.


Private Limited Company (a limited liability company) - "OOD" - it is a commercial company with share capital owned by its members whose liability is limited to the amount of the capital subscribed. A private limited liability company may be founded by one or more persons, including foreign natural or legal persons. The minimum foundation capital is Leva 5,000 divided into shares with nominal value of Leva 10 each and at least 70% of the capital must be paid up on foundation. Contributions to the foundation capital may be paid in cash or in kind. The statutory bodies of the private limited companies are the general meeting of shareholders, which must be held at least once a year, and the managing director or board of directors.
A single-person private limited liability company is called "EOOD". It is owned by a natural or a legal person, the sole shareholder exercises the powers of the general meeting and the managing director or board of directors is appointed to run the company. A private limited company must prepare a balance sheet and financial statements each year.

Here is a general explanation of what is needed to set up a private limited company in Bulgaria:

produce its articles of association (Memorandum of Association - in the case of a single-person private limited company); the Law on Commerce stipulates the obligatory provisions of the articles;
have appointed a managing director (or board of directors);
have paid up at least 70% of its authorized capital, including at least one-third of each member's contribution.
This information together with details of the management, etc., is recorded in the commercial register and promulgated in the State Gazette.

Invest Bulgaria Info Sheet - Step by step guide to setting up a Private Limited Company




Public Limited Company (a joint stock company) - "AD" - it is a commercial company with share capital owned by its members whose liability is limited to the amount of the capital they subscribe. A joint stock company can be founded by two or more persons, including foreign natural or legal persons. The only exception to this rule is when the State is the only founder and, therefore, the sole owner of the whole capital of the company - in this case we have a single person public limited company ("EAD").
The minimum capital of a joint stock company is Leva 50,000, increasing to Leva 100,000 if the capital is raised by a public offer. A capital higher in value is required for the establishment of banks, insurance companies and investment companies:

banks - the minimum capital required amounts to Leva 10,000,000,000;
insurance companies - the minimum capital required amounts to:
Leva 2,000,000 for life insurance and personal accident insurance;
Leva 3,000,000 for property insurance;
Leva 4,000,000 for reinsurance;
Investment companies - the minimum amount and the structure of the required capital as well as its relation to the assets and liabilities as per the balance sheet are determined by the Securities and Stock Exchange Commission according to the Law on Securities, Stock Exchange and the Investment Companies.
In the general case of a registration of a public limited company, contributions to foundation capital may be paid in cash or in kind, in which case an independent valuation is required, and at least 25% of the capital must be paid up on foundation. A joint stock company may issue either registered or bearer shares. The general meeting of shareholders is the highest body of the company, and must be held at least once a year. The shareholder's meeting elects a board of directors (a one-tier management structure) or a board of directors and a supervisory board (a two - tier management structure). A public limited company must prepare a balance sheet and financial statements each year. Special statutory instruments provide additional requirements to the foundation of banks, insurance companies and investment funds in the form of joint stock companies.

Here is a general explanation of what is needed to set up a public limited company in Bulgaria:

have adopted articles of association;
have all of its authorized capital fully subscribed;
have paid up at least 25% of its authorized capital;
have elected a board of directors; and
have met any other legal requirements.
Details of the official business name and registered office of the company, its management bodies, and other facts related to its incorporation, existence and winding-up are recorded in the commercial register and promulgated in the State Gazette.


Invest Bulgaria Info Sheet - Step by step guide to setting up a Public Limited Company




Holding - it is a public limited company, a public limited partnership or a private limited company with the purpose to participate in whatever form in other companies or in their management. At least 25% of the capital of a holding has to be entered directly in subsidiaries. A subsidiary means a company in which the holding owns or controls directly or indirectly at least 25% of the stocks or shares, or can appoint directly or indirectly more than 50% of the members of the managing body. The Law on Commerce explicitly names the activities, which a holding is allowed, and those not allowed, to perform.
Branch - foreign legal entities registered abroad, as well as foreign natural persons and entities that are not legal persons, can register a branch in Bulgaria provided they are registered as commercial entities in accordance with the relevant legislation in their home country. No authorized capital is required to found a branch. A branch is not a legal entity, it is part of the company - founder. Branches are obliged to maintain accounts as an independent company. A branch of a foreign company must prepare a balance sheet.

Representative Office - it is regulated by the Foreign Investment Law. Foreign persons who are entitled to engage in business activity under the legislation of their own countries may set up a representative office which is registered with the Bulgarian Chamber of Commerce and Industry. Representative offices are not legal persons and may not engage in economic activity.

Joint Venture - it is a company formed jointly by a Bulgarian and a foreign partner. The size of the foreign participation in a joint venture is not limited. Joint ventures must take one of the forms of business entities pursuant to the Bulgarian Law on Commerce. Establishment of a joint venture is one of the forms of investing in Bulgaria.