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Commercial corporations;

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Co-operatives.

They differ in their form of legal organisation and in the manner of apportionment of liability. The Commerce Act makes exhaustive provisions for the following types of commercial corporations:

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General partnership (SD);

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Limited partnership (KD);

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Limited liability company (OOD), incl. Single-member limited liability company (EOOD);

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Joint-stock company (AD);

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Partnership limited by shares (KDA).

Other forms of business organisation according to Bulgarian law are:

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Sole trader;

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Wholly owned subsidiary;

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Trade representation office;

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Co-operative.

Among the forms of organisation listed above, the most widespread in practice are limited liability companies and joint-stock companies, in which the members or the shareholders, as the case may be, incur limited liability for the obligations of the company.

Limited liability company (OOD)

A limited liability company may be formed by one or more natural persons or legal entities, and in case the capital is owned by a single person, a single-member limited liability company (EOOD) is formed. The capital of the company may not be less than BGN 5,000 (five thousand Bulgarian leva), and the value of a single corporate interest may not be less than BGN 10 (ten Bulgarian leva). The interests held by the separate members may vary in size. Members are liable for the obligations of the company to third parties up to the amount of the participating interest they hold in the corporate capital. Corporate interests are freely transferable between members, whereas the transfer of such interests to non-members requires a majority of three-quarters in value of the capital, i.e. the consent of almost all other members. Unlike a joint-stock stock company, the capital of a limited liability company is not divided into shares, existing in a physical form as securities. A limited liability company does not have a collective management body (Board of Directors or Management Board), and such a company is managed single-handedly by one or more managing directors.

Joint-stock company (AD)

A joint-stock company is a corporation whose capital is divided into shares. The liability of shareholders for the obligations of the company is limited to the extent of the participating interest they hold in the capital. The structure and organisation of the joint-stock company are regulated in the Commerce Act, but promoters are free to agree on such clauses in the articles of association of the company as best suit the specifics of their needs. A joint-stock company may be incorporated by one or more natural persons or legal entities, and in case the capital is owned by a single person, a single-shareholder joint-stock company (EAD) is formed. The minimum amount of capital of the company is BGN 50,000, and the minimum nominal value of a share is BGN 1. In case a larger nominal value of shares is opted for, it must be defined in terms of whole numbers.

The capital of a joint-stock company is divided into shares of identical nominal value. The shares are securities and they can be traded on the stock exchange. Either registered shares or bearer shares may be issued. Both types of shares may be preference. Registered shares are transferable by means of endorsement, and the transfer must be entered into the Register of Registered Shareholders in order to have effect in respect of the company. The articles of association may also lay down other conditions for their transfer. Bearer shares are transferable by means of delivery to the transferee.

Decisions in a joint-stock company are made by a majority vote.

Joint venture

A joint venture is a corporation with the participation of resident and non-resident persons. No restrictions are imposed on the percentage of the foreign participating interest. The corporation must be incorporated in one of the forms of commercial corporation exhaustively listed in the Commerce Act:

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General partnership (SD);

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Limited partnership (KD);

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Limited liability company (OOD), incl. Single-member limited liability company (EOOD);

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Joint-stock company (AD);

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Partnership limited by shares (KDA).

After entry in the Commercial Register at the court exercising jurisdiction over its place of registration, a joint venture is treated as a resident legal entity and its operation is subject to the provisions of Bulgarian legislation. A joint venture may alternatively be formed by several non-resident persons without Bulgarian participation: once registered under Bulgarian law, it will enjoy all rights recognised by the law for domestic corporations.

Wholly owned subsidiary

Article 7 of the Encouragement of Investment Act provides that any non-resident natural person or association which is not a legal entity may register a wholly owned subsidiary, should the said person or association have been registered and entitled to carry on commercial business under his, her or its national law. A wholly owned subsidiary is entered in the Commercial Register at the Court exercising jurisdiction over its registered office.

The Commerce Act regulates the procedure for registration of a wholly owned subsidiary. The subsidiary is entered in the Commercial Register on the basis of a written application which must state:

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registered office and objects of the wholly owned subsidiary (branch);

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particulars of the person who manages the subsidiary, and scope of his or her representative authority.

The following documents must be attached to the application:

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a notarised consent with a specimen of the signature of the person who manages the wholly owned subsidiary;

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a copy of the contract between the company and the manager of the wholly owned subsidiary;

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certificate of merchant registration of the non-resident person;

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a certified copy of the decision by the competent body on setting up a wholly owned subsidiary (branch).

The wholly owned subsidiary does not have a legal personality separate from its parent company; it is part of that company but has a different registered office. Nevertheless, the wholly owned subsidiary keeps business books as a stand-alone merchant, and subsidiaries wholly owned by non-resident persons must also prepare a balance sheet at the end of the year.

Trade representation office

Non-resident persons, who or which have the right to carry on commercial business under their national legislation, may establish trade representation offices in Bulgaria, which must be registered at the Bulgarian Chamber of Commerce and Industry (BCCI). Such representation offices are not legal entities and may not carry out economic activity. The non-resident person may conclude transactions with resident persons solely for the needs of a representation office registered by the non-resident, and the provisions of Bulgarian law apply to any such transactions.

The trade representation offices of non-resident persons are mandatorily entered in the BCCI Trade Register in pursuance of Article 6 (1) of the Encouragement of Investment Act. In this sense, the BCCI decision on registration of a trade representation office has a constitutive effect. The following documents are required for registration:

1. an application, completed in a standard form;

2. an official document on the registration of the non-resident person, issued by the relevant competent authority according to its national legislation;

3. an official document indicating the persons managing and representing the non-resident person, issued by the authority referred to in the foregoing item;

4. a decision of the management body of the non-resident person on the opening of a trade representation office in the Republic of Bulgaria;

5. the original of an express notarised power of attorney, granted by the person (or persons) referred to in Item 2 to the person authorised to register and to manage the trade representation office in the Republic of Bulgaria, and the scope of the rights conferred on that person. Such power of attorney may alternatively be presented in an originally certified transcript;

6. original specimen (specimens) of the signature (signatures) of the person (persons) who represents (represent) the company in Bulgaria: by right or by express authorisation, notarised or affixed to a special declaration in a standard form of the BCCI before an authorised employee of the Chamber's Trade Register Bureau;

7. a registration card for the BCCI information system, completed in a standard form;

8. documentary proof of payment of a registration fee, according to the Tariff of Rates of Services Provided by the BCCI (the amount may be paid in cash at the Chamber's Cash Department or may be remitted to the Chamber's bank account No. 100 030 811 9, Code 62196214 with BULBANK).

Requirements for authentication and legalisation of the documents:

The documents referred to in Items 2 and 3, once issued by the relevant competent authority according to the national legislation of the non-resident person, must be authenticated by:

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the Ministry of Foreign Affairs of the issuing State and the Consular Office of the Republic of Bulgaria in that State, or

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the Consular Office of the issuing State in the Republic of Bulgaria, with subsequent certification by the Consular Relations Directorate of the Ministry of Foreign Affairs of the Republic of Bulgaria (in the cases where the documents have not been authenticated by the issuing State), or by another Consular Office representing the interests of the issuing State (if the issuing State has no accredited Consular Office in the country), with subsequent certification by the Consular Relations Directorate of the Ministry of Foreign Affairs of the Republic of Bulgaria.

The documents referred to in Items 5 and 6, once notarised in the foreign State, must also be authenticated according to the above-mentioned procedure.

After authentication, the documents must be translated by an authorised Bulgarian translator and legalised by the Consular Relations Directorate of the Ministry of Foreign Affairs of the Republic of Bulgaria.

If the documents are issued by a State signatory to the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents (The Hague Convention of 5 October 1961) and bear an original apostille, they do not require any further certification but only have to be accompanied by a legalised translation into Bulgarian language.

Other registrations

Both Bulgarian and foreign entrepreneurs must register their economic activity carried out in any of the forms of legal organisations listed above:

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at the relevant division of the Registry Agency: for assignment of a Standard Identification Code;

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at the National Revenue Agency: upon hiring of employees under an employment contract;

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at the relevant division of the customs administration: in the cases provided for by the law.

The requirements for company registration in Bulgaria were revised and streamlined with the entry into force of the Commercial Register Act with effect from 1 July 2007. The text of the Act is available on the Website of the Registry Agency, at http://www.registryagency.bg/bg/AboutUs/LegalFoundation/f142.html