Business establishments in Bulgaria are governed by The Commercial Act. Foreign persons who want to establish a business in Bulgaria have the same rights as Bulgarians. There is no limitation on the share participation of foreign legal entities and individuals.
The following forms of commercial organization can be set up:
● Sole-shareholder limited liability company
● Limited liability company with more than one shareholder
● Sole trader, individual company with unlimited liability
● Joint stock company
● Sole shareholder joint stock company
● Unlimited partnership set up by two or more individuals who carry unlimited responsibility
● Limited partnership, responsibility is set according to agreement
● Partnership limited by shares
● Representative office
● Consortium and holdingContact us
if you wish to get a thorough comparison of establishing a branch office, subsidiary company, or a representative office.
The registration must be carried out by a professional firm in Bulgaria. It is not possible for foreigners to do business in Bulgaria without incorporation through a permanent establishment.
Regardless of founders nationality, all types of entities established in Bulgaria are considered as Bulgarian and treated under Bulgarian legislation system.
Registration in the Commercial Register
The newly established company becomes a legal entity after it is registered in the electronic Commercial Register with Register Agency. The information in the register is public and freely available online
Registration process usually takes 3 to 5 days after the documents are submitted. Incorporation can be filed either by a lawyer or by legitimate proxy.
Power of Attorney
Some further changes, such as appointment of a new manager, changing of legal address or change of registered capital are also subject to registration. All companies registered in the Commercial Register should announce the annual financial statement for every year no later than 30 June the following year.
The initial step for establishment of all types of entities is adoption of Article of Association. The document must contain: trade name, seat and address of management, scope of business activities, managing bodies and representation, shareholders’ relations etc.
The most common commercial entities in Bulgaria are limited liability company (EOOD and OOD) and joint-stock company (AD) as they offer the best combination of running costs, management opportunities, limitation of shareholders' liability, legal regulation and administrative requirements.
Personal Data Administrator
Companies that operate with personal data of employees, counter partners, vendors and clients, etc. must adopt and process their GDPR activities.
Limited Liability Company (OOD)
The limited liability company is a preferred form of doing business. Mainly because of the minimum capital requirement of 2 BGN, but also because of the limited liability of the shareholders to the amount of the registered capital and simplified corporate governance structure.
Shares may be transferred and inherited. The transfer of company shares to third parties requires the prior approval of the company’s general meeting. Transfer of shares should be performed by means of a notarized contract entered in the commercial register.
The governance structure of a limited liability company is:
● General meeting of shareholders
● Manager(s) who manage and represent the company before third parties
Foreigners can also be appointed managers of the company.
According to Commercial Act, OOD company can be established by physical or legal persons and there is no limit to the number of shareholders. In case of a single shareholder, the entity is registered as a single member limited liability company.
The liability of OOD Company is limited to the extent of its own assets. The shareholders themselves bear liability limited to the amount of their contributions in share capital.
Minimum required capital to start a liability company is 1 EUR. The capital comes from the shareholders and the registered capital is the main financing source of the company.
Shared capital is formed by incorporation expenses, accounting and administrative support, and all current expenses which will be running until the time company is able to make a profit and finances its activity.
The bank will then issue a certificate of capital, which is one of the company registration mandatory documents.
Shareholders may be either individuals or companies, no matter if they’re local or foreign. If a shareholder is a company, certificate of good standing is needed.
Transfer of a share from one shareholder to another is unrestricted, but transfer to a third party is subject to a more complex procedure.
The OOD is managed by the General Meeting of Shareholders and by the appointed Managing Director(s). The EOOD is managed and represented by the owner of the capital. The owner can do it either personally or through an employed Managing Director(s).
Director is either an individual or a legal entity who represents the company in court and in dealings with third parties, the Director also conducts the daily activities of the company.
Company can be represented by more than one Director:
● Jointly and separately: any manager can represent the company by itself, all documents need to be signed by one of the managers only in order to be valid
● Jointly: documents are valid only when signed by all managers
Director is usually appointed by the shareholders or, in the case of an EOOD, the owner. A written contract must be also signed. The rights and obligations, as well as the scope of their authority, are determined in a management agreement.
The minimum registered capital required to establish a joint-stock company in Bulgaria is 50 000 BGN. One of the characteristics of a joint-stock company is that there are no regulations on the transfer of shares, and shareholders have no ownership over the company.
The corporate governance structure of the joint-stock company is:
● General meeting of shareholders
● Board of directors (in the case of a one-tier management system) or a Supervisory board and Management board (in case of a two-tier system)
Foreigners can be appointed managers of the company.
After the required documents are filed, the company must be entered to the commercial register of commercial companies. It must be done at the end of the first working day following the day of the documents filing.
Branch and Representative Office
To establish foreign investments under Bulgarian law, the investor may choose one of the following corporate forms:
● Trade representation
A commercial legal entity who has the right to perform commercial activity under their national law may register a branch in the Commercial Register.
The branch is not considered a separate legal entity. The branch is not required to have any paid up capital or separate governance structure. Its assets and liabilities are considered assets and liabilities of the mother company.
Foreign persons authorized to do business under their national law, may establish a representative office in Bulgaria.
A representative office is registered at the Bulgarian Chamber of Commerce. The representative office is not a separate legal entity and can not carry on business activity. Thus, the purpose of the representative office is to perform activities such as promotions, exhibitions, demonstrations, training and advertising of products or services.
If you would like to establish your presence on the Bulgarian market (i.e., branch, subsidiary, holding company, representative office, etc.) we will handle all the formalities: the establishment, incorporation, etc. We will also provide you with comprehensive support and advice in the process.
So that your foreign operations would have the right support from day one, our services include:
● Experienced multilingual staff: English, Bulgarian and Russian
● Documents processing in local language and in accordance with local legislation
● Registrations with all competent authorities, including Commercial Register and VAT
● Open a bank account on behalf of the client under a task framed power of attorney
● Provide a legal address and post handling
● An officially accredited accounting division under the direction of professionally certified accountants and tax advisors
● Comprehensive invoicing and bookkeeping services, sales and inventory statistics, profit calculations, agents’ commission processing and reporting
● Payroll management including salary payments, tax withholdings, and deductions from a paycheck