Types of Companies

Various legal arrangements may be used to carry out business activities in Bulgaria. According to the applicable Commerce Act the following types of companies can be established: general partnership; limited partnership; limited liability company; joint-stock company; partnership limited by shares.

A company may be established by a Bulgarian or foreign natural or legal person. A person may participate in one or more companies to the extent that such participation is not prohibited by law. All companies have to be recorded in the Commercial Register within the Registry Agency.

The most commonly used types of companies are:

Limited Liability Company;

Limited Liability Company (LLC) – OOD (in Bulgarian abbreviated as „ООД”)

A limited liability company may be formed by one or more persons which are liable for the company’s obligations with their contributions to the company’s registered capital. The trade name of a company must be unique and must also contain the extension "дружество с ограничена отговорност” ( limited liability company) or its abbreviation "OOD". The minimum registered capital of a limited liability company is BGN 2 which is about € 1. It consists of the participating interests of the members, and no interest may be smaller than BGN 1. The total sum of the participating interests is to be equal to the capital, and the value of each participating interest must be a multiple of 1. The interests of the individual partners may be of unequal value. The founders of a company are jointly liable and before the company for damages caused in the course of its formation, if they have not acted with due care. Limited liability company is established when the partners sign Articles of association which duly describe, inter alia, the rights and liabilities of the partners and its main activities. Furthermore, the Articles of Association contain other details such as the seat, the sum of the registered capital, etc.

Solely Owned Limited Liability Company;

Solely Owned Limited Liability Company – EOOD (in Bulgaria abbreviated as „ЕООД”)

EOOD is a solely owned limited liability company in which a single legal or natural person is the owner of the company’s capital. The manager of such a company may be different from and appointed by the owner of the capital.

Joint Stock Company (JSC) – AD (in Bulgarian abbreviated as „АД”);

Joint Stock Company (JSC) – AD (in Bulgarian abbreviated as „АД”)

A joints tock company is a company in which the capital is divided into shares. The company is liable before its creditors with its assets. The trade name of the joint stock company should be unique for Bulgaria and should include the extension "акционерно дружество" (joint-stock company) or the abbreviation "AD". A joint stock company may be found by one or more natural or legal persons. When, however, a joint-stock company is formed by one person, a constitutive deed approves the Statutes and appoints the first supervisory board or board of directors. The minimum registered capital of a joint-stock company is BGN 50,000 which is approximately € 26,000. The capital stock should be fully subscribed. The company may not subscribe shares from its capital. The minimum nominal value of a share must be BGN 1. A joint stock company is founded at a constituent meeting attended by all the persons subscribing for shares. The constituent meeting adopts Statues which contain, inter alia, information about the seat, the sum of the capital, manner of distribution of profits, etc. The General Meeting of the shareholders is the supreme governing body. A joint stock company may have one- or two-tier managing system. If it has two-tier managing system, a supervisory body is appointed along with a managing board while in companies with one-tier system only a board of directors is appointed.

Solely Owned Joint Stock Company - EAD (in Bulgarian abbreviated as „ЕАД”);

Solely Owned Joint Stock Company - EAD (in Bulgarian abbreviated as „ЕАД”)

Solely owned joint stock company is a joint stock company in which the capital is owned by a single natural or legal person. The minimum registered capital is BGN 50,000 and it is divided into shares.

There are no restrictions for foreign persons to establish a company in Bulgaria and the establishment process does not differ from the process when a Bulgarian citizen establishes a company. A company must be registered in the Commercial Register and then it obtains Unified Identification Number (UIN or „ЕИК” in Bulgarian) which is the code used to identify the company. Each company has a file in the Commercial Register and all actions with it such as change of the sum of capital or owner can be traced through this file (visible now also online). No further registrations for establishment are required under the applicable legislation.

However, business activities may be carried out through holding companies, branches and representative offices which are also allowed under the applicable legislation. Besides, the activities of a sole proprietor performing commercial activities are also regulated in the Commerce Act.

When deciding on the most appropriate form of business organization, the specific needs of the business must be assessed. Factors which require consideration are, inter alia, the extent of liability, participation in management, separate legal existence, transferability of interest, financing aspects, complexity of organization, the nature of the business, and tax implications, etc. Therefore, we suggest to consider all opportunities and to seek professional legal advice to the most suitable structure for your business.

For more information about doing business in Bulgaria, see the complete text of our Guide.