Legal Advice

Types of companies

Bulgarian legislation in force specifies the several types of commercial enterprises but below are listed the most popular and suitable:

• Partnership company
• Limited liability company
• Joint-stock company
• Sole proprietorship

Partnership company: This is a legal entity established by two or more persons who have joint and unlimited liability for all obligations of the company. Mutual relations between founders are determined by the constituent act. They are obligated to participate in the activity of the company in person. There is no minimum capital for setting up such a company. This legal form is suitable for those who have limited funds.

Limited liability company: The limited liability company (LLC) is a legal entity separate and distinct from the personal affairs and other business involvements of its owners. It can be set up by one or more persons whose liability is limited to the amount invested in the LLC by each of the partners. The minimum capital required by law to set up such a company is 5000 BGN. The procedure of registration is simple. By the moment of the documents submission for registration, not less than 70 % of the capital of the company should be deposited in the bank account. The rest of it — within one year. The share of one member in the capital cannot be less than 10 leva. The number of founders is not limited. Management and representation are done by one or several co-founders, or a manager, who may not be a partner. The number of the members can be changed at any time after the company is registered. All changes in the constituent documents should be registered in court. This type of company is most commonly used in Bulgaria.

Joint-stock company: This is a legal entity with a share capital. The company has liabilitiy for all obligations by its property. It can be established by 1 or more natural persons or legal entities. The ownership of each member depends on the number of shares one possesses. The minimum capital for the joint-stock company should be 50 000 BGN. (on a face-value of shares), and in case of formation of the company through a subscription — 100 000 BGN. The operating and managing body of the joint-stock company is the board of directors.

Sole proprietorship (ET): Natural person. Can be established by a Bulgarian citizen or a foreigner who is authorised constant resident of Bulgaria. One person can register only one sole proprietorship. There is no limit for minimum capital of such company. The owner is liable by the total amount of personal and company assets. This option is recommended if the scope of activity and capital are limited. The name of the company includes the name and surname of the founder.