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Forms of business and corporate governance

Company regime: Legal framework: Commercial Law (State Gazette 48/1991, last amended, State Gazette 58/2003)
Types of companies:
  • General Partnership Sabiratelno Druvestvo (SD);
  • Limited partnership Komanditno drujestvo (KD);
  • Limited Liability Company, Drujestvo s ogranichena otgovornost (OOD);
  • Joint-stock Company Akcionerno drujestvo (AD);
  • Limited Partnership by Shares Komanditno Drujestvo s Akcii (KDA)
Partnership:

Partners: 2 or more partners domestic or foreign legal or natural persons.

Characteristics: The general partnership is an association of two or more legal or natural persons who are personally, jointly and unlimitedly liable towards the creditors for the partnerships obligations. In a limited partnership there are one or more general partners, whose liability is limited to the extent of their agreed capital contribution. A limited partnership by shares has general partners, who bear unlimited liability, and at least three limited partners, whose liability is limited to the extent of their shareholding.

Specific features: A foreign national must be resident in Bulgaria in order to participate as a general partner in a partnership.

Limited Liability Company (LLC)

Shareholders: 1 or more shareholders. If the whole capital belongs to a single shareholder there is a single-owned limited liability company Ednolichno Drujestvo s Ogranichena Otgovornost (EOOD)

Minimum capital: BGN 5000

Share and contribution requirements: The minimum contribution of each shareholder shall not be less than BGN 10. Contribution to the foundation capital can be paid in cash or in kind. At registration, at least 70% of the capital must be paid in full and each of the shareholders shall have paid at least 1/3 of his share and no less than BGN 10.

Company management: The general meeting of shareholders is the decision-making body of the company. It is summoned at least once a year. The shareholders vote proportionally to their contribution unless otherwise provided in the agreement of the incorporation. One or more managers are appointed by the general meeting for a period stipulated in companys statutory documents. There are no citizenship requirements for the managers.

Specific features: If the company has more than 30 employees, they are represented in the general meeting with deliberative vote.
Joint-Stock Company (JSC)

Shareholders: 1 or more shareholders

Minimum capital: BGN 50 000

Share and contribution requirements: the minimum value of each share shall not be less than BGN 1.00. The company may issue either registered, bearer or preference shares. Shares are freely transferable. At least 25% of the capital must be paid up at the moment of registration. Contributions to the foundation capital may be paid in cash or in kind.

Company management: The general meeting of shareholders takes decisions by majority vote. Pursuant to the one-tier management system, the general meeting appoints the members of the board of directors with 3 to 9 members. The Articles of Association shall determine their exact number. The non-executive members should be more than the executive members. According to the two-tier management system, the general meeting appoints a supervisory board consisting of 3 to 7 members.

The supervisory board nominates a management board with 3 to 9 members. Members of the executive bodies in both systems in both systems are elected for a period longer than 5 years. The members of the first board of directors and the first supervisory board may be determined for a period of up to 3 years for the initial mandate. There are no citizenship requirements.

Specific features: There are higher minimum capital requirements for companies acting as:

Banks - BGN 10 000 000
Insurance companies for:
Life insurance and personal accident insurance - BGN 2 000 000
Property insurance BNG 3 000 000
Reinsurance - BGN 4 000 000
Investment companies BGN 5 000 000

Branches Domestic and foreign persons may register branches at the Commercial Register of the relevant court. Branches are not separate legal entities but must keep separate accounting books.
Representative Offices Legal framework: Low on Encouragement of Investment (State Gazette 37/2004)
A trade representative office is incorporated through registration into the commercial register with the Bulgarian Chamber of Commerce and Industry.

Bankruptcy Legal framework: Part IV of the Commercial Law
Anti-trust Rules Legal framework: Law on Protection of Competition (published, State Gazette 52/1998, last amended State Gazette 107/2003

Dispute resolution mechanisms

The national legislation in the field of arbitration consists of the Civil Procedure Code and the Law on International Commercial Arbitration, which is applicable to international commercial disputes, based on an arbitral clause, when the arbitration takes place on the territory of Bulgaria.

Bulgaria has also ratified the following international conventions in the field of arbitration:

The most reputable arbitration courts in Bulgaria function with the Bulgarian Chamber of Commerce and Industry and the Bulgarian Industrial Association.

Under the new Law of Public Procurement (enforced as of 1 October 2004) a specialized arbitration court at the Public Procurement Agency is to be established to deal with public procurement disputes.


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