Entrepreneurs planning to set up a business in Bulgaria can opt for one of five main company types that this country in Eastern Europe regulates for corporations with commercial activities:
- company with limited liability (LLC);
- joint stock company (JSC);
- limited partnership (LP);
- general partnership (GP);
- share-limited partnership (SLP).
Features of the most widely used Bulgarian company types
The most preferred entities for business activities are the limited liability and the joint stock companies. The two types have similarities and differences. LLCs and JSCs are owned or set up by at least one physical or legal person. There also has to be a minimum of one shareholder.
One of the differences between the two types of entities is the amount of required minimum share capital. The value for establishment of an LLC is BGN 2 (or EUR 1). JSCs need a share capital of no less than 50 000 BGN, the nominal value of each share is BGN 1.
The managing bodies of the two types of companies are also different. The LLC is governed by a General Stakeholders’ Meeting and a minimum of one manager. Besides a General Meeting, JSCs also have a Directors’ Board (with at least three members), Managing Board and Supervisory Board (both consisting of a minimum of three persons).
LLC founders must contribute their interest and can be dismissed from the entity if failing to do so. The partners’ rights are equal with respect to the company’s management, profit, business affairs and liquidation procedures.
In JSCs the liability of shareholders is limited to their own contributions. The capital of the company may be increased (through the issue of new shares), diminished or cancelled. Any shareholder subscribing for shares is obliged to contribute accordingly or pay interest.
There is no requirement for an independent audit with respect to the annual statements of LLCs (there are some exceptions), while JSCs are obliged to perform one.
Characteristics of other Bulgarian company types
The Bulgarian LP is an entity established by at least one partner and its members belong to two particular classes: general partners who are liable for the debts of the business and limited members investing money. The limited partners are entitled to benefits (tax and income benefits, capital gains) much like dividends. The general member collects fees and a part of the profit.
The Bulgarian GP is established by at least two members with a common trade name who perform commercial transactions with a mutual goal. There is no requirement for minimum capital and the members carry unlimited liability with respect to the company’s debts regardless of the value of their investments. The partners have equal privileges regarding the administration of the business and the sharing of profits.
The Bulgarian share-limited partnership is a hybrid between a JSC and an LP. This type of entity should have a minimum of 3 limited partners nominated by the general members from the shareholders. The liability of the members is limited to their share contributions.
In case you need further information on business incorporation in Bulgaria, please, contact our specialists in company establishment who will assist you with the procedure. We can also provide useful information and guidance in case you are planning to open a business in the Netherlands.