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Starting a Business in Bulgaria

General remarks

In the last couple of years experts and consultants in different spheres have noted a growing interest in Bulgaria as an investment destination. Foreign investors have been particularly active in the IT, energy, construction, telecommunications, infrastructure, and manufacturing sectors.

Many start-ups also choose Bulgaria for starting their operations or expanding their business.

Although, the COVID-19 pandemic and the war in Ukraine have impacted the overall investors’ activity in Bulgaria, the Bulgarian market continues to be preferred by many starting businesses and foreign investors. In addition, according to a recent macroeconomic prognosis of the Bulgarian National Bank it is expected the economic activity in Bulgaria to accelerate to 3.2% in 2024 and up to 4.0% in 2025.

About this section

This Section is aimed at providing a general insight of the process of starting a business and setting up a presence in Bulgaria for start-ups and foreign investors. It also contains a general list of the necessary documents for the types of companies most preferred by investors and start-ups. Here you can also find useful insights, news and novelties from the Bulgarian and European corporate and M&A legislation that have impact over the process of starting a business and setting up a presence in Bulgaria.

Disclaimer

Please note that this section does not constitute a legal opinion. It is prepared abstractly and is not tailored to the specifics of your case. Therefore, do not take legal action based on it, before consulting a legal and / or an accounting expert.

What types of companies are preferred by investors and start-ups

In the majority of cases investors and start-ups opt for setting up their presence in Bulgaria in the form of a limited liability company or a joint-stock company. In the following paragraphs you will find the specifics of each of these company types, their advantages and the necessary documents for their incorporation and registration.

For the sake of completeness, please note that as per the Bulgarian Commercial Act a business in Bulgaria may also be set up as a general or limited partnership, partnership limited by shares, branch of a company, trade representative office of a foreign company, consortium, holding, or as of 2023 as a variable capital company.

In this section, general information will also be provided for setting up a branch and representative office of foreign company, which are sometimes preferred by investors, where applicable, as alternatives to the limited liability company or joint-stock company.

General information will also be provided for the newly introduced variable capital company.

Limited liability company

  • Minimum required capital amount as per the Bulgarian Commercial Act – BGN 2;
  • May be set up as a sole limited liability company.
  • The activity of the company is managed by one or more appointed managing directors.
  • It needs to have at least one appointed managing director. Where more than one managing directors are appointed the company needs to determine the manner of their representation, e.g. jointly, severally or jointly and severally, otherwise as per law the managing directors act severally. Other limitations of the representation power of the managing directors do not apply towards third parties.
  • The company may appoint a general commercial proxy for the purposes of management.
  • The shareholders are involved in the company’s activities and in achieving its goals through personal work and efforts.
  • Often, the shareholders also participate in the management as managing directors.
  • The general policy of the company is determined by the sole shareholder / the general meeting of shareholders.
  • The share transfer agreement needs to be concluded in writing with notary certification of the signatures and content, performed simultaneously.
  • This type of company is convenient for small- and medium-sized business activities, where it is important that the shareholders can exercise control over the company’s activities.
  • The minimum required capital for registration of a (sole-owned) limited liability company is BGN 2.
  • The personal assets of the shareholders are protected from the company’s creditors, as their liability is limited to the amount of their capital contribution.
  • Low state fees for registering the incorporation with the Bulgarian Commercial Registry – BGN 110 (BGN 55 – when filing the application electronically).
  • Articles of association, respectively incorporation deed by sole-owned limited liability company
  • Resolution of the shareholder(s) for the company incorporation, adoption of the articles of association / incorporation deed and appointment of the managing director(s)
  • [Resolution of a shareholder for participation in the company, where the shareholder is a company]
  • [Good standing certificate, where the shareholder is a foreign company [with apostille depending on the country of issuance]]
  • Notarised [and apostilled, depending on the country of signing] specimen signature of each of the managing directors
  • Declaration under Art. 141, para. 8 and Art. 142 of the Bulgarian Commercial Act by the managing directors
  • Evidence of transfer of the company’s capital – certificate from the bank where the capital contribution bank account is opened. The contribution bank account needs to be opened after drafting and signing the incorporation documents and prior to filing the application for registration with the Bulgarian Commercial Registry.
  • Declaration stating that the information presented before the Bulgarian Commercial Registry is true and correct
  • [Power of attorney, where the application is filed by an attorney]
  • Evidence for payment of the due state fee
  • [Documents and declarations related to the disclosure of the company’s beneficial owners, where applicable]
  • Drafting the incorporation documents – approx. 1 week
  • Opening a company’s bank account – between 2 weeks and 6 months, depending on the company’s structure and participating shareholders, as well as the bank’s internal Anti-Money Laundering policies and procedure
  • Registration of the incorporation with the Bulgarian Commercial Registry – between 3 and 7 business days, depending on the registry’s workload, issued instructions or rejections
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Joint-stock company

  • Minimum required capital amount as per the Bulgarian Commercial Act – BGN 50,000.
  • May be set up as a sole joint-stock company.
  • The participation of the shareholders is mainly expressed in making an investment.
  • Management is carried out by the management board (two-tier management system) or the board of directors (one-tier management system). By two-tier management system the management board is appointed by the supervisory board and its activity is controlled by the latter. The members of the board of directors, the supervisory board and the management board are elected for a term of up to 5 years, unless a shorter term is specified in the articles of association / incorporation deed. The members of the first board of directors, respectively of the supervisory board, are appointed for a term not longer than 3 years.
  • Companies may be appointed as members of the boards.
  • The company may appoint a general commercial proxy for the purposes of management.
  • The general policy of the company is determined by the sole shareholder / the general meeting of shareholders.
  • Shareholder participation is limited to the investment in shares.
  • Shares may be transferred more easily and quickly than shares from the capital of a limited liability company, unless the articles of association / incorporation deed provide for special transfer conditions.
  • A suitable form of organization in industries requiring large capital and a lower degree of shareholder control, as well as for startups with higher initial capital.
  • Averagely low state fees for registering the establishment compared to other EU countries – BGN 360 (BGN 180 – when filing the application electronically).
  • Articles of association, respectively incorporation deed by sole-owned joint-stock company
  • Resolution of the shareholder(s) for the company incorporation, adoption of the articles of association / incorporation deed and appointment of the members of the board of directors / supervisory board
  • [Resolution of a shareholder for participation in the company, where the shareholder is a company]
  • [Resolution of the supervisory board for appointment of the members of the management board]
  • [Good standing certificate, where the shareholder is a foreign company [with apostille depending on the country of issuance]]
  • Notarised [and apostilled, depending on the country of signing] specimen signature of the members of the management board, respectively board of directors, appointed to represent the company
  • Notarised [and apostilled, depending on the country of signing] declaration under Art. 234, para. 2 of the Commercial Act of the appointed board members stating that they consent to being appointed as board members and that there are no impediments for their appointment, as required by the law
  • Declaration signed with wet ink by the founding shareholders – companies stating that the latter have not been declared in insolvency
  • List of the persons who subscribed shares at the time of incorporation
  • Evidence of transfer of the company’s capital – certificate from the bank where the capital contribution bank account is opened. The contribution bank account needs to be opened after drafting and signing the incorporation documents and prior to filing the application for registration with the Bulgarian Commercial Registry.
  • Declaration stating that the information presented before the Bulgarian Commercial Registry is true and correct
  • [Power of attorney, where the application is filed by an attorney]
  • Evidence for payment of the due state fee
  • [Documents and declarations related to the disclosure of the company’s beneficial owners, where applicable]
  • Drafting the incorporation documents – approx. 1 week
  • Opening a company’s bank account – between 2 weeks and 6 months, depending on the company’s structure and participating shareholders, as well as the bank’s internal Anti-Money Laundering policies and procedure
  • Registration of the incorporation with the Bulgarian Commercial Registry – between 3 and 7 business days, depending on the registry’s workload, issued instructions or rejections
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Variable capital company

  • This form is applicable only to companies with an average headcount of less than 50 people and an annual turnover that does not exceed BGN 4,000,000 and/or an asset value that does not exceed BGN 4,000,000.
  • The capital is not subject to entry in the Bulgarian Commercial Register.
  • May be set up as a sole variable capital company.
  • The share transfer agreement needs to be concluded in writing with notary certification only of the signatures, unless the company’s articles of association / incorporation deed provides for a written form. 
  • The activity of the company is managed by one or more appointed managing directors or a board of directors.
  • The general policy of the company is determined by the sole shareholder / the general meeting of shareholders.

Please note that this is a new form of a company that was introduced in Bulgaria in the second half of 2023. My research shows that to current date no such companies have been registered with the Bulgarian Commercial Registry, yet. Although the variable capital company was introduced to facilitate start-ups, according to specialists in the field this option is not very practical, as usually start-ups reach 50 employees within 2 years as of their incorporation.

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Branch

  • Any company may open a branch outside the settlement where its registered address is located.
  • The branch is not a legal entity.
  • The activity of the branch is managed by one or more appointed managers.
  • A power of attorney with a notary certification of the signature authorizing the manager to represent and manage the branch needs to be presented before the Bulgarian Commercial Registry.
  • The registered address and the scope of activity of the branch, as well as details of the person who manage it need to be filed with the Bulgarian Commercial Registry.
  • It is mandatory for the branch to keep a separate accounting.
  • Where a branch of a foreign company is set up, a copy of the founding act, contract or statute of the foreign company, which contains all amendments and additions, including after the registration of the branch each issued annual financial statement of the foreign company issued after the registration of the branch need to be presented before the Bulgarian Commercial Registry.
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Trade representation office

  • Foreign persons carrying out commercial activities may open trade representation offices in Bulgaria.
  • The trade representation office carries out non-profit activities such as preparation of promotions, exhibitions, advertising goods and services, demonstrations, etc.
  • Trade representation offices are registered with the Bulgarian Chamber of Commerce and Industry.
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