Setting up a Company
The two most popular legal forms for carrying out business in Bulgaria are a joint stock company (AD) and a limited liability company (OOD), though the law also provides for: sole trader operations (ET), joint ventures, branches, holdings, cooperatives, and representative offices. They all have to be registered with the district court, which is a process that usually takes 2 or 3 weeks, though courts do tend to have some very long holidays! The first two restrict the liability of the shareholders to the amount of their share in the capital of the company, which means that the AD and OOD are the most preferred forms for doing business by both locals and foreigners. Whilst in an OOD the shares are attributed to individuals and can only be transferred with a court decision and by entering in the Commercial Register, the shares of an AD are not individually named and can be sold or transferred without informing the court. An AD may issue registered, bearer's and preference shares. Both paper-backed and book-entry shares may be issued. The AD company ensures the anonymity of shareholders and allows for raising funds through issuance of bonds or shares on the stock exchange. An AD is managed by the general meeting of shareholders, and the board of directors or supervisory board and management board. An OOD’s annual financial statements need not be audited by a CPA unless the company happens to meets certain requirements under the Bulgarian Accountancy Act, whereas all ADs have to have their annual financial statements audited by a CPA. Individuals can also establish both types of companies. In these cases the one-man limited liability company is called an EOOD and the one-man joint stock company is called an EAD. EOODs and EADs are regarded as local legal entities even when the sole owner of the capital is a foreign physical or legal person. These forms are widely used by foreigners to acquire ownership over land in Bulgaria, since foreign individuals are not allowed to own land at present. In any of these cases you should use a reputable law firm to handle the whole process for you, from choosing the company name to registering the company with the court and all the subsequent compulsory registrations with tax authorities, National Insurance Institute, etc., all of which have to be done within strict deadlines and carry hefty fines if they are not adhered to! There are many legal firms with excellent reputations and most now speak the major European languages so finding one should not be a problem. In short the process for setting up a company is as follows: · Check the company name is free and reserve it; · Produce Articles of Association; · Pay in to the bank at least 70% of the obligatory company capital for an OOD (the total capital being 5000 levs); or 25% for an AD (the total capital being 50,000 levs); · Submit the application to form the company together with the proof you have paid the capital to the district court; · The company becomes active when it is published in the State Gazette (2 or 3 weeks later); · Registration with the National Statistical Institute to receive a BULSTAT identification number must be done within 14 days; · Registration with the National Insurance Institute (NOI) within 7 days; · Registration with the local tax authority must be done within 14 days; · Any bank accounts that are opened in the company name must also be registered with the tax authority within 14 days. Warning: Intellectual Property Make sure you use a registered patent lawyer in your dealings with the Patent Office. To be on the safe side, even if your company name is the same as that of your activity, register the name under the relevant sections anyway with the Patent Office to prevent anyone stealing your name. The Patent Office works painfully slowly (a trademark usually takes 18 months to be registered and a design 6 months), as do the regional courts who would be called upon to decide on any disputes, so make sure your case is watertight. |
