The Bulgarian Ltd Company and its conservative legal status
Very Often foreign clients and investors in Bulgaria complain about how difficult and slow is the procedure of registration of LTD Company in Bulgaria. Some of the incorporation documents require notary certification. On the other hand, the registration online in the Bulgarian Commercial register can be done only by an official – a lawyer with an electronic signature. These procedures cause a delay in the initial registration of a company in Bulgaria and respectively when selling a ready-made Bulgarian company to a new owner. However, all these restrictions are for the benefit of the investor, especially when he is not the resident of Bulgaria. They are in place to protect his property.
The Legal Procedure for transfer of the shares of the Bulgarian Ltd Company / OOD EOOD/
The transfer of the ownership of shares in Bulgarian Ltd company is done by contract with notarized verification of the signatures and content. Verification may be carried out before the Bulgarian notary public or before the Bulgarian consul abroad. In some cases it is possible to make a certification in front of a foreign notary and an Apostille authentication is required to be completed additionally. In this case, only certification of a signature is made, as the legal order in that foreign country does not provide certification of the contents of a document.
Legal Procedure for changing the managing director of a Bulgarian Ltd Company
The manager of the Bulgarian limited liability Company is the person who has the right to sign on behalf of the company and also operates the bank accounts of the company. In practice, this is the company’s administrator who has total control over all the assets of the company and can transfer them to third parties, as well as to arrange their transfer price and terms of acquisition. From this point of view, the appointment and dismissal of that person is essential for the security of the investment and for the protection of the rights of the shareholders.
The procedure for changing the manager of the Bulgarian limited liability company consists of two stages:
- Making of Internal decision to change the manager, adopted by a certain majority of the partners in the company. The law requires notary’s certification of the signatures of the partners in a special protocol. This rule could be waived expressly by the shareholders with an amendment to the company’s statute. However, such a derogation is not recommended by our law firm! In case of cancellation of the requirement for notary certification, it can be very easy someone to “steal the company”. In such case /of stealing a company/ follow long lawsuits, during which time the company will be emptied of assets and in practice lawsuits will have no effect for the damaged shareholders.
- Registration of the change of manager in the commercial register. The change is stated by the newly elected company’s manager. He is legitimized by a protocol of a general meeting of the shareholders with a notary certification of the signatures. The notarization of the protocol is a guarantee of authenticity of the decision and is a prerequisite to avoid abuses. The registration of the name of the newly elected manager in the commercial register / www.brra.bg / is crucial. Only after that moment the new manager may represent the company in front of third parties /banks, partners, the state, etc./ . Before that the old manager is the only (one) entitled.
The conservative Legal Regulation of the status of the Bulgarian Ltd Company makes it extremely appropriate to be used as a holding company for securitization of financial and material assets
The 100% guaranteed protection of the rights of the partners in the Bulgarian limited liability company / OOD EOOD/, enables each investor to create a holding structure to ensure its assets, both financial and tangible. In combination with the unprecedented low dividend tax for individuals /5%/, and with the appropriate tax planning, the creation of a holding company of the type of OOD or EOOD in Bulgaria is an opportunity that should not be ignored.