What is a variable capital company?
The Variable Capital Company is a new type of commercial company in Bulgaria, which is distinguished by its flexibility in terms of capital and number of partners. It can be constituted by one or more natural or legal persons, and the company is liable to creditors with its assets. It is important to note that a legal entity that has been declared bankrupt cannot be a founder of the DPC (Art. 260a, para. 1 and para. 2 TZ).
A company with variable capital may be established only if it has a list average number of staff of less than 50 persons and an annual turnover not exceeding BGN 4 000 000, and/or a value of assets not exceeding BGN 4 000 000 (Art. 260a, para. 3 TZ).
The name of the company must contain the designation “company with variable capital” or the abbreviation “DPC”. If the company is constituted by one person, the company contains the designation “sole proprietorship with variable capital” or the abbreviation “EDPK” (Art. 260b TC).
The formation of a SPP requires the preparation of a company contract, which must contain information such as the company, the registered office and address of management, the subject of activity, the term of the contract (if any), the class and nominal value of the shares, the conditions for the transfer of the shares, the type and value of the non-cash contributions (if any), the management and the manner of representation, the privileges of the partners (if any), the method of distribution of profits and other conditions related to the management and termination of the company. When the company is created by one person, an act of incorporation is drawn up (Art. 260c, para. 1 and para. 2 TZ).
The capital of the company is variable and is not subject to entry in the Commercial Register. The amount of capital is established annually at the regular annual general meeting, and is determined on the basis of the financial results for the previous year (Art. 260e, para. 1 TZ).
What are the requirements and necessary documents for registration of a company with variable capital and when is it worth it?
For the registration of a company with variable capital (DPC) in Bulgaria, certain documents and compliance with specific steps are required according to the Commercial Law and the Law on the Commercial Register and the Register of Non-Profit Legal Entities.
The first step is the preparation of the company agreement, which must contain the company, the registered office and address of the company, the subject of activity, the term of the contract (if any), the class and nominal value of the shares of the individual classes and the rights that are acquired for the individual classes of shares, the special conditions for their transfer, the type and value of the non-cash contributions (if any), the management and manner of representation, the privileges that certain partners retain for themselves, the manner of distribution of profits, and others conditions relating to the establishment, existence, management and dissolution of the company (Art. 260c, para. 1 TZ). When the company is created by one person, an act of incorporation is drawn up (Art. 260c, para. 2 TZ).
A manager or board of directors of the company must then be elected, and their names and manner of representation of the company are entered in the Commercial Register (Art. 260d, para. 1 and para. 2 TZ).
For the registration of the company in the Commercial Register, it is necessary to submit the company contract or the memorandum of association, as well as the decision on the election of a manager or board of directors (Art. 260d, para. 1 TZ).
Another requirement is the capital of the company, which must be variable and not subject to entry in the Commercial Register. A decision of the regular annual general meeting establishes the amount of capital at the end of the financial year and its amendment with respect to the previous financial year (Art. 260e, para. 1 TZ).
The variable capital company has specific advantages, such as flexibility in capital management, which allows the capital to increase and decrease depending on the number of partners and their contributions. This makes it suitable for enterprises with seasonal activity or those that often need changes in capital. A disadvantage may be the need for more complex reporting and management compared to other types of companies.
How do I open a bank account in Bulgaria to deposit authorized company capital?
Opening a collection account for depositing authorized company capital in a bank in Bulgaria is an important step in the registration of a new company. The general conditions and requirements for opening such an account, as well as the possibility of opening by proxy, the requirements under the Law on Measures against Money Laundering and the reasons for the refusal by banks to open accounts for foreigners are regulated in various regulatory documents and internal rules of banks.
General conditions and requirements
To open a collection account, you need to submit certain documents, which include:
- Application for opening an account- completed and signed by the representatives of the company.
- Identity documentof the representatives (identity card or passport).
- Constitutive act/Memorandum- contains the main data about the company and its founders.
- Decision on the establishment of the company- signed by the founders.
- Certificate of entry in the Commercial Register- in the event that the company is already registered.
According to the general terms and conditions of most banks in Bulgaria, all these documents must be presented in original or notarized copies, and in some cases the bank may require additional documents or information depending on the specific case.
Opening a bank account by proxy in Bulgaria
It is possible to open a collection account by proxy, provided that the power of attorney meets the requirements of Bulgarian legislation. The power of attorney must contain an express will to represent the client for the respective service and be notarized with the signature of the authorized person. Banks have the right to require written confirmation of the validity of the power of attorney and carry out verification in public registers. In case of doubt, the bank may refuse to accept the power of attorney.
Requirements under the Anti-Money Laundering Measures Act
According to the Anti-Money Laundering Measures Act, banks are obliged to carry out identification and comprehensive verification of their customers. This includes the collection of information on the beneficial owners, the purposes and nature of the business relationship, as well as other data necessary to assess the risk of money laundering and terrorist financing.
Reasons for refusal by banks to open a collection account to foreigners
Banks in Bulgaria may refuse to open a foreign direct debit account for various reasons. One of the main reasons is related to the requirements of the Law on Measures against Money Laundering and the need to carry out a detailed check and verification of customer identification data. In cases where the bank cannot carry out the necessary verification or there are doubts about the legality of the sources of funds, it may refuse to open the account.
Other reasons may include administrative obstacles, such as a lack of adequate documentation or non-compliance with the bank's internal procedures. For example, some banks may require additional information or documents that foreigners may not be able to provide in a timely manner.
What is the deadline for company registration and what is the procedure in Bulgaria?
For the registration of a company in Bulgaria, the procedure and the term are clearly regulated in the Commercial Law and the Law on the Commercial Register and the Register of Non-Profit Legal Entities.
Deadline for company registration
According to Art. 14, para. 4 of the Commercial Register and the Register of Non-Profit Legal Entities Act, applications for registration of initial registration of traders are considered by the end of the next working day from their entry into the commercial register. This means that after submitting the application and all the necessary documents, the Registry Agency must consider and rule on the application within one working day.
Company registration procedure
- Preparation of constituent documents:
- Memorandum of Association or Company Agreement (Art. 115 and Art. 116 of the Commercial Law).
- Decision on the appointment of manager (s) (Art. 119, para. 1 of the Commercial Law).
- Entry in the Commercial Register:
- Submission of a sample application, together with the constituent documents and other necessary documents - declarations under Art. 142 of the TC and Art. 141, para. 8 TC (Art. 21 of the Commercial Register Act).
- The registration officer checks whether all requirements have been complied with and whether all necessary documents have been submitted (Art. 21, para. 2 of the Commercial Register Act).
- Certificate of registration:
- After all documents have been submitted and checked, the Registry Agency issues a certificate of registration, with which the company officially begins its activities.
The need for a visit to a notary
A visit to a notary is necessary in some cases, for example:
- Notarization of signatures: According to Art. 21, para. 3 of the Commercial Register Act, signatures on documents that are submitted for registration must be notarized.
- Powers of attorney: If the documents are submitted by a proxy, the power of attorney must also be notarized by the signature of the power of attorney.
Important! If the registration of the company is carried out by a lawyer, the power of attorney can be in ordinary written form without notarization of signatures!!
In conclusion, the procedure for registering a company in Bulgaria includes preparation and submission of the necessary documents, verification and registration by the Registry Agency, as well as a possible visit to a notary for certification of signatures and powers of attorney. The procedure is fast and efficient, and applications are considered by the end of the next working day after their receipt.
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