Choosing a legal form
The most common forms for carrying out business in Bulgaria are:
- Sole trader (ET) - an individual who is liable for the business's obligations with their entire personal estate;
- Limited liability company (OOD/EOOD) - the shareholders are liable only up to the amount of their capital contribution;
- Joint-stock company (AD) - better suited to larger businesses with multiple shareholders or investors.
The choice depends on the number of owners, the desired level of protection of personal assets, the expected scale of the business, and the requirements of potential investors or partners.
Registration with the Commercial Register
Every company is entered in the Commercial Register and Register of Non-Profit Legal Entities maintained by the Registry Agency. For an OOD/EOOD, the filing typically includes:
- the articles of association (or memorandum of association for an EOOD);
- a decision/minutes appointing the manager;
- declarations required under the Commercial Act and a specimen signature of the manager;
- evidence of the capital contribution.
A lawyer drafts the founding documents, checks the proposed company name and business activities, and files the registration application electronically.
Ongoing management and contracts
Once registered, a company has ongoing obligations - keeping commercial books, meeting deadlines for publishing the annual financial statements, and registering changes in company details (address, capital, manager, shareholders) as they occur. A lawyer drafts and reviews commercial contracts, general terms and internal documents to protect the company's interests in its dealings with partners and clients.
Insolvency protection
When a trader is unable to meet its current obligations, the Commercial Act provides for insolvency proceedings. These can lead either to the company's rehabilitation through a recovery plan, or to the sale of its assets and satisfaction of creditors under a set order of priority. Timely legal advice when a company faces financial difficulty matters both for protecting the owners' assets and for avoiding the manager's personal liability in certain cases of breach.