All types of business ownership, except Sole Proprietor, are legal entities.
Taxation is similar for all types of ownership, but there are some nuances.
Registration in tax office, statistical department and pension fund – are mandatory for all.
Analogue of the Individual Entrepreneur. It is not a legal entity. Available for Bulgarian citizens or foreigners with permanent residence. One person may register only one SP . The authorized capital is required. SP is liable for its obligations with all personal property. The property of SP is involved in both personal and business turnover . The name contains a mandatory name or surname of the entrepreneur. Also, the title may contain one word that is not the name.
2 . General Partnership
The so-called personal association, where the co- founders are engaged in shared activity and are jointly liable for the obligations , including with the personal property, without any restrictions. Number of founders – at least two. The founders can be both physical and legal entities. Authorized capital – is not defined by law. The founders’ relations are governed by the association’s agreement. Founders must personally participate in the association. Each founder can (and has the right) to operate the General Partnership. Members of the partnership cannot participate in other partnerships without the consent of the General partnership’s founders, if the activity overlaps with the activities of the General Partnership. Also member of the General Partnership can not enter into any transaction that in any way violates the partnership’s interests.
Usually this type of companies are established by family members or very close friends, because complete confidence in each other is necessary for business success. Often heirs establish General Partnership to continue the work of the person who left the inheritance. In practice, the legal entities rarely become co-founders of such companies.
3. Limited Partnership
Basically, the same as in section 2 (General Partnership), but with the following modifications. First, one or more founders have joint and unlimited liability for the obligations of the company (the so-called partners) and the others have limited liability (the so-called limited partners) – within the limits of the authorized capital of the company. Second, the company can be managed only by the partner(s) whose liability is unlimited. Other members of the partnership can manage the company only after signing an agreement.
Historically, this type of company was used in family business, but over time has become very popular.
4. Joint stock company
Joint stock company – is company with capital divided into even shares in the form of stock. Shares are registered in the “Central depository”. Availability shares gives right to participate in the company. Shares are freely bought and sold. Minimal cost of 1 share is1 lev. Share’s price may be increased but must be a whole amount in lev.
Company’s establishment is divided into 4 stages. Holding constituent assembly. Selection of executive body. Approval of charter. Collection of capital. The minimum share capital of the company is 50,000 (fifty thousand) lev. If the shares are sold by subscription, than- 100,000 (one hundred thousand) lev. For such organizations, such as banks, insurance companies and the like, the authorized capital is governed by applicable law. The authorized capital can be increased in several ways. Issue of new shares. Increase in the par value of existing shares. Conversion of bonds into shares. Capital increase at its own expense .
The supreme governing body of Joint Stock Company is the general board of shareholders, it has general competence. The general board holds its meetings annually. Under the law, Joint Stock Company may have a one-tier and two-tier management system. With the one-tier system, the board of directors is elected, with the two-tier system – the director and the supervisory board.
5. Limited Partnership with shares
The hybrid type company that combines the elements of Joint Stock Company (section 4) and elements of General Partnership (section 2) . To establish Limited Partnership with shares, the participation of at least four founders is required. Three of them – so-called “limited partners” ( limited liability founders) and at least one unlimited liability founder (so-called partner).
The company is established by holding general board’s meeting. The general board’s meeting is organized by unlimited liability founders (partner). At the general board’s meeting shareholders are appointed. In addition to the limited liability partners, the unlimited liability partners may become shareholders, but it does not change their unlimited liability in terms of decreasing it. With the establishment of this company statute act and charter are mandatory.
The charter is prepared by the unlimited liability partners and shall include information on the type and number of shares, the description of the control bodies and their powers, the amount of capital, rules for depositing funds and other important aspects of the company. The minimum capital for such company is 50,000 lev. To register, it is enough to deposit 25% of the share capital.
The unlimited liability partners cannot be government bodies and banks.
6. Limited Liability Company
Limited Liability Company – is the type of company that has advantages of both personal and public companies. The company of type LTD or LLC in the Russian Federation emerged artificially in the turnover of trade relations, as the result of effort of the German lawyers in the 19th century.
LLC does not require personal participation of the founders in company’s operations. Compared with the Joint Sock Companies, the benefits are the following – simple registration , no need to publish the results of the activities, lower share capital . Compared with the partnership, the rights and obligations of the parties are more flexible to formulate and the LLC is responsible for obligations within their capital and property.
The company is managed by the general board and company’s director. A third person can also be appointed as an optional body – the controller that will monitor the implementation of the company’s memorandum and report to the general board.
The general board is the supreme governing body of the company, it can amend and add to the memorandum, include and exclude founders, select and dismiss the director. Adopt annual balance, distribute profit. Decisions are made by majority with more than three -quarters ( 3/4 or 75 %) of capital. Only the decision to increase the share capital is made unanimously.
The director – is the rule making body of the company. His power comes from the law and cannot be limited by the general board or memorandum .
The founder may be one person or legal entity (then the name includes Ltd.) or more. The minimum share capital – is 2 lev.
Registering company in Bulgaria – is the service we can provide for you as with your personal involvement or remotely by the power of attorney.