As from January 1st, 2008 a new Act on the Commercial Registry came into effect. By virtue of this, all types of commercial companies and all branches of foreign commercial companies are incorporated by way of registration in the commercial register administered by the Registry Agency functioning under the authority of the Ministry of Justice. This is a one-stop shop registration and it serves for all commercial, tax, social security, statistics and other public purposes. Upon its registration in the commercial register a newly incorporated company or branch receives a unique unified identification number /UIC/, which serves to identify the company throughout its entire existence. It concerns the registration procedure of commercial companies at the territory of Bulgaria, which procedure shall be entirely amended and facilitated.
No other secondary registration is any more required from newly incorporated companies and branches to start effectively performing their business activity. In this relation as of January 1st 2008 BULSTAT registration is no more applicable to newly incorporated companies and branches.
Until the end of 2007, the commercial companies in Bulgaria had to be established under the procedure regulated by the Commercial Act. According to the old law, the company was established under a court decision issued by the respective Competent court where the head office of the company was located. The court decision was final and could not be appealed. After the court decision, the newly established company was obliged to apply for and to receive the unified identification code under BULSTAT /UIC under BULSTAT/.
In compliance with the new Act on the Commercial Registry, the documents for establishment of commercial companies have to be submitted before the National Registry Agency. Furthermore, the UIC under BULSTAT was replaced by a similar code – UIC issued directly by the Registry Agency. For the companies registered before January 1st 2008, the Act of the Commercial Registry determines a three year period for re-registration from the respective Competent court into the Registry Agency.
The two most popular legal forms for carrying out business in Bulgaria are the joint stock company (in Bulgarian the abbreviation is AD) and the limited liability company (OOD). The Bulgarian Commercial Act also provides: sole trader (ET), joint ventures, branches, holdings, cooperatives and representative offices. According to the Act on the Commercial Registry, these all have to be registered with the Registry Agency. Although all these changes and amendments in the applicable legislation were introduced in order to facilitate and shorten the process of establishing a new company, because of some administrative reasons as at the current moment /July 2008/ the company registration takes more than one month.
The legal forms – LLC and JSC restrict the liability of the shareholders to the amount of their share in the capital of the company, and these are the most preferred forms for the both local and foreign investors in Bulgaria. The initial capital for the registration of LLC shall be minimum BGN 2 and for the JSC – the minimum capital shall be BGN 25.000.
An LLC’s annual financial statements do not need to be audited by a CPA unless the company happens to meets certain requirements under the Bulgarian Accountancy Act, whereas all JSCs have to have their annual financial statements audited by a CPA. Furthermore, in compliance with the last amendments of the Act on the Commercial Registry all newly established companies /after 01.01.2008/ as well all re-registered companies are obliged to publish their annual financial statements with the Registry Agency.
Foreign individuals or foreign legal entities are also entitled to establish LLC and JSC. In these cases the sole-owned limited liability company is called in Bulgarian an EOOD and the sole-owned joint stock company is called an EAD.