BULGARIA Law and Practice Contributed by: Marin Sarafov, Petya Norova, Iva Georgieva and Eduard Milchev, G&P Law
• the management body must be a collective (at least three persons), which is safer for decision- making, but not ideal for fast decisions; • depending on the types of shares, dematerialised shares make the JSC eligible for IPO and stock- market participation, but the shareholders will always be dependent on an investment broker to accommodate the transaction; and • reporting standards are higher, with the necessity of a third-party audit over financial reports, making running costs higher. Variable Capital Company (VCC) Best use scenario: • a start-up; • for venture capital participation with several invest - ment rounds; • for fintech, or other fast-growing industries where the product is key; and • where flexibility on management and control is required. When to avoid: • when an LLC/JSC is needed to meet statutory requirements; • for an IPO listing – the company must first be transformed into a JSC; and • for small-to-medium and family-owned businesses, where an LLC works better. The VCC’s aim is to service the start-up scene, offer - ing a mix of both LLC and JSC characteristics. Ven - ture companies, start-ups and scalable enterprises are the intended target for this legal form. The capital, being labelled as “variable”, is not fixed but always changing, with a view to constant growth because of investments. The VCC has only been in use since 2025 and Bulgar - ian business is still somewhat hesitant to engage, as better understanding of corporate and financial affairs is required. The emphasis in the VCC is on speed, servicing the market and flexibility. The AoA of the VCC can be “moulded” to best suit the needs of the shareholder while, of course, remaining within the confines of the law.
Intended only as a “start-up” vehicle, there are two thresholds at which the VCC should be transformed either into an LLC or JSC: • when the annual turnover (or assets) exceed approximately EUR2,050,000; and • when there are more than 50 persons on the staff. The minimum number of shareholders is again one. There is no explicit minimum starting capital stated in the law, and no requirement for opening a bank account to begin with. As with other corporate enti - ties, however, the single share amount should not be less than EUR0.01. No shareholders will be visible in the Commercial Reg - ister; only the management body is. The VCC uses the conveniences of the other corpo - rate forms in: • low starting costs (like an LLC); • choosing the best management approach – either singular, board (as in a JSC) or a mix; • avoiding notary certifications of share transfers and implementing a shareholders’ book (like a JSC); and • vesting, employee stock ownership plans (ESOPs) and other employee incentives. What to watch out for: • loss of controlling rights on the part of the founder(s) when investors buy in; • passing both statutory thresholds (staff number and EUR2,050,000 annual turnover/assets); and • maintaining proper vesting policies for staff and executive members. 3.2 Incorporation Process LLCs LLC incorporation can take between a week and 1.5 months depending on several factors. The LLC’s incorporation consists of: • signing several documents (resolutions, AoA, statu - tory declaration); • opening a bank account at a Bulgarian bank to pay in capital; and • filing and review at the Commercial Register (CR).
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