BULGARIA Law and Practice Contributed by: Marin Sarafov, Petya Norova, Iva Georgieva and Eduard Milchev, G&P Law
(ii) jointly by all; or (iii) in another mixed form (eg, by two out of three managers). There are no prohibitions for management members to be shareholders or vice versa. JSCs A JSC can be managed either in a single- or two-tier style. However, a JSC is managed by a board, whichever system is chosen. Board members are appointed for a mandate of up to five years, with no prohibition on In the case of a single-tier system, the company is managed and represented by a board of directors (BoD) consisting of three to nine persons. The BoD’s members are elected and appointed by the GM, while the BoD itself adopts internal rules and regulations for its work. The BoD may appoint a single executive director, who takes on the responsibility of represent - ing the company before third parties. Two-tier system When using a two-tier system, the management body consists of a: • management board; and a • supervisory board, which observes the work of the management board and sets the standards. Here, the supervisory board’s members (three to sev - en persons) are elected by the GM, while the man - agement board’s members (three to nine persons) are elected by the supervisory board. To avoid a conflict of interests, no board member can be part of both the supervisory and management boards at the same time. It is either one or the other. VCCs A VCC can use either a single or group of managers, as chosen by the founder/shareholder(s). Choices vary between: • appointing a single manager; • having multiple managers who work independently; or being reappointed. Single-tier system
• having a collective board with collective liability, or any mix of the above. Supervisors, observers, secretaries, etc, can also be appointed. All management types and work rules must be duly reflected in the AoA. 3.5 Directors’, Officers’ and Shareholders’ Liability Until the implementation of the VCC, Bulgarian corpo - rate entities worked on the principle that the managing body was only internally liable to the company (share - holders), while all deals with third parties concluded by said management without the GM’s authorisation, were considered valid and binding. In any case, credi - tors of the company may pose their claims only before the company itself, not its management. LLCs Managers and officers The above rule for only internal liability of the manager works in full force in an LLC. Legislation makes little differentiation between offic - ers and managers, CEOs, COOs, CFOs, etc (the lat - ter are internal differentiations based on a contractual level). The important distinction is who is registered as a company representative at the CR. Managers’ liability towards third parties and authori - ties is severely limited under the legal framework, which does state, however, that managers can be fined for non-compliance of financial reporting. In some cases, managers can be personally liable for certain tax breaches. Shareholders Once shareholders have subscribed for shares, they are free from other monetary obligations. All shareholders do have basic statutory operative obligations towards the company, such as, (i) to par - ticipate in the GM/management and to follow its reso - lutions; and (ii) to provide support for the company’s activity realisation, etc.
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