BULGARIA Law and Practice Contributed by: Nikolay Zisov, Svetlina Kortenska, Deyan Terziev and Teodora Peycheva, BOYANOV & Co
1. Market Trends 1.1 Technology M&A Market
opening of bank account prior to registration of the company in the Commercial Register, the bank KYC procedures sometimes take longer to complete and may extend the incorporation timeline. 2.2 Type of Entity The most frequently used form of entity for ini- tial incorporation of start-ups is limited liability company (OOD). The joint-stock company (AD) is usually considered a somewhat more sophis- ticated corporate form offering better corporate structuring and management options. In 2023 Bulgaria introduced another type of company – the Bulgarian Variable Capital Com- pany (VCC) – designed to provide start-ups with more flexibility and ease of incorporation than the traditional company structures. The techni- cal infrastructure for VCC registration is antici- In Bulgaria, early-stage financing is usually pro- vided by business angels and/or venture capital funds which specialise in providing seed invest- ments. Government sponsored funds are also a source of financing for early stage start-ups. There is no standard set of early-stage financing documentation. Usually, the documents include an Investment Loan Agreement and/or Share- holders’ Agreement together with Articles of Association reflecting the relevant arrangements The typical sources of venture capital in Bulgaria are local and foreign venture capital funds as well as business angels. While the venture capi- tal ecosystem in Bulgaria has been growing, it is still relatively small compared to more mature markets. Therefore, securing venture capital between the parties. 2.4 Venture Capital pated to be operational in 2025. 2.3 Early-Stage Financing
The Bulgarian tech scene is currently seen as hotbed for foreign investors. In the last year there has been a surge in mergers and acqui- sitions within the tech sector, with 50% of all announced M&A deals focused on information and communication technology. Even as the global economy has faced its ups and downs, foreign investors, particularly from the US and Western Europe, have continued to show inter- est in acquiring Bulgarian tech companies. 1.2 Key Trends The tech sector has led M&A activity in Bulgaria over the past year, attracting foreign investors due to the region’s favourable business climate and growth potential. Telecoms infrastructure deals have been prominent, while digital trans- formation has increased demand for tech com- panies, especially those developing AI and cloud solutions. Bulgarian tech start-ups have seen rapid growth, drawing interest from both local and international investors, including venture capital funds. 2. Establishing a New Company, Early-Stage Financing and Venture Capital Financing of a New Technology Company 2.1 Establishing a New Company The new start-up companies are typically incor- porated in Bulgaria. The incorporation process is considered relatively simple and inexpensive. At this time there do not seem to be any general advantages of having the start-up registered in another foreign jurisdiction. The incorporation is a quick process as the procedure itself takes about a week. Since the process involves the
45
CHAMBERS.COM
Powered by FlippingBook