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Company types are more or less different around the world.When speaking about specifics of any desired corporate entity to be set up, investors should know that there are half dozen of different types of companies in The Republic of Bulgaria and the main criteria is the active trading quality – its lack or availability. The major possible forms of business entities in Bulgaria can and should be further divided into two main big groups: a) traders and b) non-traders. Traders who are involved in active deals or any other commercial activities can be divided into another further two groups (depending on the special relevant legal act regarding their business status): A1) Traders registered under the Commerce Act; and A2) Traders who are subject to regulation by specific laws. The forms of opening a company and running an active business outlined below might be divided once again into two groups: 1. Commercial trading companies and 2. Other legal entities. There is also another group in which corporations are split into ‘normal’ (with two or more members) and single member trading companies.
Any type of Bulgarian company is duly established legal entity in which two, three or more physical or judicial persons who have come together and join forces to do business with common monetary or other resources. A corporation may also be set up by a sole trader in all cases stipulated in the applicable legal instruments. In order for a trading company to be incorporated in Bulgaria, it needs to be duly recorded with the only competent Trade Register in compliance with the regulatory Act on the Commercial Register.
Founders of established companies described in the above paragraphs should be legally capable foreign or Bulgarian individuals (physical persons) or legal entities (judicial entities). Anyone of them has the excellent change to start up and run as many business corporations as he likes insofar as the laws do not explicitly prohibit this. Where a Bulgarian registered company takes part in another duly formed corporation, its rights as a partner, shareholder or single shareholder-owner should be exercised by a person specially authorized in writing and announced in the public register to do this.
The absolutely total number of Bulgarian companies that could legally be incorporated under the applicable Bulgarian laws is five and they are exactly the following ones:
- Joint Stock Company (AD – Aktsionerno Druzhestvo or EAD – Ednolitchno Aktsionerno Druzhestvo)
- Limited Liability Company (OOD – Druzhestvo s Ogranichena Otgovornost or EOOD – Ednolitchno Druzhestvo s Ogranichena Otgovornost)
- General Business Partnerships (SD – Sabiratelno Druzhestvo)
- Commanditte Business Partnership (KD – Komanditno Druzhestvo)
- Commanditte Business Partnerships Limited by Shares (KDA – Komanditno Druzhestvo s Aktsii)
As one can see the Bulgarian word for “company” is obviously “druzhestvo”.
As an exception to the common rule, the Limited Liability (LTD or OOD in Bulgarian) and Joint Stock Companies (JSC or AD in Bulgarian) may also be started up as a single member trading companies – SMLLC (EOOD) and SMJCS (EAD). Bulgarian law does not prohibit single foreign investors from registering the above mentioned single member companies. Foreign citizens could even establish EOOD or EAD in their capacity of single owners of the capital and then be the only managers (for the JSC type of companies there should be managing board of at least 3 members).
Having reviewed the above described Bulgarian companies, a common questions raises: Are these 5 ones the only types of trading companies one could open in Bulgaria? And the answer to this question is: Yes, only these five explicit types of companies found in the Commercial Act may be legally established in Bulgaria and as mentioned earlier some laws may provide that certain specific business activities should be carried out not by all possible but only by a specific types of companies.