Changes in Bulgarian Commerce Act 2017

Significant changes in Bulgarian Commerce Act were adopted at the end of 2016, valid in the current year. We present below a summary of the most significant changes introduced with the present Act.

Validity form of certain documents is getting stricter

In addition to the current requirements for notary certified signatures on contracts for the transfer of commercial enterprise and contracts for the transfer of shares, a new requirement for additional notary authentication of the content of such contracts is introduced.

The same validity form will be required for the decisions of shareholders of limited liability companies for acceptance and exclusion of shareholders, increase and decrease of company’s capital, shares transfer to a new shareholder, appointment of company manager, acquisition and disposal of real estate and property rights thereto.

The requirement for such a form of validity will not be applicable if the respective Articles of Association/ Memorandum of incorporation explicitly provide simple written validity form for those decisions.

Amendments in the bankruptcy proceedings

Insolvent will be considered any trader that before filing an application for bankruptcy proceedings has not filed in the Commercial Register its annual financial statements for the last three years.

Stabilization proceedings of merchant/ company

The proceedings will apply to merchants/ companies which are not insolvent but are in a state of imminent danger of insolvency.

We advise our clients before undertaking any structural changes to their companies in Bulgaria to consult with us first.

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5 reasons to trust the professional company registration

The creation of a business company or even a sole trader is an activity that is important to be done by the rules, because the appearance of a newly created business depends on it. Many people believe that they can successfully pass the administrative and bureaucratic procedures, with the intention to save the fee that would have paid the specialist performing the registration of companies. Not long after, the majority of these people find themselves so entangled in red tape that ultimately again recourse to expert, which is a waste of time and money.

If you want to avoid the bitter experience and start as soon as possible your business activity it is important to select a team to take on the entire burden of cumbersome procedure. During this time, you can focus to the activity, corresponding to your competence, laying the foundation for a successful and prestigious business.

5 reasons to trust the professional registration of companies

The reasons to trust the professionals are many, but here we will suggest only 5, we believe that their significance is greatest. Most of us don’t soberly judge the situation until we understand from experience how great is the difficulty to fight the bureaucracy not having the necessary competence and experience. Here are the main reasons ordered but not prioritized.

  1. The ability to correctly choose the right type of company

The fact that we have decided to list our activity in the Commercial Register is only the beginning of a series of important decisions. Choosing the type of company that we’ll register is much more important and responsible because it will affect both its appearance in front of customers and business partners, and the subsequent accounting and tax burden that we’ll have to take. Professional services enable us to be informed about the differences between sole proprietorship, Ltd., SA, joint-stock company, shareholding etc. and to register the type of company meeting our needs.

  1. Preparation and submission of the documents

The documents drawn up in the process of registration of a company are many, and for different type of companies are required declarations and applications within the meaning of various articles and paragraphs of different laws and regulations. Although around the Internet it’s possible to find the basic requirements and even forms to download and fill ourselves, nothing ensures us that our documentation will be in order. The preparation of documents is long and complex process and their acceptance as valid is not guaranteed in case of errors as inevitably any layman makes.

  1. Visiting various administrative institutions

The procedure of registering a company in the Commercial Register is not the end of the saga in launching a business. It takes visits to banks, NRA, NSSI, municipalities and all this is connected not only with time but also with a lot of nerves and patience. Once time is money it’s foolish to waste it in vain, renouncing the help of professionals who will take on the task as soon as we delegate them to make it through a notarized power of attorney.

  1. Option to take advantage of other services in the future

Many companies specializing in the registration of companies offer a wide range of legal and financial services. One such firm may become a permanent partner from which our business will only gain profit. Different companies also offer accounting services and preparation and filing of tax returns and publication of such – a mandatory requirement for certain activities.

  1. Preparation for audits and protection of our interests in front of the tax authorities

Each business is subject of control by the tax authorities; often because of lack of knowledge we make mistakes that create preconditions for serious sanctions. Using the services of the right company specialized in the registration of companies; we can call and ask for the assistance of a specialist to prepare our company documentation for upcoming inspections, audits and revisions in order to avoid any possibility of eventual sanctions.

Announcement of annual financial report

What is an annual financial report?

The annual report gathers full information about the financial position of the company. It includes statement for revenues and expenses, balance sheet, statement for share capital and cash flow statement

The financial report is drawn up for one financial year , coinciding with the calendar year – from January 1st to December 31st. E.g: If you have a company created on 01.12.2015, you need to submit a report on the activity carried out in 2015 – in this case only one month.

Who is obliged to announce the annual financial report?

All the traders according to the Bulgarian Commerce Act, this includes Limited Liability Companies (Ltd.), Limited Partnerships, General Partnerships, Joint Stock Companies.

Financial statements shall be prepared by accountants or accounting firms. However, there are certain companies whose reports are subject to independent financial audit by registered auditors. These reports are also prepared by accountants but it is necessary to be verified by registered auditor before their announcement in the Commercial register.

These specific companies are several types:

  • Joint Stock Companies and Partnerships limited by shares;
  • Companies that issue securities for public offering;
  • Credit institutions, insurance companies, investment companies;
  • Companies involved in social insurance and funds management;
  • Companies that shall draw up consolidated financial statements – parent company and its subsidiaries;
  • Non-profit organizations in public benefit with assets over 1 million BGN or business income over 2 million BGN;

Announcement of the annual financial statements has certain deadlines as follows:

  • For sole proprietors – until 31.05 ;
  • For Limited Liability Companies – until 30.06 ;
  • For all the rest legal entities – until 31.07 ;

The deadline must be followed for each year thereafter. If the financial statements has not been announced on time, the fine that may be imposed to the company is from 500 BGN to 3000 BGN. Upon repeated violation the amount оf the fine is double.

How to submit annual financial report for company in Bulgaria?

Refer to our team of professionals. We will prepare the report, accounting records, together with additional applications – protocol of general meeting of shareholders / decision of the sole shareholder for adoption of the report, declaration of the truthfulness of the circumstances stated.

What is an EORI number?

EORI number is used to identify legal persons and individuals based in the European Union, as well as those outside the EU, when performing customs activities in the EU.

With effect from 01.07.2009, for all economic operators in their interaction with the customs administration of a Member State of the European Community, it is necessary to have an unique identification number EORI (acronym for Economic Operator Registration and Identification). In this relation all companies and individuals sending and receiving packages/consignments need to obtain EORI number from the relevant customs office.

Some cases for which EORI number is required

Import Export Transit
Consignor / Exporter Non mandatory Mandatory
EORI number or single (Ad-hoc) number
Non mandatory
Consignee Mandatory
EORI number or single (Ad-hoc) number
Non mandatory Non mandatory
Declarer / Representative Mandatory
EORI number or single (Ad-hoc) number
Mandatory
EORI number or single (Ad-hoc) number
A person responsible Mandatory
EORI number

EORI registration should be made in the relevant territorial customs office of individual’s residence or company’s registered office.

Acquiring BG citizenship by investment

 I. Under Art. 12 of Bulgarian Citizenship Act

The physical person :

  1. Must be an adult;
  2. Before no less than 5 years has been given permit for permanent or long-term residence in Bulgaria;
  3. Has not been convicted of a crime by Bulgarian court or is not prosecuted for such a crime, unless rehabilitated;
  4. Has an income or occupation that enables him to live in Bulgaria;
  5. Is skillful at Bulgarian language;

Permit for long-term residence – requirements (LFRB art. 24, para 1, items 19, 20):

  • Visa D;
  • Investment of no less than 600 000 BGN or  investment in economically disadvantaged regions of no less than 250 000 BGN plus opened at least 5 workplaces for Bulgarian citizens;

Permit for permanent residence – requirements (LFRB art. 25, para 1, items 16, 17):

  • Investment of no less than 500 000 BGN plus opened at least 10 workplaces for Bulgarian citizens;

Or

  • Acquired permit for long-term residence and keeping the investment over 5 years;

II. Under Art. 12a of Bulgarian Citizenship Act

Permit for permanent residence – requirements (LFRB art. 25, para 1, items 6, 7, 8, 13):

  • Investment of over 1 million BGN or  increase of the investment with this amount through the acquisition of:
  1. shares in Bulgarian commercial companies, traded on a regulated Bulgarian market;
  2. shares and treasury bonds and derivative instruments issued by the State or by municipalities, with a residual maturity not less than 6 months;
  3. ownership rights over an isolated part of the property of a Bulgarian commercial company with more than 50 percent state or municipal participation in the capital under the Act of Privatization and Post- privatization Control;
  4. shares or stocks owned by the state or municipalities in a Bulgarian commercial company in compliance with the Act of Privatization and Post- privatization Control;
  5. Bulgarian intellectual property – objects of copyright and related to it rights, patent-protected inventions, utility models, trademarks, service marks and industrial design;
  6. rights under concession contracts on the territory of the Republic of Bulgaria;

or

  • Deposit of 1 million BGN in a licensed credit institution in Bulgaria under fiduciary management for a period not less than five years;

or

  • Investment in the capital of Bulgarian company which shares are not traded on a regulated market of no less than 6 million BGN;

or

  • Performing activities and certification under the Investment Promotion Act – implementing and/or maintaining an investment which has received a certificate for class А, class B, or priority investment project;

The physical person :

  1. Must be an adult;
  2. Before no less than 5 years has been given permit for permanent or long-term residence in Bulgaria;
  3. Has not been convicted of a crime by Bulgarian court or is not prosecuted for such a crime, unless rehabilitated;
  4. Has an income or occupation that enables him to live in Bulgaria;

 III. Under Art. 14a of Bulgarian Citizenship Act

The physical person :

  1. Must be an adult;
  2. Has not been convicted of a crime by Bulgarian court or is not prosecuted for such a crime, unless rehabilitated;

A) Before no less than 1 year has been given permit for permanent residence in Bulgaria under LFRB art. 25, para 1, items 6 or 7 and has increased the investment under the same conditions to 2 million BGN or  has invested in the capital of Bulgarian company no less than 1 million BGN for implemented priority investment project;

or

B) Before no less than 1 year has been given permit for permanent residence in Bulgaria for performing activities and certification under the Investment Promotion Act – implementing and/or maintaining an investment which has received a certificate for class А, class B, or priority investment project. During this year the investments performed and put into exploitation are maintained above the minimum score for certificate for class А;

Permit for permanent residence – requirements (LFRB art. 25, para 1, items 6, 7):

  • Investment of over 1 million BGN or  increase of the investment with this amount through the acquisition of:
  1. a) shares in Bulgarian commercial companies, traded on a regulated Bulgarian market;
  2. b) shares and treasury bonds and derivative instruments issued by the State or by municipalities, with a residual maturity not less than 6 months;
  3. c) ownership rights over an isolated part of the property of a Bulgarian commercial company with more than 50 percent state or municipal participation in the capital under the Act of Privatization and Post- privatization Control;
  4. d) shares or stocks owned by the state or municipalities in a Bulgarian commercial company in compliance with the Act of Privatization and Post- privatization Control;
  5. e) Bulgarian intellectual property – objects of copyright and related to it rights, patent-protected inventions, utility models, trademarks, service marks and industrial design;
  6. f) rights under concession contracts on the territory of the Republic of Bulgaria;

or

  • Deposit of 1 million BGN in a licensed credit institution in Bulgaria under fiduciary management for a period not less than five years;

If you have any questions regarding the acquiring of Bulgarian citizenship, do not hesitate to contact us.

What you should know about business name reservation in the commercial register?

  Business name (known as a firm) is the name under which the trader carries his occupation and shall be signed. It must correspond to the truth, not be misleading and does not undermine public order and morality. Every firm has content prescribed by the law which may include indication of the sphere of activity, the persons involved and freely chosen supplement. The trader is obliged to write firm’s name in Bulgarian, as he could additionally inscribe it in a foreign language.

  The trader has an exclusive right over the firm. It can only be used by the trader who has made the registration. It can’t be identical or similar to a trade mark or earlier registered company. The firm can be changed upon request of the trader who has made the registration.

  Firm’s name reservation shall have effect for six months and prevents another trader to be entered in the commercial register under the same firm. The reserved firm cannot be estranged and transferred.

  Everyone can reserve a firm before submitting the application for registration but the trader must be entered in the commercial register within six months.

  Required documents :

  • Application for firm’s reservation;
  • A document certifying the representative authority of the applicant (when the application is submitted by a representative of the person concerned);
  • A document for paid state fee;

  You can check whether the chosen name is unique and does not repeat another already registered on the website of the Commercial Register – www.brra.bg. Using the English version, you should select section “References”, then “Rights over company”. In the field “Business name” you are typing the name of the company you wish to register. If an inscription in red “No results found” appears, this means that probably the name is available and can be used.

  To be completely sure that the name is free, you need to check also Bulstat Register – http://bulstat.registryagency.bg/. Since the access to it is limited and requires payment, Global Consult Europe can perform this check for you.