Opening a company in Bulgaria with foreign partners

Opening a company in Bulgaria with foreign partners

 

Question:
Hello!

I want to open a company in Bulgaria and the idea is for my partners from Germany to own 10% of the company's shares, without the right to vote on how to develop the company in the future, nor the right to vote or access the company's finances.

How can this be achieved? Is it possible to open a company that is not a JSC because there the minimum capital is BGN 50,000, and the company will not have an income for a start, most likely at least in the first year.

Therefore, I am looking for a cheap option that could solve the problem.

Thanks in advance!

 

Answer:

Hello,

In general, you have two options.

Your first option is to establish a Company that is owned by several individuals and / or legal entities - the form is Ltd. (Limited Liability Company). The minimum amount of the initial capital is generally BGN 2, but we recommend two things:

1. The amount of capital should be a multiple of 100 in order to allow for variability in the initial and future distribution of shares between the partners.2

2. The amount of capital should be sufficient to cover the initial costs of the company. That is, if you have estimated that before receiving its first income, the company incurred expenses worth BGN 300.00 (this is an example number), it is logical that the initial capital should be at least such an amount. Otherwise, if these initial costs are paid with personal money to one of the owners, it will be reflected as financing the company (loan). Not that it is impossible and there is no such practice, but depending on the amount and duration of funding, this could have consequences. In any case, the payment of these initial costs will be paid, it is most logical that they are part of the company's capital.

What could be a problem in your idea is that the initial capital should be paid into a fundraising bank account, the opening of which must be attended by all owners, who must accordingly pay the appropriate amount of initial capital. Also, when it comes to owners who are not Bulgarian persons, the banks carry out their own inspections of persons, and for this purpose they charge a fee (fees vary according to the banks between BGN 50.00 - BGN 200.00) and respectively according to their criteria may refuse to open a bank account of a foreign person. The fact that we are talking about German citizens in this case is good news, as our practice shows that for citizens of the European Union, refusals are rare. However, you should keep in mind that, although rare, it happens. Also note that in case of cancellation, the initial fee for reviewing documents is not refundable. The verification procedure by the banks is between 5 and 30 working days (depending on the bank you have chosen).

In conclusion, our advice is to investigate in several banks before proceeding with registration how to open a savings bank account, given that one or more of the owners of the company will be foreign individuals.

Your other option is to initially open a Company (EOOD - sole proprietorship with limited liability) in the name of a Bulgarian person and subsequently this person to sell part of its shares to the foreign natural / legal person. In this way there will be a transformation from Ltd. to Ltd. and you will achieve the same end effect that you would achieve in the first option presented by us above. With strict and fast organization there is even a possibility that the foreigners in question do not have to come to Bulgaria - all the necessary documents that must be certified by them before a Bulgarian notary can be certified before the Bulgarian Consul at the Bulgarian Embassy. It is important to know that within 7 days from the date of certification the documents must be entered in the Commercial Register. In this option, however, you will have more costs for notary and state fees, as well as for possible fees for preparing the necessary documents. But you will save a bank fee for reviewing the documents of foreign persons.

We hope we have been helpful to you.

Greetings!