Every commercial company or sole trader has the option of appointing a procurator to take over the management of the enterprise. In practice, a procurator is often appointed when the manager of a sole-owner limited liability company (EOOD) or a sole trader takes leave for pregnancy and childbirth, or for raising a child up to the age of 2, in order to be entitled to a benefit from the National Social Security Institute (НОИ).

Authorisation and Entry

The appointment of the procurator, known as procura, must be effected with notarisation of the signature and must be entered in the commercial register. There is nothing to prevent the trader from appointing several persons as procurators, who may represent the trader individually, jointly, or in certain combinations with the manager. This mixed form of representation is often used when concluding high-value contracts or when taking out loans.

Procura Agreement

The commercial management contract (procura agreement) may be concluded in the form of an employment contract or a civil mandate contract. It is important to know that concluding a procura agreement is mandatory, since authorisation by a power of attorney alone creates no obligations for the authorised person, but only rights.

The agreement must regulate in detail the rights and obligations of the procurator, as well as the restrictions, the prohibitions on carrying out certain acts, the procurator's liability, and the conditions for termination of the agreement.

Remuneration

The procura agreement is for consideration, which means that the procurator is entitled to remuneration. Even if the procura is not entered in the commercial register, case law accepts that the trader is obliged to pay the agreed remuneration to the procurator. The amount of the remuneration may also be specified by an annex to the agreement, and bonuses for results achieved may also be provided for.

Term of the Agreement

The procura agreement may be concluded for an indefinite term or for a fixed period. The procurator undertakes to carry out the operational management of the company or the activity of the sole trader. However, the procurator's powers of representation are more limited than those of the manager.

Powers and Restrictions of the Procurator
Powers

The procurator has the right to:

  • Represent the trader before various third parties, including banks, insurers, other commercial companies and state and municipal authorities.
  • Carry out all acts and transactions connected with the management of the trader's activity, such as concluding contracts of sale, lease, loan and insurance, and bringing claims on behalf of the trader.
  • Organise the commercial activity, the production process, the accounting records and the management of the company's bank accounts.
  • Authorise third parties to carry out certain acts, such as attorneys and accountants.

The procurator may also be authorised to exercise the powers of the employer in respect of the employment relationships with the staff, including the conclusion and termination of employment contracts and the imposition of disciplinary liability.

The procurator signs by adding to the trade name their own name and a designation indicating the procura.

Restrictions

The procurator may not:

  • Authorise other persons with their statutory rights.
  • Dispose of or encumber immovable property owned by the trader, nor create limited rights in rem over it, unless expressly authorised to do so.
  • Carry out competing activity or conclude commercial transactions for their own account or for the account of others within the scope of the authorisation, unless otherwise agreed in the procura agreement.

The authorisation of the procurator takes effect with regard to third parties after its entry in the commercial register.

Documents Required for the Entry of a Procura

The following documents are required for the entry of a procura:

  • Application Б1.
  • A notarised specimen of the procurator's signature.
  • A declaration under Article 21(3) of the Commerce Act by the procurator.
  • A procura bearing the notarised signature of the manager of the EOOD or OOD, of the executive director of the EAD or AD, or of the sole trader.
  • A decision of the competent body of the company to appoint a procurator.
  • Declarations under Article 13(4) and Article 13(5) of the Commercial Register and Register of Non-Profit Legal Entities Act.
  • A power of attorney, if the documents are filed by an authorised representative.
  • A payment order for the state fee paid.

Depending on the circumstances, other documents may also be required, such as a certificate of current status, invitations to convene a general meeting, etc.

State Fees and Termination

The state fee for the entry of a procura is BGN 40, and where the documents are filed electronically the fee is BGN 20. The procura may be revoked at any time, and its termination must be entered in the commercial register in order to have effect with regard to third parties.

The procura is not terminated automatically upon the death of the trader or the placing of the trader under judicial disability.

Termination of the Procura Agreement

The procura agreement may be terminated in the following cases:

  • By mutual consent.
  • Upon expiry of the term, if one has been agreed.
  • Unilaterally by the procurator, with notice.
  • Upon the death or judicial disability of the procurator.
  • Upon the transformation, liquidation or opening of insolvency proceedings in respect of the commercial company.
  • Other cases provided for in the agreement.

Should you require legal advice or assistance in connection with the appointment of a procurator, contact us on telephone: 0887550706 or by e-mail: [email protected]