The right of ownership of a commercial enterprise, regarded as a body of rights, obligations and factual relations, is often transferred by means of a contract for the sale of a commercial enterprise. Nevertheless, the transfer may also be effected by another legal means, for example through contracts of donation, exchange, contribution in kind (apport) or even merger by absorption into a commercial company.

In accordance with the Commerce Act, the term „enterprise“ encompasses the entire property of the trader, which includes:

  • Rights (assets) such as the right of ownership and limited real rights over immovable and movable things, receivables, company shares and stock in other companies, trademarks and other rights;
  • Obligations (liabilities), for example loans, credits, security provided for third parties, as well as obligations under contracts with customers, suppliers, employees and others;
  • Factual relations, such as know-how, trade secrets, clientele, distribution network and others.

The sale contract may include the transfer of either the entire enterprise or only a distinct part of it. If the enterprise has persons employed under an employment contract, the sale is possible only on the condition that all remuneration, indemnities and mandatory insurance contributions due to current and former employees (up to three years prior to the sale) have been paid. The contract may provide that the buyer assumes these obligations, with the employment relationships of those working in the sold enterprise remaining unchanged.

Preliminary notifications and documents before the sale

Before the transfer, the seller must submit a notification under Article 77 of the Tax and Social Insurance Procedure Code (ДОПК) to the territorial directorate of the National Revenue Agency (НАП) according to its registered seat. The НАП issues a certificate within 60 days, which serves as an indispensable condition for entering the transaction in the Commercial Register and must be attached to the application for registration.

It is also advisable that, before the sale, the seller request an expert valuation of the property, carried out by a licensed valuer. This valuation will help to avoid possible disputes with the tax authorities. The sale price may be lower than the expert valuation, but in the event of a tax audit a justification must be provided. The sale of a commercial enterprise under Article 15 of the Commerce Act is not regarded as a supply under the VAT Act and is not subject to VAT.

For the validity of a contract for the sale of a commercial enterprise, it is mandatory that it be concluded with notarial certification of the signatures and of the content, executed simultaneously. If the enterprise includes immovable property, the contract must be entered in the Registry Office at the location of the property. Where trademarks and patents are transferred, the contract must also be entered with the Patent Office.

Documents for entering the sale of a commercial enterprise in the Commercial Register

The documents required for entry in the Commercial Register are:

  • Application form В1;
  • A contract for the sale of a commercial enterprise with notarial certification of the signatures and of the content, executed simultaneously;
  • A declaration under Article 264, paragraph 1 of the ДОПК with the seller's notarially certified signature, if the enterprise contains immovable property;
  • A declaration under Article 16, paragraph 2 in conjunction with Article 15, paragraph 4 of the Commerce Act regarding the absence of obligations to employees;
  • Minutes of the general meeting or of the sole owner of the capital;
  • A certificate under Article 77 of the ДОПК;
  • Declarations under Article 13, paragraphs 4 and 5 of the Commercial Register and Register of Non-Profit Legal Entities Act (when submitted by an authorised representative);
  • A payment order for the state fee paid;
  • A power of attorney (if the documents are submitted by an authorised representative).

Depending on the case, additional documents may be required, such as a certificate of current status, invitations to a general meeting, and others.

The documents for registration may be submitted by either the seller or the buyer. Where the submission is made by an attorney, notarial certification of the attorney's power of attorney and of Application В1 is not required, which reduces costs. When submitted electronically, the state fee is also halved.

State fees for entry in the Commercial Register

The state fees for entry are:

  • BGN 30 for the sale of the enterprise of a sole trader;
  • BGN 80 for the sale of a commercial enterprise of a limited liability company (OOD), a joint-stock company (AD), a general partnership or a limited partnership.

When the documents are submitted electronically, the fees are halved.

After entry in the Commercial Register, the transfer of the enterprise is entered simultaneously in the files of both the seller and the buyer. The seller is obliged to notify all creditors and debtors of the sale that has taken place. In the absence of another agreement with the creditors, the seller bears joint and several liability for the obligations together with the buyer, up to the amount of the rights received. Creditors of querable obligations must first assert their claims against the seller.

The buyer's responsibilities

The buyer is obliged to manage the acquired commercial enterprise separately for a period of six months after the entry of the transfer. In addition, the buyer is jointly and severally liable for the seller's tax obligations up to the amount of the rights received.

Should you need legal advice or assistance in connection with the transfer of a commercial enterprise, contact us on telephone 0887550706, e-mail: [email protected]