A variable-capital company (DPK) may be established by one or more natural and/or legal persons. This type of commercial company is a new legal form in Bulgarian business, introduced by the latest amendments to the Commerce Act (Official Journal No. 66 of 1 August 2023).

This legal form is particularly suitable for start-up companies that focus on innovative and high-technology products and services.

Requirements for a Variable-Capital Company

The company may exist only if the following two conditions are met simultaneously:

  1. An average number of staff of fewer than 50 persons
    AND
  2. An annual turnover and/or value of assets of up to BGN 4,000,000.

If at least one of these conditions is not met, the company must be transformed into an OOD or an AD.

Principal Differences from an OOD and an AD

For the variable-capital company, a number of requirements applicable to an OOD and an AD do not apply:

  • There is no requirement to open a capital subscription account for the capital.
  • The capital is not entered in the Commercial Register.
  • There is no minimum required amount of capital.
  • The partners are not entered in the Commercial Register.
  • Non-cash contributions to the capital can be made more quickly and easily.

As of 15 December 2024, the Registry Agency provides the facility to register a variable-capital company in the Commercial Register.

Capital and Company Shares

The principal difference from an OOD and an AD is that the capital is variable and is not subject to entry in the Commercial Register.

The amount of the capital is determined by a decision of the annual regular General Meeting, convened to consider the annual financial statements. The decision contains:

  • The capital as at the end of the financial year.
  • The changes as compared with the previous financial year.

The minimum value of one share is 1 stotinka.

The capital may be divided into different classes of shares, as in an AD. For example:

  • Class A – 1 stotinka
  • Class B – BGN 100
Non-Cash Contributions

The partners may make contributions in cash or by means of non-cash assets.

Unlike in an OOD and an AD, the valuation of the non-cash contributions is carried out by three valuers, appointed by the manager or the management board, and not by the Registry Agency.

Preferential Shares

As in an AD, the variable-capital company may issue shares carrying special rights (privileges), for example:

  • The right to more than one vote at the General Meeting.
  • A guaranteed or additional dividend.
  • A right to redemption of shares.
  • A right of veto over decisions of the General Meeting.

There is no obstacle to the articles of association providing that the preferential shares carry no voting rights.

The partners receive a certificate in respect of their share, but this certificate is not a security.

Transfer of Company Shares

The transfer of company shares is effected by means of a contract with notarial certification of the signatures.

The articles of association may stipulate that:

  • Notarial certification is not required.
  • The shares must first be offered to the other partners.
  • There may be a prohibition on disposing of shares for a fixed period.
  • The partners may have a right of first refusal.

If the shares are transferred in breach of the articles of association, the transaction is not enforceable against the company and third parties.

The Right of Employees to Acquire Shares

The General Meeting may grant the company's employees the right to acquire shares.

  • The transfer is effected by means of a contract between the company and the employee.
  • The total number of such shares may not exceed 15% of all shares.
  • This right may not be transferred, but may be inherited.
Inheritance of Company Shares

Upon the death of a partner, his shares are inherited.

  • The heirs may become partners if they declare this within a period of 3 months.
  • If they do not wish to participate in the company, it pays them the value of the shares as at the date of death.
  • The articles of association may provide that the heirs may not become partners.

If a partner had a right to acquire shares, his heirs may exercise it within a period of up to 6 months.

Management of the Company

The General Meeting comprises all the partners and takes decisions on:

  • Amendment of the articles of association.
  • The issue and cancellation of shares.
  • Dissolution or transformation of the company.
  • The election and removal of managers.
  • Adoption of the annual financial statements.
  • Distribution and payment of the profit.
Convening the General Meeting

The meeting is convened by:

  • A written notice announced in the Commercial Register (at least 15 days before the date of the meeting).
  • An electronic notice with confirmation of receipt (at least 7 days before the meeting).

The meeting may be held online by means of a videoconference link and remote voting.

Forms of Management

The company may be managed by:

  1. One or more managers.
  2. A management board.

There is no established requirement as to the minimum number of members of the management board. It may include both natural persons with legal capacity and legal persons.

The duration of the term of office of the members of the management board is determined in the articles of association. They may be re-elected an unlimited number of times.

The management board has the power to elect one or more executive directors from among its members to represent the company.

If you need legal advice or assistance in connection with the establishment of a variable-capital company, please contact us on 0887550706 or by e-mail: [email protected]