Corporate actions form an essential part of every company’s lifecycle. Companies undertake corporate actions due to business growth, restructuring, new investments, or strategic realignment. Corporate changes such as the appointment of a new manager, transfer of shares in a company, change in the registered address of a company, or change in the corporate name require strict compliance with commercial legislation in Bulgaria.
Most corporate actions are not effective until they are registered and published in the Bulgarian Commercial Register and Register of Non-Profit Legal Entities, administered by the Registry Agency. This applies to both Bulgarian-owned companies as well as those companies in which the shareholders are foreigners.
Change of manager
One of the most common corporate changes is the change of the company manager. This applies particularly to limited liability companies (OOD) but also to joint-stock companies or other entities. The manager represents the company legally and has extensive or even complete powers to bind the company legally. Hence, Bulgarian legislation requires specific formalities for such a change.
Firstly, a resolution on the change of manager must be adopted by the competent body of the company. Then, the new manager formally accepts by expressing consent and submitting declarations per sample. The internal decision on the change of manager may be effective between the parties, but it becomes legally effective vis-à-vis third parties after registration with the Commercial Register.
Registration should be completed within three to five working days after submission of all documents. After that, only the registered manager has the right to represent the company or empower other people to do so.
Change of registered address
A company in Bulgaria is legally obliged to reflect changes to its registered office when it relocates. This applies irrespective of whether the company moves to a new city or changes its office within the same city. The registered office determines where official correspondence will be served to the company and this is why you need to have access to this address or at least someone to notify you about the incoming correspondence. If no one is there to receive it, there is a procedure in which the company is considered notified, even if the correspondence was not actually received.
The change requires a corporate decision and registration with the Commercial Register. Although procedurally straightforward, accuracy is essential, as failure to update the registered address may result in legally valid reception of documents at an old address, even if the company no longer operates there.
Transfer of company shares and ownership changes
The transfer of company shares is an important legal issue in corporate management, especially in limited liability companies. There are differences in transferring shares among shareholders and transferring shares to third parties. In that regard, you should be careful when you are preparing the required documents, depending on who you will transfer the shares to.
For this procedure, it is essential to have corporate approvals and a valid contract, which should be concluded in Bulgaria with notarised signatures.
Foreign individuals and legal entities are free to acquire shares in Bulgarian companies.
The transfer of the shares takes a few business days depending on the complexity of the corporate structure and an additional 3 to 4 business days to be reviewed and visible in the Commercial register. It is recommended that structuring be done by professionals due to legal and fiscal implications.
Change of company name
Changing the company’s name is an important corporate action in brand management, corporate restructuring, or corporate positioning in the market.
Bulgarian corporate law provides that each company’s name must be unique and not misleading.
On the other hand, the name of the Bulgarian company need not be related to the brand or trademark under which you will operate. Overall, it is good to match these, but it is not mandatory. You can have a different company name from the brand or a trademark that you will use in your business. A company in Bulgaria could have more than one trademark, which may differ from its name.
It is important to note that company name registration does not automatically provide trademark protection. Separate trademark registration should be considered, particularly for businesses with commercial or international exposure.
Upon resolution of the shareholders for the new company’s name, the change must be registered with the Commercial Register.
Change of Business Activity
Although the scope of activity for Bulgarian companies is generally broad, changes may be needed as the business evolves. This is one of the main pieces of information that your future partners and clients will check when opening the company’s profile in the Commercial Register.
Also, some of the fields in which the company will operate may have additional requirements for that part of the company registration. In regulated sectors, a change of activity may also trigger licensing or notification obligations. Even where no special permits are required, consistency between actual operations and registered activities remains important.
The procedure is straightforward, but requires a lot of documents to be created, including a new Articles of Association and to be uploaded to the Commercial register. The change takes between 3 and 5 business days in order to be visible there.
Increase/Reduction of the Capital
Changes to the registered capital are common for companies involved in investments, restructuring, and other financial actions. The Bulgarian system strictly controls both increases and decreases to the registered capital to protect shareholders and creditors.
Depending on the nature of the change to the registered capital, documentation regarding the paid contributions to the company, resolution by the General meeting of the shareholders and other supporting documents, may be required to complete the process.
Increasing is less complicated as all of the parties have an interest in a company with higher capital, but decreasing can take a lot of time due to the mandatory 3-month period for protecting the interests of creditors. The process for changing the registered capital will be carefully reviewed by the Bulgarian Commercial register and everything should be in order and done right.
These actions often have accounting and tax implications and should be planned strategically.
Other Corporate Actions in Bulgaria
Other corporate actions that must be registered with the Bulgarian authorities include the appointment of procurators, pledging of shares, company mergers, and the process for liquidation and dissolution.
These procedures follow specific legal frameworks and often require individual legal solutions due to their complexity and depending on a lot of circumstances.
Commercial Register
The Commercial Register is a key component of Bulgarian company law as it ensures transparency, legal certainty, and the protection of third parties. Only registered changes are valid and can be enforced to third parties.
Registration in a timely and accurate manner is not a formality but a crucial legal requirement. Proper management of corporate changes ensures legal certainty and allows companies to focus on their business operations.
With the right legal assistance, companies in Bulgaria can ensure compliance, continuity, and legal certainty while focusing on their core business. If you need any legal or accounting help regarding company changes, we are here for you.
Contact Switch2BG for legal and accounting assistance. We handle the necessary procedures on your behalf and ensure full compliance with Bulgarian law.