Variable Capital Company in Bulgaria

The new “train” for business

With the latest ammendments and Supplements to the Commercial Code, published in the “State Gazette”, no. 66 of 01.08.2023, Bulgarian commercial law was enriched with a new type of commercial company – a company with variable capital. It is the latest type of company. The new regulation, which has only been adopted and published so far, will enter into force in 2024.

The main characteristics of VCC are:

1. It can be established by one or more natural or legal persons and is liable to creditors with its assets.
2. The legal requirements for VCC provide that the average number of personnel of the entity may not be greater than 50 employees, and the maximal amount of the annual turnover and the maximal amount of assets must not exceed BGN 4,000,000.
3. VCC is a contractual company because it is established and governed by a company agreement. Its form is ordinary written form. When it is established by one person, no contract shall be concluded, but an act of incorporation shall be drawn up.
4. Variable Capital Company shall be managed by a Director or Directorship Board.
5. VCC is subject to registration. In the commercial register, in addition to the company, registered office, address and subject of activity, the names of the members of the management board or the manager, the names of the persons representing the company and the method of representation shall be registered.
6. The Capital consists of shares. Shares are grouped into classes. In a class, shares have the same nominal value. The minimum limit of one share is 1 Bulgarian cent.
7. Shares, classes and nominal values ​​are defined in the articles of association. They are acquired by the partners who make contributions in exchange for them. The partners receive rights from the shares. Shares are transferable and inheritable. Apart from being transferable and inheritable, shares can be staked as well as acquired by the company itself. The transaction with shares takes place through a contract, which is formal – written form with notarization of the signatures. The form is established in the interest of the company itself, and therefore it is permissible to stipulate only a written form in the company agreement. From his company share, the partner acquires rights commensurate with its nominal value, but otherwise as well can be agreed upon. Certain shares may confer privileges stipulated in the contract (preferential company shares). Privileges, like shares and bonds, can be expressed in more than one vote, guaranteed or additional dividend or liquidation share, right of redemption. Other privileges beyond the above may be provided for in the law or the company agreement. It is possible for preferred shares to be deprived of voting rights, which are acquired in the event of an unpaid or delayed dividend.