Company Formation in Bulgaria: A Comprehensive Guide for Foreign Entrepreneurs

Introduction

Bulgaria has become an increasingly attractive destination for foreign entrepreneurs seeking an affordable yet legally secure framework for company formation. The most common corporate form is the limited liability company (LLC), which exists in two versions under Bulgarian law: the OOD (multi-member LLC) and the EOOD (single-member LLC). Among the key advantages of these company types are the very low minimum share capital requirement (currently only BGN 2), the flexible shareholder structure, and the fact that foreign individuals or legal entities can act as founders without restriction.

This guide outlines the entire company formation process, the necessary documentation, and key points arising from Bulgarian legislation, with particular attention to practical questions most frequently raised by foreign founders.

1. Preparatory Steps

Before commencing the formation procedure, it’s essential to make several practical and legal decisions that will define the company’s future structure and operations. These initial steps include choosing the company name, determining the appropriate company form (OOD or EOOD), and designating a registered office in Bulgaria.

It is highly advisable to consult in advance with a Bulgarian lawyer. They can prepare the articles of association or incorporation deed in compliance with local legislation, draft the required declarations and powers of attorney, and assist in designing the optimal corporate structure. Based on our experience, the success of the incorporation process often significantly depends on the thoroughness and professionalism of these preparatory steps.

Another important aspect is carefully defining the internal legal relationships between the shareholders. This requires special attention to the distribution of voting rights, the proportion of capital contributions, the rules governing management, and, where appropriate, the inclusion of pre-emption rights or restrictions on share transfers. At our law firm, these matters are always discussed in detail with our clients – and, if necessary, in cooperation with their legal counsel in their home country. A properly structured shareholders’ agreement is not only essential for smooth day-to-day operation but also plays a fundamental role in any future restructuring, changes in membership, or the entry of investors.

1.1. Mandatory Content of the Articles of Association

To establish a Bulgarian limited liability company (either an OOD or an EOOD), it’s essential to prepare the articles of association (for multi-member companies) or an incorporation deed (for single-member companies). This foundational document must clearly define the company’s legal and operational framework. Below, we outline the key mandatory elements that must be included.

Company Name

Under Bulgarian law, the company name must be stated in Bulgarian, using the Cyrillic alphabet. It’s also possible to register a Latin transcription of the name; however, this must be in a simplified form, without diacritical marks. The company name must include the designation of the chosen corporate form (e.g., OOD or EOOD) and must not be misleading, offensive, or infringe any registered trademarks.

Registered Office

Every company is required to have a registered office in Bulgaria. This can be an owned property, a leased office space, or an address provided under a registered office service agreement. Notably, during the registration procedure, there is no requirement to submit documents proving ownership or tenancy.

Scope of Activity

Bulgarian company law offers considerable flexibility regarding the scope of a company’s activities. Unlike some jurisdictions that require a specific classification code (such as the Hungarian TEÁOR system), when setting up a company in Bulgaria, it isn’t necessary to indicate a precise Bulgarian Classification of Economic Activities (KID) code. Instead, the Articles of Association may describe the company’s scope of activity in general terms.

While it’s possible to identify a principal activity, there’s no mandatory requirement to list every potential business activity in detail. In practice, it’s common to use broad wording such as “trade,” “consultancy,” “import activities,” or “business services.”

company may engage in any economic activity that isn’t expressly prohibited by law

Under the Bulgarian Commerce Act, a company may engage in any economic activity that isn’t expressly prohibited by law. Therefore, it isn’t necessary to state each specific activity in the incorporation documents, provided it’s lawful under Bulgarian legislation. To ensure this flexibility, it’s standard practice to include a general clause in the Articles of Association confirming that the company is entitled to carry out any activity permitted by law.

It is important to note, however, that if a particular activity is subject to licensing or other official authorisation, the company may only commence that activity after obtaining the relevant licence or permit. In such cases, a copy of the valid licence must be attached to the registration application.

Share Capital

At the time of writing, the minimum required share capital for a Bulgarian limited liability company is BGN 2 (approximately EUR 1). The Bulgarian National Assembly has already adopted legislative amendments that will automatically enter into force upon the introduction of the Euro in Bulgaria. From that point onwards, the minimum share capital will be EUR 1.

Should the company’s share capital exceed this legal minimum, it’s possible to pay in only a portion of it prior to registration. In such cases, at least 70% of the total capital must be paid in before registration, with the remaining balance due within two years after registration. The Articles of Association must include the schedule and conditions for these subsequent payments.

Members’ Capital Contributions

Under current regulations, each shareholder’s capital contribution must be specified in whole Bulgarian leva, with the minimum permitted contribution being BGN 1. In practice, this means that if a company is incorporated with three or more members, the minimum share capital will be BGN 3 or higher, as the company’s total capital is the sum of all members’ contributions.

The recent amendments adopted by the National Assembly, which will take effect upon the introduction of the Euro, will reduce the minimum contribution to EUR 0.01 (one euro cent). The requirement for amounts to be stated as whole numbers will remain, but will then be understood in euro cents. Consequently, contributions cannot include fractions; they must be stated in whole euro cents.

The total of these contributions forms the company’s registered capital, which also determines each member’s ownership share and voting rights within the company. Accurately recording these figures is essential, not only for legal compliance but also for practical reasons, especially in multi-member companies where shareholding proportions directly affect dividend rights and decision-making powers.

Management and Representation

A Bulgarian limited liability company (OOD or EOOD) is managed and represented by one or more directors. These directors are registered in the Bulgarian Commercial Register, maintained by the Registry Agency, concurrently with the company’s incorporation. While the specific identity of the director(s) is not included within the Articles of Association, these documents must clearly specify the number of directors who will represent the company and the manner in which they are authorised to act on its behalf.

Bulgarian law imposes no nationality or residency requirements on directors

Importantly, Bulgarian law imposes no nationality or residency requirements on directors. Therefore, a director may be a foreign national – for example, a citizen from any foreign country – even if they do not possess a permanent address in Bulgaria.

The Articles of Association must precisely define the company’s representation rules. The following options are available:

• Sole Representation: Each director is entitled to act individually on behalf of the company.
• Joint Representation: Directors must act together, requiring all to sign jointly.
• Other Specific Arrangements: Customised representation structures can also be established. Examples include:
  • One director may represent the company independently, while the others may only sign jointly with that specific director.
  • The joint signatures of any two directors may be required.

Each director must formally accept their appointment in writing and provide a notarised specimen signature.

Our firm specialises in preparing, verifying, and providing all declarations and documents related to the appointment of directors and their representation rights in a legally valid form under Bulgarian law. This includes arrangements for sole or joint management, appointments of foreign nationals, or entirely customised representation structures.

Duration of the Company

Limited liability companies (OOD or EOOD) in Bulgaria are typically established for an indefinite duration. In such cases, the company exists and operates until its shareholders decide otherwise and initiate its termination.

However, it is also permissible to incorporate a company for a fixed term. If this option is chosen, the Articles of Association must clearly state the conditions under which the company’s operations will cease. This limited duration may be defined, for instance:

• By specifying a concrete end date (e.g., until 31 December 2030);
• By linking it to the achievement of a specific objective (such as the completion of a property development project); or
• By reference to a future event or condition (for example, the expiry of a licence or the occurrence of specified market conditions).

When drafting conditional termination clauses, it is essential that the company documents clearly and precisely identify the event, date, or objective that will trigger the end of the company’s existence. If these provisions are not accurately worded, they can create legal uncertainty later for the registration authority or for the shareholders themselves.

Based on our firm’s experience, establishing a company for an indefinite period usually provides sufficient flexibility for most business models. However, where justified by the founders’ specific business objectives, incorporation for a fixed term is also a lawful and viable option.

Rights and Obligations of the Members

Bulgarian company law offers significant flexibility, allowing shareholders to include bespoke provisions in the Articles of Association that deviate from the general statutory rules. This enables them to shape their internal legal relationships precisely to suit their specific business objectives. This customisation is particularly important in multi-member companies, where factors such as trust among members, varying capital contributions, and the need for long-term cooperation often necessitate detailed and tailored arrangements.

Within the established legal framework, the Articles of Association may set out, for example:

• A distribution of voting rights that differs from the proportion of capital contributions;
• Preferential rights to dividends, granting certain members priority in profit distribution;
• Pre-emption rights in the event of a member’s intention to transfer their share to a third party.

Among our clients, there is a frequent need for the Articles of Association to include pre-emption rights to protect against undesirable external acquisitions. Accordingly, we regularly incorporate such provisions into company documents. Bulgarian company law permits the flexible structuring of members’ rights, provided this does not conflict with mandatory legal rules, particularly those protecting minority rights and the requirement for proportionate economic contribution.

It should also be noted that members’ obligations are not limited solely to paying in their capital contributions. The Articles of Association may impose further obligations, such as additional contributions, contributions in kind (apports), or cooperation duties for the implementation of specific projects. Defining such rules individually allows the company’s legal structure to reflect its business goals and the specific agreements between the parties.

1.2. Opening a Bank Account and Paying in the Share Capital

In Bulgaria, the share capital must be paid in before submitting the incorporation application. This requirement differs significantly from the practice in many other jurisdictions, where capital contributions are often made within a short period following registration.

By contrast, Bulgarian law requires the founders first to open a special temporary bank account, used solely for the purpose of depositing the company’s capital (either in full or in part). The payment of the capital is thus a prerequisite for incorporation, and a bank certificate confirming the deposit must be attached to the application for registration with the Bulgarian Commercial Register.

This temporary bank account is opened in the company’s name at the chosen commercial bank. The documents required by the bank may vary, but typically include:

• The proposed company name;
• Identification details of the founders and the appointed director(s);
• And a draft of the incorporation documents.

Due to anti-money laundering (AML) regulations, banks also routinely request advance information on the founders and directors and may inquire about the company’s planned activities and business model. This customer due diligence (CDD) process often involves a preliminary risk assessment and can be time-consuming. For this reason, it is highly advisable to start preparing well in advance.

Importantly, this temporary account does not automatically become the company’s operational business account once registration is completed. After registration, the company’s director(s) may choose to open a regular business account at the same bank or at a different financial institution, in which case the temporary account is subsequently closed.

2. Required Documentation

When preparing the documents necessary for registering a company in Bulgaria, specific information and proofs of identity, along with the legal status of the founders, are required.

For Natural Persons (Founders and Directors):

• A copy of a personal identity card or passport, for identity verification.
• A copy of a residence card or other official document proving the residential address, if the primary identity document does not display this information (e.g., as is common with certain national ID cards).

For Legal Entity Founders:

An up-to-date company extract or equivalent official document, recognised by the state of incorporation, confirming the legal status of the founding company. This extract must not be older than three months at the time of filing.

Documents Prepared by Our Law Firm

Several documents are mandatory for company formation, and their content and form are strictly regulated under Bulgarian law. Our firm prepares these documents in full compliance with legal requirements and tailors them to each client’s specific corporate structure and business objectives.

All incorporation documents are prepared in two languages: Bulgarian and English.

Resolution by the Founding Legal Entity

If a founder of a Bulgarian company is a legal entity, it must adopt an internal resolution expressly authorising its participation in the new Bulgarian company. This resolution serves as formal proof of the founding entity’s decision and can take the form of:

• A shareholders’ resolution (in the case of a limited liability company); or
• A board resolution (in the case of a joint-stock company or public limited company).

The resolution must clearly specify the incorporation decision, the share capital amount, the chosen legal form of the Bulgarian company, and the details of its appointed representative.hare capital amount, chosen legal form, and details of the appointed representative.

Minutes of the Founders’ Meeting

For multi-member companies (OODs), the decisions taken at the inaugural meeting of the Bulgarian company must be formally recorded in minutes. These minutes provide a detailed record of аll mandatory elements of the Articles of Association:

• The share capital amount;
• Data on each shareholder;
• The registered office;
• The scope of activities;
• The appointment of the director(s); and
• The rights and obligations of the members.

All founding members must sign these minutes.

For single-member companies (EOODs), instead of a formal meeting, the sole founder adopts a unilateral resolution covering the same content as would be found in the minutes of a multi-member company..

Articles of Association or Deed of Incorporation

Under Bulgarian law, an OOD (multi-member limited liability company) is formed through its Articles of Association, while an EOOD (single-member limited liability company) is formed through a Deed of Incorporation. As detailed in Section 1.1, these foundational documents define the company’s legal and operational framework, encompassing all mandatory elements.

In multi-member companies, the Articles of Association must be signed personally by each founder. In single-member companies, the Deed of Incorporation is signed by the sole founder or their authorised representative.

Director’s Consent and Notarised Signature Specimen

The appointed director must issue a written declaration confirming their acceptance of the position and affirming that no legal disqualification applies to them. This declaration, which includes the director’s consent to serve, requires notarisation.

Notarisation of this document can be performed in one of three ways:

• Before a Bulgarian notary public (in Bulgarian);
• At a Bulgarian diplomatic mission (e.g., a Bulgarian Consulate or Embassy abroad);
• Before a local notary public in a foreign country (in the local language). In this latter case, an official translation into Bulgarian must also be provided.

Declaration under Art. 142 of the Bulgarian Commercial Act (Non-Competition)

The director must also provide a written declaration confirming that, without the prior express written consent of the company, they will not engage in any business activity that might conflict with the company’s interests. Specifically, the director is prohibited from:

• Concluding transactions on their own behalf or for the benefit of a third party in the same business area;
• Holding positions as a director or member (shareholder) in companies pursuing identical business activities.

Should these rules be breached, the director is liable for damages caused to the company.

Many foreign clients are understandably concerned about whether acting as a director or member of the Bulgarian company would conflict with their existing roles in businesses abroad, such as parent companies or other affiliated entities. It is important to clarify that Bulgarian law primarily focuses on conflicts between Bulgarian-registered companies. Furthermore, the prohibition is not absolute: the company’s members can formally grant prior consent, typically through a resolution, which removes the restriction and relieves the director from this specific liability.

Declaration under Art. 141(8)–(9) of the Bulgarian Commercial Act

The director must also submit a written declaration confirming the following:

• In the preceding two years, they have not served as a director of a company that was struck off the commercial register due to insolvency, where creditors remained unpaid.
• They have not managed a company that was penalised by a final court decision for breaching the statutory requirements concerning oil and petroleum product reserves.

This declaration is a mandatory legal requirement and serves to confirm the director’s eligibility to hold the position. It constitutes an essential part of the company registration process.

3. Procedure and Timeframes

Once all required documents have been duly signed and, where necessary, notarised, our law firm prepares and submits the application for company registration to the Bulgarian Registry Agency. This governmental body performs a role similar to the Companies House in the UK or comparable company registration authorities in other jurisdictions. Company data are subsequently entered into the Commercial Register, which serves as the official national companies register in Bulgaria.

The entire incorporation process is conducted electronically, meaning your personal presence in Bulgaria is not required, provided that our firm holds a properly executed power of attorney. In such cases, we manage the entire procedure on your behalf: from preparing all necessary documentation and submission, through to the final registration.

After submission of the application, the registration procedure is usually completed within 4–5 working days. However, it is possible for the process to take one to two weeks, depending on the current workload of the authorities.

Once the registration is approved, the company’s details become publicly visible in the online Commercial Register. The Registry Agency does not issue a separate certificate of incorporation. However, upon request, we can obtain and provide an official, certified company extract confirming the company’s registration.

4. Registration and Legal Effect

A company is legally established on the date its incorporation is officially published in the Bulgarian Commercial Register. From this moment, it acquires legal personality and is fully entitled to conduct business activities, enter into contracts, open bank accounts, hire employees, and fulfil all its tax and statutory obligations.

On the day of registration, the company is assigned a Unified Identification Code (EIK). This unique number serves simultaneously as the company’s registration number, tax identification number, and statistical code. The EIK must be prominently displayed on all official company documents, contracts, offers, and invoices.

Should the nature of the company’s activities or its client base require it, the company may also need to register as a VAT payer. This is done through a separate procedure, resulting in the company obtaining an EU VAT number. This number consists of the company’s EIK prefixed by the country code “BG” (e.g., BG123456789), enabling the company to perform intra-Community supplies of goods or services within the European Union. Our firm always discusses the practical aspects of VAT registration – such as the optimal timing and appropriateness of applying – individually with each client, taking into account their specific business model, contracts with partners, and overall scope of activities. Where needed, we coordinate this process with an experienced accountant to ensure full compliance with Bulgarian tax legislation.

Conclusion

Establishing a limited liability company (LLC) in Bulgaria offers significant advantages for international entrepreneurs seeking an efficient, secure, and cost-effective legal framework. With minimal share capital requirements, flexible management options, and streamlined electronic procedures, company formation can typically be completed within a few working days, often without the founder’s personal presence in Bulgaria.

However, the true success of any incorporation process lies not merely in submitting documents, but in thorough preparation. This includes defining the optimal corporate structure, accurately drafting the Articles of Association, clarifying shareholder rights and obligations, and ensuring full compliance with all legal requirements. Careful planning at this initial stage helps mitigate potential conflicts later and lays a solid groundwork for long-term growth and operational stability.

Our law firm is uniquely positioned to assist you through every stage of this process. Our services cover the full process: from advising on the most suitable company type and preparing all required bilingual documents, to representing clients before the Bulgarian Registry Agency. In addition, we guide you through essential post-registration steps such as opening corporate bank accounts and handling VAT registration. With deep local expertise and an international outlook, our team delivers secure, practical solutions tailored to your business goals.

If you’re considering starting a company in Bulgaria or have any questions about the incorporation process, please do not hesitate to contact us for an initial consultation. We’re here to help you establish your business swiftly, securely, and in full compliance with Bulgarian law.