Effective as of December 15, 2024, all interested parties can apply for the registration of Variable Capital Companies (VCCs) in the Commercial Register. The first applicants have already submitted their registration requests.
Unexpectedly for many, the Registry Agency (RA) provided early technical capability for application submission, thus making the new capital companies a reality sooner than anticipated.
The Registry Agency has also published answers to a series of practical questions related to VCCs. Applicants pay a fee of BGN 110 to register a Variable Capital Company, or BGN 55 if they submit the application electronically. For registering changes in company circumstances, applicants pay a fee of BGN 30—or BGN 15 for electronic submissions.
Advantages of the New Variable Capital Companies (VCCs):
- The main goal of a Variable Capital Company (VCC) is to support the growth and operations of startups and innovative businesses by making it easier to allocate company shares to investors or employees.
- VCCs also allow for fast and simple company registration between Bulgarian and foreign individuals.
- The law does not require a minimum initial capital, and the Commercial Register does not record capital amounts.
- The incorporation process does not require opening a capital-raising bank account.
- Companies can list VCCs on the stock exchange more quickly through a simplified procedure.
- They support remote and online general meetings, offering greater flexibility for modern businesses.
- Shareholders can freely transfer shares at their discretion, and the VCC structure allows for faster management and decision-making processes.
Briefly about VCCs:
- One or more individuals and/or legal entities can establish a Variable Capital Company (VCC) by definition.
- A Variable Capital Company can only be a business that has fewer than 50 employees, with an annual turnover not exceeding 4,000,000 BGN, and/or assets worth no more than 4,000,000 BGN.
- The capital of a VCC, as its name implies, is variable and is not subject to registration in the commercial register, unlike the capital of an LLC or limited liability company (OOD), for example. Legislators also removed the requirement for the founders to provide proof that they have deposited the capital in the bank, with the removal of the obligation to register the capital in the articles of association and to announce it in the Commercial Register.
- There will no longer be a problem with opening a collection account!
Regarding the management of the VCC, the company’s bodies are: 1. the general meeting of shareholders; and 2. the management board or manager. In the case of a sole shareholder company, the sole owner of the capital decides on the matters within the competence of the general meeting. The articles of association determine the number of members on the management board, and the company can appoint either a capable individual or a legal entity as a member. The general meeting elects the members of the management board for a term specified in the articles of association (mandate), and it can re-elect them without restriction.
A member of the management board can initiate their removal from the commercial register by submitting written notice to the company. After receiving the notice, the company has one month to submit the application for the member’s removal. An interesting aspect of the VCC is that if the company does not submit the application, the management board member can file it themselves, and the registry removes the member, regardless of whether the company has appointed someone else in their place
Next, if the participants in the regular annual general meeting of the VCC find that by the end of the previous financial year the company no longer meets the requirements of Article 260a, Paragraph 3 of the Commercial Code, they must transform the company into a capital company – LLC, OOD, or joint-stock company (AD).
The introduction of the VCC is a step towards encouraging entrepreneurship and innovation in Bulgaria, as it provides greater legal flexibility and freedom of action for start-up companies. Experts expect that fewer local companies will re-register abroad, and that more foreign investors will potentially invest, which will create new jobs.
With the introduction of Variable Capital Companies, Bulgaria joins several other European countries that have already introduced similar legal forms. This signals that the country is open to business and is ready to support the development of innovative companies.
Variable Capital Companies are the key to greater flexibility and stability in your business.
Trust us! Together, we will turn your ideas into reality!
26/12/2024
