Variable Capital Company in Bulgaria

Variable Capital Company in Bulgaria: What we need to know?

Variable capital companies are a newly established legal form of entity in Bulgaria, offering flexible opportunities for entrepreneurs, especially for the growing number of start-up companies that have chosen to develop their activities in Bulgaria. This is the result of the recent changes in Bulgarian commercial law, under which a variable capital company is established by one or more natural or legal persons and is liable to creditors with its assets.

Unlike traditional investment companies with variable capital (SICAV) characteristic of Malta and Singapore, which offer the most convenient method for business investment and are usually investment companies, Bulgarian variable capital companies (SCV) are limited to initial fundraising – they can only be micro and small enterprises, i.e., those with an average number of employees less than 50 and an annual turnover not exceeding 4,000,000 leva, and/or assets valued at no more than 4,000,000 leva. Upon reaching the legally prescribed threshold of nearly 2,000,000 euros, the law requires the conversion of the variable capital company into a joint-stock company or a limited liability company. The regulation of share disposal rather emphasizes guaranteeing and protecting the rights of the initial founders and investors compared to the rights of traditional investment companies with variable capital.

The advantages of the Bulgarian version of the variable capital company undoubtedly include the faster registration process and the absence of licensing requirements, unlike investment companies with variable capital.

Capital and Company Shares

The capital of the company is variable and is not subject to registration in the commercial register. With the respective decision of the annual general meeting, the size of the capital can be established and changed at the end of the financial year. The shares of the company can be of different sizes for different classes, and against them, the associates make contributions.

In conclusion, variable capital companies provide flexible opportunities for entrepreneurs while ensuring protection and liability to creditors. These new rules represent an important step in the development of the business environment in Bulgaria and create better conditions for entrepreneurial activity.

Variable Capital Company in Bulgaria: What we need to know?