Capital increase or capital decrease – Bulgaria
The subject of this article is to explain the procedure of capital increase or capital decrease of a Bulgarian limited liability company (LTD).
Capital increase of a Bulgarian LTD company
The capital increase can be done either by depositing property – new contributions from the partners, or by increasing the accumulated profits.
When the assets are paid by the partners, the value of the shares may be increased (if one share is 10 BGN to increase it up to 20 BGN the value per share) or by subscribing new shares (if the company has 5 shares, to increase it by another 5).
This can be done by adopting a decision of the General Meeting of the shareholders. Where the company has two or more shareholders, it concerns the general meeting of the shareholders, the decision of the general meeting must be adopted unanimously, for which a protocol is drawn up with a notary certification of the signatures and the contents carried out at the same time, unless the contract of association written form. Once the GA has been decided, the contributions must be made.
This change is subject to entry in the Commercial Register. Of course as any change of circumstances also a state fee shall be paid.
Lastly, an increase in the capital can be done by using the company’s accumulated profit and the shareholders have decided not to distribute dividends.
Capital decrease of a Bulgarian LTD company
The special legal requirement of the capital decrease is that the decision of the General Meeting must always be adopted with the unanimity of all the partners. This rule is imperative and no less majority in the company Articles can be agreed.
Another important requirement is that the decrease can be made to the statutory minimum and cannot fall below it, which is BGN 2 for a LTD (OOD) company.
Capital can be reduced in three ways:
A shareholder’s share in the capital may be reduced.
Upon termination of membership of a particular shareholder in the company. Due to the fact that the partner no longer has a membership relationship with the company, its share of the capital must be sold to another person or taken over by the other partners or the capital of the company to be reduced.
If a part of the capital has not been paid in and the partner is exempt from the obligation to deposit an unpaid share of his share in the capital.
The decision to reduce capital is announced in the Trade Register. Of course as any change of circumstances also a state fee shall be paid.
Our lawyers from Innovires Legal can fully assist you in preparing all the required documentation to increase or decrease the capital of a Bulgarian company.
Contact us in case you need additional information regarding the capital increase or capital decrease of a Bulgarian company. Click here to go back to the main corporate tab – a full guide of running your business. Lower your taxes and become free! Check Bulgarian tax residency options here.