Registration of Variable Capital Companies in Bulgaria Now Possible

Corporate Clients, Corporate and M&A, Fund-raising

After a long anticipation, the Bulgarian Company Registry surprisingly announced on a Sunday – 15 December 2024 – that it is now possible to register variable capital companies (VCC). The news comes significantly in advance of the new statutory deadline of 31 March 2025 given to the Registry after it failed to comply with the previous deadline of 30 June 2024 to provide the necessary technical arrangements to facilitate the registration of this latest type of company form under Bulgarian law.

Variable Capital Companies’ main characteristics

Here at NBLO we have already outlined the main characteristics of the VCC and have highlighted its advantages. 

To recall, the VCC is limited to businesses while they stay small and it is specifically intended not to:

• employ more than 49 staff;
• have sales over BGN 4 M (~EUR 2 M); or
• own assets over BGN 4 M (~EUR 2 M).  

The VCC must convert into a standard capital company (eg, an AD, OOD, KD, etc) if at the time of any given annual general meeting, the shareholders become aware that any of these thresholds has been crossed.

Advantages of a VCC

The main reason to opt for a VCC is its flexibility and the reduced regulatory burden. It is very easy and quick to invest in, or exit, a VCC as the company articles can conveniently accommodate various preferences (company shares as small as BGN 0.01 (~EUR 0.005), rights of first refusal, tag-along and drag-along rights, etc) with limited interaction with the Company Registry, if any. 

Importantly, to incorporate a VCC it is also not required to first open a bank account in its name, which, due to banks’ heightened AML sensitivities, has become an almost Herculean feat for investors not resident in Bulgaria.

Developments

It is too early yet to see what exact way the administrative practice will go in regards to the incorporation of VCCs and to become aware of any potential divergent opinions and approaches. However, we will be closely monitoring any new developments. 

As our clients have already shown interest in this newest type of company, we expect to have the opportunity to incorporate a VCC in the very near future. We will make sure to share our first-hand experience and impressions so gained.