Joint Stock Company in Bulgaria

As provided in Article 158 of the Commercial Code of Bulgaria (Bulg.: „Търговски закон“, short: “HG“), the Bulgarian Joint Stock Company is a capital company. The capital is divided in shares which in comparison to the company shares always remain the same and represent securities.



The shares dispose of a nominal and an emission value whereas the emission value may not be smaller than the nominal value. Consequently, the two values are on at least the same terms. The Bulgarian HG determines some kinds of shares:

  • Available shares – such as registered shares or bearer shares;
  • Unavailable shares that are no securities;
  • Simple and prerogative shares;
  • Treasury shares and more.



Obligations represent loans given by the company’s bondholders. Obligations are securities which contain at least two demands – the primary debt and the interest. The bondholder is a creditor and not a member of the company. He does not participate in the management of the company nor may he be liable for the consequences of the business activity.




The Joint Stock Company is to be founded by at least two persons. The only exception is the single owner Joint Stock Company which is founded by a single person. The founders may be natural as well as legal persons. A founder is each person that subscribed shares during the foundation meeting. Each founder is severally liable against third parties for liabilities which incurred on their behalf before the foundation of the company. If there were shares subscribed previous to the inscription, the members of the company are obliged to make an advance payment.

The establishment procedure is complicated and comprises several phases. First, there is the foundation meeting where all persons (or their deputies) who want to subscribe shares are present. As provided in Article 163 (3) HG the foundation meeting must take the following decisions:

  • Concerning the establishment of the Company;
  • To accept the statutes particularly given by Article 165 HG;
  • To establish the amount of the foundation expenditures;
  • To entitle a Supervisory Board resp. a Board of Directors.

The registration in the commercial register is the last requirement for the establishment of the Joint Stock Company. It requires:

  • The approval of the statutes;
  • That all shares of the capital have been subscribed;
  • That the contribution provided by the statues has been contributed with not less than 25 % of the share value;
  • That a Supervisory Board resp. a Board of Directors has been entitled;
  • That the other legal requirements have been met.


Shareholder’s rights and obligations

The rights and obligations of the shareholders may be divided into material ad immaterial rights and obligations.

Immaterial rights:

  • The right to manage (right to participate in the general meetings and voting rights)
  • Control rights
  • Collective rights (minority rights) – these are rights that do not exist in favour of one shareholder but of the share capital determined by law. These are e.g.:
    1. The right of the shareholders who obtain at least 0,2 % of the capital value to extend the topical themes for the discussion of the general meeting’s agenda either after its publication or the arrival of the invitation – Article 223 HG;
    2. The right of the stakeholders who obtain at least 0,2 % of the capital value to convene the general meeting;
    3. The right of the stakeholders who obtain at least 0, 1 % of the capital value to chose the monitoring officer.

Material rights:

  • The right on share of profits; a right on additional or secured share of profits is possible. This right is irrevocable and given by the following conditions: the end of a financial year, profit, an approved financial report and a decision made by the general meeting concerning the profit distribution;
  • The right on liquidation quotas;
  • The right on disbursement of interest on actual contribution if such a right is provided by the statutes;
  • The preferential right which allows the stakeholder to subscribe an equal amount of newly issued shares;
  • The right to exchange registered shares against bearer shares and vice versa, given that the performance of their values has been completed.




There is no obligation for the stakeholders to participate in the company’s management but to perform the contribution of the subscribed shares. For this, the law prescribes a maximum term of 2 years that cannot be extended by the statutes. If the performance is in default, the stakeholder must pay compensation or may be excluded if the demanded sum is not paid within the grace period of one month. What results is either a reduction of the company’s capital or an offer to sell new, equivalent shares.

It is possible to integrate a provision of securities for the part of the contribution that had not been paid in the statutes.


Management structure

There are two types of management bodies of Joint Stock Companies

  1. The single stage system (board of directors)
  2. The two stage system (Supervisory Board and management board)

Another constant body of the company is of course the general meeting though it does not play an explicit role in the management.


The stakeholder’s general meeting

The stakeholder’s general meeting consists of each stakeholder who has a right to vote. The stakeholders may participate in person or send their deputies. The general meeting takes decisions by the majority of the present shares. There are resolutions for which the registration in the commercial register is required to obtain a constitutive effect.


Management of the company

Single stage Joint Stock Company

The single stage Joint Stock Company maintains only one body of management which is the board of directors. It manages and represents the company. Usually, the board of directors tasks the management of the company to one or more persons (directors) to take responsibility. The directors represent the company towards third parties and exercise power of representation due to a contract. The board of directors is determined by the general meeting.

Two stage system

The two stage system maintains two bodies of management:

  1. The management board – it manages and represents the company. It is responsible for the management and therefore has to issue an annual report of the financial statements and to present a report to the Supervisory Board every three months. The management board is determined by the Supervisory board and can be changed at any time.
  2. Supervisory Board – it consists of 3 to 7 persons. The Supervisory Board has supervisory competences and is determined by the general meeting. The exercised supervision may be provisional or subsequent. It consists of the obligatory reports of the Management Board and the decisions on approval regarding businesses that are yet to be concluded.


Financial Statement

A profit may be provided amongst the stakeholders only after the Financial Statement. The Financial Statement is made using the annual report which contains the balance sheet and a calculation of profit and loss.


Liquidation of the Joint Stock Company

The conditions for liquidation are explicitly listed in Article 252 HG. The Joint Stock Company may be liquidated:

  1. By decision of the general meeting;
  2. After the expiration of the agreed time-limit;
  3. In case of insolvency;
  4. By an order of the council following the decision of the Prosecutor if the company pursues purposes prohibited by the law;
  5. If the net value of the company drops lower than the share capital and if the general meeting does not decide a capital reduction, a transformation or a termination within a year, the company is liquidated following N° 4;
  6. If within the time-limit of 6 months, the number of the members of the management board is smaller than the minimum requested by the law, the company may be dissolved following N° 4;
  7. As soon as facts occur which are provided in the statutes.

The single owner Joint Stock Company is not liquidated if the only stakeholder dies.



The profit of the Joint Stock Company is assessed with a corporation tax of 10 %. The distribution of profits is assessed with a withholding tax of 5 %.



To record a Joint Stock Company in the commercial register 460,00 BGN are to be paid; if the request is submitted in electronic form the price is 230 BGN.