Tag Archives: Legislation

Limited Liability

Trading companies in the Republic of Bulgaria are legally defined in the currently existing legislation in force. Bulgarian Commercial Law which is applicable in all cases defines it as a business relationship union of two or even more physical (natural) persons or legal entities who have duly set up and registered a company which carries out business and other commercial and trading activities with mainly common assets and also joint efforts. Exceptionally, a Bulgarian company could also be set up by only one natural person.

The typical characteristic feature of a LTD company, which sets it apart from other many different types of companies in Bulgaria is the shareholder’s personal limited liability – which means that they are fully responsible for any and all obligations of the so formed company which they own to the full extent of their own share capital contribution(s). In other words, the company is legally responsible for all its obligations which are outstanding with its property and its creditors cannot lay hands on the shareholders’ various personal belongings and assets. In fact, the main distinctive feature of any LLC is that it’s a capital company and according to the applicable current Bulgarian Company Laws its capital should be divided into many (unlimited) different shares.

In Bulgaria there are many types of companies that could be opened but the most popular of them is the limited liability type of commercial company – this is the so called LLC, LTD (abbreviation) or OOD (in Bulgarian language). This type of company is thought to be just in the middle between the individual commercial companies (collective or either limited) and the companies of big capital – the joint stock companies.

The company formation of exactly this type of commercial entity is often used as a way of limiting the corporate and personal liability of all different shareholders, rather than as an organizational form for the business accumulation of capital. The founders could possibly be Bulgarian or foreign natural or either legal persons. Individuals must be legally capable (i.e. are 18 years old and not placed under guardianship). When, as a founding company member of OOD (LTD) participates legal person, his rights of shareholder or respectively sole shareholder shall and can be exercised only by the person who is duly entitled to represent it, or explicitly authorized person.