Transfer of company shares in Bulgaria. What is new ?
The subject of this article is only the procedure of transferring company shares of Bulgarian LTD company and it is inspired by the recent changes (from 22.12.2017) in the Bulgarian Commerce act.
Let’s first explain what was necessary to be done so far in order to acquire Bulgarian LTD shares:
The Bulgarian Commerce act recognize several different regimes depending on whether the buyer is already a shareholder or it is a third party. Basically, the transfer of a whole company under the Bulgarian legislation means transfer of 100% shares of the shareholders in Limited Liability Company
According to art. 129 Commerce act, the company share may be transferred and inherited.
The company share may be transferred freely between the partners/shareholders of the company. In case the buyer is a third party, a decision allowing the transfer is required as the legal form of the LTD has a “personal” element.
The procedure for transfer of company shares requires at first place signing of Contract for transfer of shares, which should be notarized. It is obligatory the notary certify the signatures, along with the content of the contract executed simultaneously. Which means it cannot be notarized first by one of the parties and then in the next day by the other party.
As the second step, there should be also a Decision of the General meeting of the shareholders for transfer of the shares. This decision shall be also with notary certification of the signatures and the contents carried out simultaneously by the notary. This rule can be excluded in case the shareholders have taken a decision in the Articles of the company that the Decision for transfer of shares could be in simple written form.
In order to apply in the Trade register for registering the changes of the ownership, the new shareholders have to sign new updated Articles of Association and the manager shall sign few declarations and a power of attorney.
What is new?
According to the recent changes in the Commerce Act, in the moment of transferring the shares the seller shall prove that and no outstanding wages, indemnities and statutory social security contributions are due and not paid to employees, including employees, whose employment relationship is terminated within three years prior to the transfer of the company’s share.
At the moment the changes in the Law from 22.12.2017 requiring the proof of no such liabilities does not regulate how the seller of company shares has to prove this. In the same time upon submitting the documents for the share transfer, the Trade register requires an official document or certificate issued by the authorities – National revenue agency or National social security institute proving this. Recently it was announced by the Ministry of Justice that it is expected to have specially written procedure what document shall be required and exactly which authority will issue it.
This uncertainty in the Law regarding the type and procedure of document that has to be provided to prove the absence of outstanding and unpaid wages, indemnities and statutory social security contributions to employees has lead from 22.12.2017 until now to different interpretations from Trade Register registration officers, notaries, lawyers and institutions and to many declined by the TR share transfers. The parliament is expected to regulate the loop very soon and until then let us hope that the Trade Register will not announce many more rejections.
Our lawyers from Innovires Legal can fully assist you with preparing all the required documentation to transfer the shares of the Bulgarian LTD company.