Transferring Ownership in a Bulgarian Company

Whether you are selling your business, bringing in a new partner, or restructuring ownership, transferring company shares in Bulgaria follows a specific legal procedure. The process applies to OOD (multi-member LLC) and EOOD (single-member LLC) companies, which are the most common business forms used by foreigners.

Our law office in Troyan regularly assists expats in the Lovech region and beyond with share transfers. Here is what you need to know.

Legal Framework

Share transfers in Bulgarian limited liability companies are governed by the Commerce Act (Targovksi Zakon). Unlike joint-stock companies where shares can be freely traded, transferring shares in an OOD requires a formal legal procedure with specific steps.

Step-by-Step Transfer Process

Step 1: Check the Articles of Association

Before initiating any transfer, review the company’s articles of association (ustav). They may contain:

• Restrictions on share transfers to third parties
• Right of first refusal for existing partners
• Requirements for unanimous consent
• Minimum holding periods

If restrictions exist, they must be followed or the articles amended first.

Step 2: Obtain a General Assembly Decision

A General Assembly decision approving the share transfer is required. For an EOOD (sole owner), the owner issues a sole owner decision instead.

The decision must include:

• Approval of the share transfer
• Identity of the buyer and seller
• Number and value of shares being transferred
• Any changes to the articles of association
• Acceptance of the new partner (if applicable)

The decision must be in writing with notarized signatures of the partners.

Step 3: Draft the Share Transfer Agreement

The share transfer agreement must be in writing with notarized signatures of both the seller and the buyer. The agreement typically includes:

• Full details of both parties
• Description of shares being transferred
• Purchase price and payment terms
• Representations and warranties
• Effective date of transfer

Step 4: Notarize the Documents

Both the General Assembly decision and the share transfer agreement require notarization. The parties must appear before a Bulgarian notary or provide notarized powers of attorney.

For foreigners abroad: You can execute documents at a Bulgarian consulate or have them notarized locally and then apostilled for use in Bulgaria.

Step 5: Prepare Updated Articles of Association

If the transfer changes the ownership structure, updated articles of association must be prepared reflecting the new partner(s) and their respective shares.

Step 6: File with the Trade Register

The final step is submitting the following to the Bulgarian Trade Register (Targovski Registar):

• Application form (A4 for OOD)
• General Assembly decision (notarized)
• Share transfer agreement (notarized)
• Updated articles of association
• Declaration of consent from the new partner
• Declaration under Art. 141, para. 8 of the Commerce Act
• Specimen signature of new manager (if applicable)
• Filing fee receipt

Electronic filing is available and preferred, with lower fees.

Costs Involved

Typical costs for a share transfer in the Lovech region:

• Notary fees: 50-200 BGN (depends on the value declared)
• Trade Register filing fee: 30 BGN (electronic) or 60 BGN (paper)
• Legal fees: 300-800 BGN for attorney assistance
• Translation and apostille (if documents come from abroad): 50-200 BGN

Tax Implications

Share transfers may trigger tax obligations:

For the Seller

• Capital gains tax: 10% on the profit from the sale (sale price minus acquisition cost)
• Exemption: If the seller is a Bulgarian company, certain exemptions may apply under the Corporate Income Tax Act
• Non-resident sellers: Bulgaria may tax the gain depending on the applicable double taxation treaty

For the Buyer

• No transfer tax applies to share transfers in Bulgaria (unlike real property)
• Due diligence is essential to understand the company’s existing liabilities

Special Considerations for Foreigners

Non-EU Citizens

If a non-EU citizen acquires shares, they should consider:

• Impact on any existing residence permits
• Whether the new ownership structure affects visa eligibility
• Banking requirements for the transaction

EU Citizens

The process is generally simpler, with fewer restrictions. EU citizens have the same rights as Bulgarian nationals regarding company ownership.

Remote Transfers

If you cannot be present in Bulgaria, the transfer can be completed using:

• A notarized power of attorney (apostilled if issued abroad)
• Documents executed at a Bulgarian consulate
• Combination of electronic signatures where permitted

Common Pitfalls to Avoid

• Not checking for existing debts: The new owner inherits all company liabilities
• Incorrect share valuation: Tax authorities may challenge unrealistically low prices
• Missing the 7-day filing deadline: Changes should be filed promptly
• Forgetting to update bank signatories: The bank needs separate notification

How We Can Help

At our office in Troyan, we handle the complete share transfer process, from drafting agreements to filing with the Trade Register. We ensure all documents are properly prepared and deadlines are met.

Contact Attorney Biser Dimov to discuss your share transfer needs.