Due to numerous inquiries regarding the procedure of selling of companies received from our clients we decided to provide information about the procedure of such sale to the visitors of our website. Below you will find general information about the sale of a company.
SALE OF A COMPANY
Before we begin we would like to clarify that with “sale of a company” we have in mind sale of shares /the capital/ of the company by the owner. A share of a company is the participation of a certain person in the company; it is the aggregate of property and non-property rights and obligations. When a company is a single-member LLC then we are speaking about sole shareholding, and in such case the buyer of shares becomes the new sole owner of the company. It is important to note that the owner of a single-member LLC can sell only part of his shares, and thus the buyer becomes a shareholder of the seller, therefore, the form of the legal entity changes from “single-member LLC” to “LLC” – a limited liability company. If the shareholder of the company (LLC) wants to sell his own shares in this LLC, he can freely sell them to one of the other shareholders or to a third party, but only with the consent of the other shareholders – according to the art. 129 of the Commercial Law of Bulgaria.
The sale of shares is executed via signing of a notarized contract about sale of the company’s shares. The parties under this contract must visit the notary public personally or they may be represented by a trustee with a notarized power of attorney. One share can belong to several persons; in this case they can exercise their rights only together.
As it was said above in case of selling of company’s shares a protocol-decision of the company is required, in which protocol other shareholder must take a decision and give their consent for the sale, as well as for accepting of a new shareholder. According to the art. 137, par. 4 of the Commercial Law: “a protocol with simultaneous notary certification of the signatures and the contents shall be drawn up, unless a written form is provided in the Articles of Association the Company“, i.e. if the Articles of Association do not explicitly specify that such decisions will be taken by simple signing of the protocol, then the protocol should be notarized.
The new owner must sign new Articles of Association – if the company is a single-member LLC, and if it is the LLC then all shareholders must sign new Articles of Association, in which all the changes must be recorded. The new owner acquires all the rights and obligations of the old owner. Sale of shares is executed in exchange of a selling price agreed between the seller and the buyer, as the price is negotiated between the parties freely.
After the last amendments that entered into force on 22nd of December 2017 there is a new rule that for selling of company’s shares certificates under art. 15, para. 4 and art. 129, para. 1 of the Commercial Law are required. Those are certificates about lack of unpaid labour remunerations and social payments to workers and employees, including cases when labour relations were terminated within three years term before the sale of shares. Those Certificates are issued in the form of declarations from the company represented by its manager, from the seller of the company’s share and from the National Revenue Agency /certificate under Art. 87 of the Tax and Social Security Procedure Code and the Certificate about Employment Contracts/.
Another important question is whether the old Manager will remain or will be replaced with a new Manager. In case of single-member LLC if all the shares of this company are sold, then usually the new owner becomes the new Manager. Provisions of the Commercial Law that apply to the new Manager are the same as those that applied to the old Manager. A set of Declarations should be prepared, as those declarations should be signed by the new Manager.
The procedure is completed and the sale is executed only after registration of the sale in the register entry of the company at the Commercial Register, as the new owner is registered as such only after registration of the sale.
Of course during the procedure of sale the new owner can take a decision about change of the name of the company, change of the address, of the subject of activity and to take any other decision that is in the competence of the General Meeting of the company. Those changes require drafting of relevant documents.
Everything said above means that the sale of the company requires deep legal knowledge and individually prepared documents that should meet the needs and requirements of each of our customers. Having in mind our extensive experience in selling of companies, we, solicitors from ID Law Office, are convinced that we can prepare documents suitable for each of our customers within shortest terms and successfully to register the sale.
The present article is not a legal consultation but presents a summarized theoretical development of a certain legal sphere. ID Law Office is not liable in the event of a misunderstanding of the information contained in this article.
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