Very often we are contacted by customers who want to start their own business and need advice on the choice of an appropriate legal form that would allow them to develop and carry out planned activities. One of the most common legal forms for small and medium business is the registration of LLC/ single-member LLC. Below you will find general information about the registration of the LLC.

Registration of a company (LLC / single-member LLC)

Before to begin, we would like to clarify what is the difference between the LLC and the single-member LLC. The single-member LLC is a company that belongs to one person, i.e. it has one owner, while the LLC is the company that has at least two owners, also known as shareholders. It means that only the number of the owners determines whether the company is the LLC or the single-member LLC. For that reason the activity of both types of companies is legally regulated in one general chapter of the Commercial Law.

The main advantage in the selection of the LLC/ single-member LLC as the legal form is the fact that the owners of company are liable before third parties to the amount of the assets of the company and to the amount of its capital. For this reason those companies are called Limited Liability Companies – i.e. personal liability of the owners is limited to the amount of the capital.

A number of issues should be clarified before proceeding with the preparation of the documents for registration. The main issue is the question about how many people will become owners of the company and whether the ownership over the company will be distributed evenly or not. The law allows the shareholders not to own equal shares of the company. Each firm is registered with a certain capital /minimum amount is 2 BGN as there is no maximum/, as the ownership over the company itself is determined by the share of the capital that belongs to each of the owners. Every shareholder is obliged to pay his share of the capital in a special bank account registered for the means of registration. This account is registered on the ground of drafted documents and after the registration of the company this bank account can be closed and capital can be withdrawn. The capital may represent a non-monetary contribution /property/, as this case requires drafting of special documents and the registration procedure is different from the usual one.

Another important issue is the choice of the Manager. The manager is the person who represents the company. The manager can be one of the owners or a person who is not a shareholder. There is no problem the company to have more than one manager, but in this case it should be specified whether they will manage the company together and/or separately. The Manager should meet several requirements specified in the Commercial Law.

Each company is registered in order to perform some specific activities that is why the law requires the company to determine and to specify exactly what activities it will perform. Due to that reason the company’s documents should contain description of the object of activities. We advise our clients to describe comprehensively all the activities that they plan to perform and we point additional activities that they may decide to develop in future. Performing of certain activities according to the current legislation requires obtaining of licenses, permits, certificates and other.

According to the legal requirements each company should have the headquarters and the address of registration. It is the administrative address of the company where the official reports, agendas, documents and other will be sent. Therefore, when choosing the address the main role is played by the fact, whether there always will be someone who will be able to receive the correspondence on behalf of the company. There are no obstacles the company to carry out activities at one address and to be registered at another address. Very often the address of the registration is the address of the company’s accountants or solicitors.

Of course, each company should perform its activities under some trade name that is why the company must specify a trade name under which it will be registered. This name should be unique and it cannot be the same as the name of an already existing company. We offer our clients a free check whether the trade name selected by them is free or not. It is advisable to make such a check because if the name is taken the registering authority will refuse to register the new company and the state fee for the registration will be lost.

When all those issues are clarified, the main documents for the registration (i.e. the protocol about the registration and the articles of incorporation) should be drafted. Those documents should meet the requirements of the Commerce Law and beside that they should be drafted individually according to the needs, requirements and agreements with the shareholders of the company. We never advise our clients to use ready samples and forms, as those, of course, cannot meet all the needs of absolutely any company. The law allows the shareholders themselves to determine the method by which the company will make decisions, manage, distribute profits, losses, acquire and sell property, accept and release the shareholders, liquidate and solve other issues, all those arrangements should be described in the articles of incorporation depending on the specific case.

It is also necessary to draft a set of declarations, without which the company cannot be registered. Those declarations are made according to the requirements of the law, as one of them represents a specimen of signature of the manager and should be signed before a notary public and notarized.

Once all the documents are drafted and signed, after registration of the equity account and payment of the capital, the shareholders have to pay the state fee and to start the registration. The company can be registered electronically by our office, as in this case the state fee will be 55 BGN, or personally by the manager, in which case the state fee will be 110 BGN.

Registration itself is made by the Commercial Register of the Registry Agency as after the last change the registration takes one working day from submitting of the application. In case the documents were not drafted correctly, the registration authority may issue instructions about elimination of errors or (in certain cases) will refuse to register the company. If the documents were drafted correctly, registration will be completed successfully with creating of a record about the company in the Commercial Register and issuing of an UIC number – Unique Identification Code / this number was previously called BULSTAT/. The company may begin to function and perform activities immediately after registration and receiving of the UIC. The Commercial Register is a public register and everyone can check the status of the company on the website of the register at any time.

Changes in the parameters of the company can be done after the company’s registration, depending on the needs, requirements of the owners or circumstances occurred, as you will find additional information about the ways and the procedures for registration of these changes in a separate article.

It becomes clear from everything said above that registration of a company requires in-depth legal knowledge, understanding of each individual case and drafting of documents that will meet the needs and requirements of each client of our law office. Thanks to the experience gained during registration of more than 200 companies we, solicitors of ID Law Office, are sure that we can draft documents that will be most relevant for each of our clients and to register a company successfully.

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.

The content of this website is property of ID Law Office is protected by the copyright law. ID Law Office has the ownership right over  all articles, logos and company names shown in this website, as no part of this website and the information contained therein may not be copied, distributed, duplicated, downloaded, modified, adapted, used wholly or in part, in any form without the written consent of ID Law office. 

ID Law Office reserves the right to commence a law suit in case of copyright infringement.