SMP

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Bulgaria

Typical legal form for start-ups

Druzhestvo s Ogranichena Otgovornost/дружество с ограничена отговорност (OOD)

Brief information

Due to its simplified corporate governance and its low share capital requirements, the OOD is the most popular legal form for start-ups in Bulgaria. It is an equivalent of the German GmbH.

Whether a PE/VC Fund can hold a mandate as a controller depends on the contractual arrangements in the individual case.

One or more directors (upraviteli) manage the OOD.
If stipulated in the articles of association, controllers can be appointed in addition to the management. Depending on the contractual arrangements, they are responsible for monitoring compliance with the articles of association, measures to preserve the company's assets and reporting to the shareholders' meeting.

Whether a PE/VC Fund can hold a mandate as a controller depends on the contractual structure in the individual case.
Controllers are rarely appointed for start-ups. If the investor wishes to monitor the management this is usually ensured by a joint representation rule of the managing directors.

Other legal form

aktsionerno drujestvo/Aкционерното дружество (AD)

Brief information

A conversion from an OOD to an AD is unusual. It generally only occurs in the event of an IPO or if the regulations in certain industrial sectors require it.

A PE/VC Fund can participate in the Supervisory Board if it is established.

Bulgarian law recognizes both the monistic system with a Board of Directors (Съвет на директорите) and the dualistic system with a Management Board (Управителен съвет) and a Supervisory Board (Надзорен съвет). The Supervisory Board controls the Management Board. It has no management responsibilities.

The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. Before taking over a board seat in a portfolio company, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.

In collaboration with: Kinstellar

Sources: Wegen/Spahlinger/Barth, Gesellschaftsrecht des Auslands 2. EL Januar 2018