Closing a Company in Bulgaria: A Comprehensive Guide
The process of closing a company in Bulgaria, whether it’s a Limited Liability Company (LLC), Sole Proprietorship, or another legal entity, involves specific legal and administrative steps. Proper dissolution ensures that the company ceases operations in compliance with Bulgarian law, preventing future liabilities or penalties.
This guide explains the step-by-step procedure for closing a company in Bulgaria.
Reasons for Closing a Company
A company may be closed for various reasons:
- Lack of business activity or profitability.
- Fulfillment of the company’s purpose.
- Shareholder or owner decision.
- Insolvency or bankruptcy.
- Expiry of the company’s established term (if applicable).
Regardless of the reason, the process involves clear legal steps to ensure the company is officially deregistered.
Steps to Close a Company in Bulgaria
- Shareholder Decision
- For Limited Liability Companies (LLCs), the General Meeting of shareholders must pass a resolution to dissolve the company.
- For Sole Proprietorships, the owner decides to close the business.
- The decision must be documented in a resolution and signed by the respective parties.
- Appoint a Liquidator
- A liquidator is appointed to handle the company’s remaining obligations, including asset liquidation and debt repayment.
- The liquidator can be the company’s manager, a shareholder, or an external party.
- Notify the Commercial Register
- File a dissolution application with the Bulgarian Commercial Register, attaching:
- Shareholder resolution or owner decision.
- Appointment of the liquidator.
- Updated Articles of Association reflecting the decision.
- Declaration of compliance.
- Settle Debts and Liabilities
- The liquidator is responsible for settling all debts, liabilities, and outstanding obligations.
- Creditors must be notified, and claims against the company must be addressed.
- Liquidate Assets
- The liquidator sells the company’s assets to pay off creditors.
- Any remaining funds are distributed among shareholders according to their ownership shares.
- Publish Notice of Dissolution
- Publish a notice of dissolution in the Commercial Register to inform creditors and the public.
- Creditors are given a statutory period (typically six months) to file claims.
- Final Accounting and Tax Clearance
- Prepare the company’s final financial statements and submit them to the National Revenue Agency (NRA).
- Obtain a tax clearance certificate confirming no outstanding tax obligations.
- Deregistration
- File an application for deregistration with the Commercial Register.
- Attach the liquidator’s report, financial statements, and tax clearance certificate.
Timeline for Closing a Company
The timeline depends on the company’s financial and operational status. For solvent companies with no outstanding obligations, the process can take 6 to 12 months. For insolvent companies, additional procedures, such as insolvency or bankruptcy, may extend the timeline.
Costs of Closing a Company
- State Fees: Payable to the Commercial Register for processing applications.
- Liquidator Fees: If an external liquidator is appointed.
- Legal Fees: For preparing documentation and overseeing the process.
- Accounting Fees: For preparing financial statements and obtaining tax clearance.
Potential Challenges
- Unsettled Debts: Creditors may delay the closure process if claims are unresolved.
- Tax Compliance: Outstanding tax obligations can prevent deregistration.
- Disputes Among Shareholders: Disagreements on asset distribution or the decision to close the company.
Why Choose Legal Frame?
At Legal Frame, we specialize in company closures and liquidations. Our team of experienced lawyers ensures a seamless process, handling every aspect from shareholder resolutions to final deregistration.
Our Services Include:
- Drafting all necessary documents, including resolutions and applications.
- Representing you before the Commercial Register and National Revenue Agency.
- Ensuring compliance with Bulgarian commercial laws.
- Managing creditor claims and asset liquidation.
Contact Us Today
Closing a company in Bulgaria requires meticulous planning and execution. Let Legal Frame guide you through the process with expert legal support. Contact us for a consultation and ensure a smooth and compliant company closure.
