Transferring Company Shares in Bulgaria

Transferring Company Shares in Bulgaria: A Complete Guide

The transfer of company shares is a common procedure for businesses undergoing changes in ownership or restructuring. Whether you are transferring shares to a partner, a new shareholder, or another legal entity, the process in Bulgaria involves specific legal and administrative steps.

This guide explains the procedure for transferring company shares in Bulgaria and the key considerations involved.

What Does Share Transfer Mean?

A share transfer occurs when an existing shareholder in a company sells, donates, or otherwise transfers their shares to another person or entity. This process leads to a change in the ownership structure of the company and must comply with the Bulgarian Commercial Act.

The process typically applies to Limited Liability Companies (LLC, in Bulgarian ООД) and involves updating the company’s Articles of Association to reflect the new ownership structure.

Reasons for Transferring Company Shares

• Restructuring Ownership: Bringing in new investors or partners.
• Exit Strategy: A shareholder decides to leave the company.
• Inheritance or Gift: Passing shares to a family member or another party.
• Sale of Shares: Monetizing the investment in the company.

Procedure for Transferring Shares

1. Review the Articles of Association

• Check the company’s Articles of Association for rules regarding share transfers.
• Many LLCs include clauses requiring shareholder approval for any share transfer.

2. Draft a Share Transfer Agreement

• The transferor (current shareholder) and transferee (new shareholder) must sign a Share Transfer Agreement.
• This document specifies the terms of the transfer, including:
  • Number of shares.
  • Transfer price (if applicable).
  • Payment terms and conditions.

3. Obtain Shareholder Approval

• If required by the Articles of Association, the transfer must be approved at a General Meeting of Shareholders.
• Document the decision in a Shareholder Resolution, signed by all attending shareholders.

4. Amend the Articles of Association

• Update the Articles of Association to reflect the new ownership structure.
• Prepare an amended version and include details about the new shareholder.

5. Notarize the Agreement

• In Bulgaria, the Share Transfer Agreement and the Resolution must be notarized.
• Both parties must appear before a notary public to sign the documents.

6. File with the Commercial Register

• Submit the following documents to the Bulgarian Commercial Register:
  • Share Transfer Agreement.
  • Shareholder Resolution.
  • Updated Articles of Association.
  • Declaration of compliance signed by the company manager.

7. Pay State Fees

• Pay the applicable state fee for registering the changes. Online applications typically cost less.

8. Registration Confirmation

• Once the Commercial Register processes the application, the transfer is official. The new shareholder is listed as a company owner.

Costs Associated with Share Transfers

1. Notary Fees: For notarizing the Share Transfer Agreement and other documents.
2. State Fees: Payable to the Commercial Register.
3. Legal Fees: If you hire a lawyer to oversee the process.
4. Tax Considerations: Depending on the nature of the transfer, there may be tax implications, such as capital gains tax.

Challenges During Share Transfer

• Refusal of Shareholder Approval: If shareholders oppose the transfer, the process may be delayed.
• Tax Liabilities: Failing to address potential tax implications can lead to penalties.
• Incomplete Documentation: Missing or improperly prepared documents can result in registration refusal.

Why Choose Legal Frame?

At Legal Frame, we specialize in assisting businesses with share transfers in Bulgaria. Our team of experienced corporate lawyers ensures the process is smooth, compliant, and tailored to your specific needs.

Our Services Include:

• Drafting Share Transfer Agreements and resolutions.
• Reviewing and amending the Articles of Association.
• Ensuring compliance with Bulgarian corporate laws.
• Filing the necessary documents with the Commercial Register.

Contact Us Today

Transferring shares in a Bulgarian company requires precision and adherence to legal requirements. Let Legal Frame guide you through the process with expert support. Contact us for a consultation and ensure a seamless transfer of ownership.