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Minimum capital for incorporation of a Limited Liability Company is reduced to 2 BGN
22.10.2009   KPMG Bulgaria OOD

Pursuant to the amendments, the minimum capital required by the law for incorporation of a Limited Liability Company is reduced from BGN 5000 (five thousand Bulgarian Leva) to BGN 2 (two Bulgarian Leva). The capital share of each partner should amount to not less than BGN 1 (one Bulgarian Lev) and each share should be divisible by 1.

At the incorporation of the Limited Liability Company (LLC) the amount of the required minimum of the capital should be fully paid in. The provisions for payment of at least 35% of the registered capital at incorporation of the company and for contribution by the partners of the remainder within two years of incorporation were abolished. Thus, if the registered capital of a LLC is higher than BGN 2, at incorporation the partners shall be required to pay in only the required minimum of BGN 2.

Based on the above amendments, in the cases where the registered capital of a LLC is higher than the minimum of BGN 2, the partners should be free to establish in the Articles of Association of the company the term and conditions for making their capital contributions in excess to the minimum.

The registered capital along with the effectively paid in capital of a LLC are announced under the company file at the Commercial Register and are public to third parties.

In response to the argument that the registered capital serves as protection to the creditors of the company and the “symbolic” minimum of BGN 2 will effect their interest, the motives to the law introducing the amendments, refer to a survey of the World Bank, the results of which show that the level of the index “degree of recovery” (which indicates the cents to a dollar that the creditor could recover from a bankrupted/insolvent company) in the countries where a higher amount of registered capital is required, is equal to that in the countries where the requirement for a minimum capital is abolished.

These amendments to the Commercial Act were introduced on 16 October 2009 (State Gazette Issue No 82/2009) which entered into effect on 19 October 2009.

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