Company Dissolution and Liquidation in Bulgaria
Company Dissolution and Liquidation in BulgariaUpdated on Tuesday 23rd April 2019
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Company liquidation and dissolution in Bulgaria can be voluntary - when the decision is taken by the company’s shareholders or when the company is acquired by another entity - or it can be compulsory - when the company is bankrupt or the decision was taken by a Bulgarian court.
The legal process of closing a Bulgarian company is included in the country’s Commercial Law. Various actions are required to complete this process and business owners can request the services of a law firm in Bulgaria that can help handle the formalities.
Irrespective of the reasons that lead to the liquidation of the company, our Bulgarian lawyers can provide assistance and counselling throughout the entire procedure.
Necessary steps for company dissolution and liquidation in Bulgaria
The liquidation procedure begins after the company’s shareholders have made a decision to close the company or the decision was taken by a competent Bulgarian court. The first step is to stop all the activities of the company – this is the phase when the company is dissolved. It is necessary to dissolve the company first because the legal entity needs to terminate any ongoing business relations before the assets can be transferred to other parties.
The dissolution of the company is made through a shareholder’s decision. This can take place if a majority of the shareholders (those holding ¾ of the capital) decide to initiate this action. After the decision is made, the company manager must notify the decision of dissolution and the commencement of liquidation to the Tax Office.
Although during the liquidation process the company still exists as a legal entity in Bulgaria, it cannot have any commercial activity. After the procedure is complete, the company loses its legal entity and it is erased from the Bulgarian Trade Register.
The most important step during the liquidation process in Bulgaria is to settle the claims and debts existing between the company and any other third parties. In order to do so, the assets of the company are divided among the creditors and the remaining assets of the company (if any) are divided afterwards to the shareholders. This is a procedure that takes place out of court, between the partners of the company and the creditors.
Insolvency proceedings can be opened by another party against the company during the liquidation procedure if the company’s insolvency has been observed.
A liquidator needs to be appointed once the procedure to terminate the company has been initiated. He or she can be the former manager of the company or he can be appointed by the Bulgarian Trade Register.
The liquidator is entitled to take all the necessary actions to complete the liquidation and represent the company before the competent authorities. Some of the liquidator’s responsibilities include:
- terminate the pending deals;
- collect debts;
- transform cash assets into cash;
- pay all the creditors’ claims;
- draw up a balance sheet;
- close the company’s accounts.
Any new transactions during this time will only take place for transforming the assets into money or to conclude any other actions connected to the liquidation. A liquidation certificate is issued by the Bulgarian National Revenue Agency. This liquidation certificate, along with the shareholder’s decision to liquidate the company, the appointment of the liquidator and a report detailing the manner in which the liquidation procedure will take place should all be submitted at the Trade Register. Our lawyers in Bulgaria can help you submit all the necessary legal documents.
Ending the company liquidation procedure in Bulgaria
The company liquidator must make sure that all creditors of the company make their claims. The existing claims can be submitted in maximum six months after the announcement regarding the liquidation was delivered to the creditors.
After all the liabilities are settled and all the company’s assets are distributed, the liquidator takes the necessary measures to delete the company from the Bulgarian Trade Register.
The liquidation of a commercial company in Bulgaria shouldn't take longer than six months, depending on the type of company and the existing claims. Our law firm in Bulgaria can offer you complete legal assistance for company dissolution and liquidation. Please contact our office for more information.