On June 15, 2022, a bill was submitted to the National Assembly to amend the Commercial Act (“The Bill”), which proposes to create a hitherto unknown legal figure – a variable capital company (“VCC”).
The proposal for the establishment of this new type of company is oriented mainly to Bulgarian startups. It is expected that in this way they will be given more flexibility and accessibility in their creation and management, which in turn will attract more investments.
A VCC can be only a small or micro enterprise within the meaning of the Small and Medium Enterprises Act. The most important feature of the VCC is its variable capital. It is envisaged that the capital of this type of company will not be subject to entry in the Commercial Register, unlike other types of companies known to us so far.
In addition to the lack of specifically defined and entered in the Commercial Register at the time of the formation of the VCC capital, The Bill provides for the removal of the requirement for a minimum amount of capital of the VCC. There is also a deviation from the rule regarding the minimum nominal value of one share, as it is proposed that it should not be less than 1 stotinka.
The other specifics of VCC are:
- Freedom in determining the number, composition, mode of operation and competence of the governing bodies of the VCC.
- Right of VCC to acquire its own company shares.
- The right of employees of the VCC to acquire up to 15% of all the shares in the VCC.
- Possibility to envisage an obligation for personal contribution to the activity and development of the VCC of the partners, the non-fulfillment of which may lead to the exclusion of the partner.
- Mandatory transformation of VCC into a capital company if at the end of the financial year it does not meet the requirements for a small or micro enterprise.