The Bulgarian Commerce Act grants every Managing director of a limited liability company the right to leave the company and to request his/her deletion from the Commercial Register and the Non-Profit Legal Entities Register (“the Register”). Every Managing director may exercise this right even when the shareholders or the Sole owner of the company do not agree to discharge him/her.
The right to leave
with the procedure starts via written notification sent to the company. If the company does not take any actions to satisfy his/ her request within a month as of the receipt of the notification, the Managing director is entitled to apply for his/her deletion from the Register. It does not matter whether a new Managing director is appointed or not.
Although the legal provisions are seemingly clear the competent officials tend to refuse deletion so requested from the Register on various grounds.
Who shall receive the notification?
The most common ground for refusals is the fact that the notification is addressed to or received by a body of the company which is not competent to adopt a resolution on the Managing director discharge. The officials instruct the applicants that the notification shall be addressed to and received either by the shareholders, the Sole Owner of the company or by the general meeting. Most of these refusals are annulled by the court.
The Managing director of a company is the only one who can represent the company before third parties and is entitled to act on behalf of the company and at its expenses. However, the position / managing body shall not be identified with the individual. When the person, appointed for a Managing director, requests to be discharged, he/she does this in the capacity of a third person/individual. But when he/she receives the notification on behalf of the company, he/she acts as the body of the company which is entitled to represent it. That is why the request shall be deemed dully delivered when the notification is received by the current Managing director. Moreover, the applicable law does not provide for a different mechanism for notifying other bodies of the company, i.e. shareholders, General meeting or the Sole owner of the capital.
Who may apply for the deletion?
Other common ground for refusal is the lack of representative powers. The officials argue that since the Managing director is applying for deletion from the Register, he/she is no longer the representative of the company and cannot submit the application on its behalf. This conclusion contradicts the applicable law.
The Managing director represents the company and he/she is entitled to act on behalf of the company before third parties from the date of his registration with the Register until the date of his/her deletion. Until he/she is deleted from the Register, the Managing director is the one entitled to submit applications for registration of circumstances and acts with the Register, including for his/her own deletion from it.
Some officials refuse to delete the Managing director because the competent bodies of the company have not adopted resolution on the consequences of his deletion from the Register, i.e. who is going to represent the company, how is the latter going to continue performing its activities etc.
The courts while annulling these refusals stress that this right of the Managing director requires only a notification to the company and lack of respective actions by the competent bodies within one month as of the notification receipt. The law does not require a resolution of the general meeting for the consequences.
The control of the official in this procedure may only concern the circumstances listed by the courts. It is not required to check if the competent body of the company has adopted a resolution on the consequences of the deletion of the Managing director.
Moreover, the Commerce Act regulates these consequences explicitly. When the company does not appoint a new Managing director within three months as of the deletion of the previous one, a prosecutor may claim for its termination before the district court. In this case a liquidation procedure shall be commenced. After all the debts of the company are paid and the property left is distributed, the liquidator shall apply for the deletion of the company from the Register. Therefore, when the bodies of the company have not adopted a resolution for the consequences the rules above shall apply.