VARIABLE CAPITAL COMPANY

March 11, 2025

A new facilitation for business

In this article, we will briefly introduce you to what a company with variable capital is, what its advantages are, and how it will facilitate start-up companies and the operation of businesses in the Republic of Bulgaria.

Here are some of the main aspects:

General information

The company with variable capital was introduced into Bulgarian legislation back in 2023 with the amendments to the Commercial Act. The aim is to make it easier for start-ups and businesses in general by providing them with more flexibility, development opportunities and functionality from the very beginning. This includes both the initial establishment of the company and its management, as well as the possibilities for flexible future changes. After some delay, from December 15, 2024, it is now fully possible to establish a company with variable capital and Bulgarian businesses can take advantage of the opportunity to establish such a company or transform an existing one into one.

Advantages of a Variable capital company

A Variable capital company takes the best features of an LLC and a JSC and allows for business modeling.
Here are the main special features of a company with variable capital (VCC) that highlight its advantages:

Flexibility and easy capital management

• Variable capital: The capital of a VCC can be changed without complicated procedures or the need for entries in the register. Changes in the company’s capital are reflected on an annual basis directly in the company’s financial statements.
• Fast financial solutions: Easy and fast establishment and change of capital is particularly useful for start-ups and dynamic businesses. There is no need to provide initial paid-in capital in a bank /savings/ account, which greatly facilitates the establishment, as foreign entrepreneurs often faced complex research by banks and filling out all sorts of questionnaires.

Optimized costs

• Low initial and operating costs: VCC offer significant savings compared to traditional forms such as LLC and JSC (about 20-30% less administrative costs).
• Small value of shares: One share can cost only 1 stotinka, which makes capital structuring more flexible.

Transparency and attractiveness for foreign investors

• Publicly available partnership agreement: This provides transparency and easy orientation for investors.
• International partnerships: VCCs offer a convenient legal framework for managing international partnerships and attracting foreign investors.

Management flexibility

• Choice of management body: One can choose between a sole or collective management body.
• Easy transfer of shares: No need for notarization, and with the possibility of electronic transactions.
• Possibility of conducting a General Meeting remotely: Again, it provides more freedom and flexibility.

Employee incentives through shares

• Vesting options: A mechanism for providing shares to employees as incentives for retention and motivation.

Conversion of existing companies into VCCs

• Easy conversion: LLC, JSC and SMJSC can be converted into VCCs if they meet certain conditions (personnel and turnover). The average number of employees should not exceed 50 people, and the annual turnover and/or the value of assets should not exceed 4,000,000 BGN.
• Flexibility for growth: If the company crosses the threshold for the number of employees or turnover, it can be converted into a more stable structure, such as an LLC or .

Improved legal structure for businesses

• Attractiveness for startups and technology companies: Ideal for startups that often need quick capital changes and investments.

Promoting economic growth

• Supporting innovation: VCCs can stimulate technological innovation and economic growth.
• Stimulating new jobs: They support the creation of new jobs and Bulgaria’s competitiveness in the EU.
  These advantages make VCC an extremely suitable form for startups and small companies that want flexibility, low costs and easy access to financing.
  If you have any questions or a case study, write to us at: office@lexsofia.com

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