VARIABLE CAPITAL COMPANY

VCC, or DPK in Bulgarian, means 'variable capital company'. It is one of the legal entities that can be registered in Bulgaria. It may be established by one or more Bulgarian or foreign individuals or legal entities. Like all other companies, it is registered in the Bulgarian Commercial register. Registration is quick and easy, as no capital raising and no opening of capital-raising bank account for the VCC are required, and the amount of capital and the names of the shareholders are not public.

The capital of VCC, or DPK in Bulgarian, is variable, since its initial amount and changes in it are not declared in the Commercial register. Information about it is never public. Or in other words, it's a secret to externals to the company. Each year, a general meeting of shareholders is convened to examine the annual financial statements of VCC. The exact amount of capital at the end of the financial year and its change in the previous financial year are then also established.

The shareholders (or the sole owner) of the VCC, or DPK in Bulgarian, can choose how the company to be managed: by one or more managers or by a board of directors. Regardless of which option is chosen, the names of the manager or the members of the Board of directors shall be published in the Commercial register. The VCC has complete freedom in Board of directors appointment. It chooses the number of members, their mandate (e.g. three or five years), and whether to be re-elected. The Board of directors, for its part, should elect one or more chief executive officers (CEO). An important condition is that the CEOs of the VCC shall not be more than the other members of the Board of directors.

VCC, or DPK in Bulgarian, combines the advantages of well-known limited liability companies (LLC) and joint-stock companies (JSC). However, unlike them, VCC formation is quick and easy. No opening of a capital-raising bank account and raising a capital in a bank are required. VCC may be registered with a minimum capital of BGN 0,02 (EUR 0,01). The shareholders are anonymous because their names are not publicly announced in the Commercial register. The only up-to-date information on them is in the Book of shareholders, which is a company document kept by the manager. The meetings of the General meeting may be held entirely online, with online voting and a record of decisions in an electronic medium. Each partner may offer shares of the VCC to employees on the basis of good performance (vesting agreements). Each partner may sell his share only by a written contract without a notarization.

Undoubtedly, the VCC, or DPK in Bulgarian, has its advantages over the standard and familiar forms of LLC and JSC, since no capital-raising bank account is opened, there is no public information about the shareholders, the capital of the VCC is secret to people, who are not part of the company. But when a VCC reaches BGN 4,000,000 (approx. EUR 2,046,000) in annual turnover or value of assets and/or an average number of employees of 50 people, it must be transformed into an LLC/sole owned LLC (or OOD/EOOD in Bulgarian) or JSC/sole-owned JSC (or AD/EAD in Bulgarian). The transformation must take place by the end of the next financial year. If this does not happen, the district court at the registered office of the VCC terminates it.