Introduction
VCC or 'variable capital company' is the new type of company in Bulgaria. The regulatory framework for the VCC entered into force in February 2024 and the de facto possibility for its creation was created in December 2024.
Who can establish a VCC?
One or more Bulgarian or foreign nationals or companies may establish an VCC. The company is set up by a memorandum or articles of association which specifies several basic elements of the VCC, such as name, address, business activity, class and nominal value of the shares, manager or board of directors, etc. What’s interesting here is that the names of the sole owner or partners are not published officially. People, who are not part of the company, will not have access to this information. It is only contained in the Book of shareholders.
How is a VCC managed?
A VCC is managed by one or more managers (similar to an LLC) or by a board of directors (similar to a JSC). The choice is in the hands of the partners (or the sole owner of the capital). If they choose a board of directors, the board must then elect one or more chief executive officers (CEO). Unlike the partners (or the sole owner) in a VCC, the names of the managers, the board of directors, and the CEO are public. They are officially announced in the Commercial Register during the initial registration of the VCC. The full flexibility of this type of company allows for the determination of the number, mandate, and re-election of the board of directors or managers.
What capital is required to establish a VCC?
If the minimum capital for an LLC (BGN 2.00) seems negligible to you, you should see what it is for a VCC. It can be created with capital of just BGN 0.02!
Do you need a deposit account in a Bulgarian bank?
A VCC is not required to open a deposit account in a Bulgarian bank or deposit its capital. This significantly facilitates the registration of this type of company, as there are no bank fees when establishing it. Furthermore, whatever capital you invest during the initial registration of the VCC remains confidential. The size and changes in the capital of a VCC are not published. Once a year, the general meeting, convened to review the annual financial report, determines the size of the capital at the end of the financial year and its change compared to the previous financial year.
How long can a VCC exist?
VCC is a type of legal entity that can exist as long as it has an average number of employees fewer than 50 and annual turnover and/or asset value that does not exceed BGN 4,000,000. If, during the regular annual general meeting, it is established that at the end of the previous financial year the company no longer meets these requirements, it must be converted into an LLC or a JSC. If the VCC is not converted by the end of the next financial year, it will be terminated by the district court at the company's headquarters upon the prosecutor's request. The newly established company (LLC or JSC) becomes the successor to the transforming VCC, which is terminated without liquidation.
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