Sole-owned Variable Capital Company - what is that?

We have already discussed how a Variable Capital Company (VCC) is established and managed. The VCC is a new type of legal entity characterised by its variable capital. The capital amount is not subject to registration in the Bulgarian Commercial register. The VCC offers vast opportunities to its founders, who can be either individuals or legal entities. However, if you are embarking on the journey of setting up a VCC on your own, you should know that you can establish a sole-owned VCC. Here is what you need to know about sole-owned VCC.

Who can establish a sole-owned VCC?

Similar to sole-owned LLCs and sole-owned JSCs, a VCC can also be established as a sole-owned company. This means that any individual or legal entity can create a sole-owned VCC. The data regarding the sole owner does not have to be officially entered in the Commercial register. They are registered only in the Book of shareholders, which has a legitimising function. The company is liable to creditors with its assets. The Sole owner of the capital is not personally liable to the creditors of the sole-owned VCC. The Sole owner can be a Bulgarian or a foreign person.

What is the main document for a sole-owned VCC?

When a VCC is sole-owned, the main document that is created is the Incorporation Act. The Incorporation Act, similar to the VCC's Articles of Association, must include the following mandatory clauses:

• The company name, registered office, and management address;
• The scope of activity;
• The term of the company, if applicable;
• The type and value of non-monetary contributions, if any;
• The management and representation structure;
• The profit distribution mechanism;
• Other terms concerning the incorporation, existence, management, and termination of the company.

For the initial registration of a sole-owned VCC, the Incorporation Act is submitted for entry into the Commercial register. In the case of amendments or supplements to the Incorporation Act, a copy containing all changes and additions must be submitted for publication in the register.

Who manages the sole-owned VCC?

The two main governing bodies of a sole-owned VCC are:

• The Sole owner of the capital; and
• The management body.

The Sole owner of the capital in a sole-owned VCC assumes the role of the General Meeting in a VCC. This means that he independently makes decisions regarding amendments and additions to the Incorporation Act, issuance of new shares, restructuring and termination of the company, appointment and dismissal of members of the management board, or manager(s), and more. Decision-making is therefore a much simpler process in a sole-owned VCC and is always unanimous.

The Sole owner of the capital in a sole-owned VCC can appoint one or more managers. The owner himself can also act as a manager. The law does not impose restrictions in this regard. In all cases, the manager organizes and directs the company's activities in accordance with the law and the decisions of the Sole owner.