Variable Capital Company (VCC) in Bulgaria: Advantages, Incorporation & Registration

Start-up companies in Bulgaria now have access to a new legal structure offering significant flexibility and simplified procedures – the Variable Capital Company (VCC). Introduced to address the needs of entrepreneurs and innovative businesses, this structure facilitates the attraction of investors, the issuance of shares, and operational flexibility without requiring a fixed capital at the outset.

This article provides an overview of the key advantages, requirements, and procedural steps for the incorporation and registration of a VCC, focusing on practical aspects that can help entrepreneurs navigate this new opportunity.

What is a Variable Capital Company?

The Variable Capital Company (VCC) is a new form of commercial company introduced in Bulgaria in 2023 through amendments to the Commerce Act. It was created specifically to meet the needs of start-ups and investors seeking a more adaptable legal framework. The VCC combines elements of both limited liability companies (LLCs) and joint-stock companies (JSCs), offering features such as simplified partner changes, the ability to issue different classes of shares, and the absence of a fixed registered capital.

The main distinction between a VCC and other corporate forms is that its capital is variable and is not recorded in the Commercial Register. This means it can be increased or reduced without complex procedures. Shares may carry different nominal values and rights, including non-voting rights or guaranteed dividends.

The shareholder register is not public – instead, an internal shareholders’ book is maintained, where all changes are recorded. This makes it easier to transfer shares and bring in new investors.

Key Advantages of the VCC

• Low initial capital – shares can have a minimum nominal value of BGN 0.01 (or one euro cent, effective from the date on which the euro becomes official legal tender in the Republic of Bulgaria)
• Flexible structure – founders have wide discretion in defining the governance model
• Investor-friendly – shares can be easily transferred or newly issued to attract capital
• Preferred shares – different classes of shares with special rights can be created
• Reduced administrative burden – capital changes do not require registration with the Commercial Register.

How to Incorporate a VCC

The company may be established by one or more natural or legal persons and may qualify only as an enterprise that has an average number of personnel of fewer than 50 employees and an annual turnover not exceeding BGN 4,000,000 and/or total assets not exceeding BGN 4,000,000.
The founders sign an Articles of Association (or a Founding Act in the case of a sole owner), which regulates all key matters such as classes of shares, rights, management, etc.

Required Documents for Registration

As part of the documentation required for the registration of a VCC in the Commercial Register, the following documents must be submitted:

• The Articles of Association (or the Founding Act, in case of a sole founder)
• A copy of the Articles of Association with redacted personal data, except for the information required by law
• Declarations by the founders confirming the absence of obstacles under Article 260a, paragraph 2 of the Commerce Act
• A resolution appointing the manager or the management board
• Notarized consent and declaration under Article 260z, paragraph 4 of the Commerce Act, signed by the manager(s) or the member(s) of the management board
• Notarized consent with specimen signature of: the manager(s), or the member(s) of the management board who represent the company
• Declaration of authenticity (Art. 13(4) CRRNPLEA), etc.
• Depending on the specific circumstances, additional documents may be required.

The application can be submitted online or in paper form using a standard template. Upon registration, the company becomes operational.

Governance and Capital Features

The VCC can be managed by one or more managing directors or by a management board. The general meeting of shareholders adopts decisions on important matters as defined by the law. A fixed term for managing directors is not mandatory unless specified in the Articles of Association.

The amount of capital as of the end of the financial year is determined by a resolution of the regular annual general meeting, convened for the approval of the annual financial statement.

When Must the VCC Be Converted?

If the VCC exceeds the statutory thresholds (see above), it must be transformed into an LLC or a JSC by the end of the financial year following the annual general meeting at which this was established. Otherwise, the court may order its dissolution upon request of the public prosecutor.

Conclusion

The Variable Capital Company is a modern and practical legal tool for anyone looking to start or grow a business in Bulgaria. With fewer formalities, easier access to capital, and a flexible structure, it is particularly well suited for start-ups and investors. Before registration, it is strongly recommended to consult with a lawyer to ensure proper structuring and governance of the new company.

After incorporation, ongoing legal support is essential – for example, in maintaining the internal shareholders’ book, drafting and formalizing management decisions, and ensuring compliance with legal and internal corporate rules. This is key to maintaining legal certainty and good corporate governance.

Disclaimer: The analysis and information provided in this article are for general informational purposes only and should not be considered legal advice.