Company Registration for Non-Residents

Having started businesses from scratch, I understand the anxiety that every business founder goes through before registering a new company. This article focuses on general and specific points regarding the process of starting a company by a foreign citizen.

The procedure for registration of a limited liability company (Ltd) by a foreign individual is technically no different from cases when the founders are Bulgarian citizens. Bulgarian legislation is open in terms of how the registration process works in this direction, and in practice, the rules are the same, regardless of whether the founders are local or foreign.

What are the basic legal requirements to form a company in Bulgaria?

Here are the documents that non-residents need to prepare in order to proceed with registering their company.

1. A bank letter confirming that capital is deployed effectively.
2. Consent for acceptance of management and sample of the signature (specimen). This document must be notarized and signed by the business owner.
3. Memorandum of Association or Company Agreement. It must contain the following:
• company name: it must have a unique name - be wary of registering a trading name that’s too similar to a competitor’s business name
• a registered office address which must be of Bulgarian descent. (The business owner must be able to receive mail at your registered office address)
• names and personal data of any partners
• company activity (any activity that the business engages in for the primary purpose of making a profit)
• amount of capital, as well as the share of the partners' contributions
4. Consent and sample signed by the business owner with notarization as described above.
5. A legal statement signed by the business owner or all initial shareholders agreeing to form the company and ‘articles of association’ (these are the rules associated with running the company agreed to by the shareholders, directors and the company secretary).
6. Declaration under Art. 13, para. 4, Commercial Register Act (CRA). The truth of the stated circumstances is declared and signed by the applicant.
7. Declaration by the business founder that there are no legal obstacles for him/her to hold this position in the new company. The declaration is according to a sample under Art. 141 and 142 of the Commercial Law.
8. In addition to the above documents, a receipt is needed for a paid state fee.

The identification of the founders is done with a valid document declaring their identity - ID card or international passport (for people who are citizens of a country outside the European Union). The minimum amount of capital upon registration of a limited liability company is 2 Bulgarian levs. As the foreign owner, resp. the associate is responsible for the obligations of the company up to the amount of the paid-in capital, which is similar to the registration of a company with Bulgarian citizens as owners. The set of documents that are prepared and entered in the Commercial Register are also identical. The state fees for registration of a company by a foreign person also do not differ from those in which the founders are local people. Whether the partners are citizens of an EU Member State or outside it, they are obliged to comply with Commercial Law and all obligations, deadlines and responsibilities arising from it.

Registration by Non-Speaking Bulgarian Foreign National

If the foreigner does not speak Bulgarian, he or she must be provided with a translation of the documents into their mother tongue or into another language he speaks. The purpose is to ensure that the owner or manager of the new company understands the content of the documents they sign. Otherwise, they will have no legal sanctity.

This requirement can be achieved in two ways. The first is with a written translation in which a parallel bilingual format of the constituent documents is prepared. The second documents are prepared in Bulgarian, and, using a translator, an oral translation of the documents in the presence of a notary is communicated. The translator must sign a declaration certifying the accuracy of the translation, bearing criminal liability for incorrect translation. It is important to clarify that the translator does not have to be sworn (also known as certified translator). The notary may appoint as a translator anyone who speaks Bulgarian and any of the languages ​​spoken by the foreigner.

The need for translation of the documents increases the cost of the registration procedure itself, due to the translator's fees and the additional notary fees for certifying the translation of the documents if the translation is oral.

Remote Registration of a Foreigner's Company

Company registration is possible even if the foreign person is not located in the country. There is no restriction on the nationality or location of either the directors or shareholders when forming a company in Bulgaria. A foreign national can be the director of a Bulgarian company, and a foreign national can also be a shareholder of a Bulgarian company. Hundreds of individuals from across the globe form companies in Bulgaria each year. The process is simple and cost-effective. However, for many it can seem overwhelming when you are outside Bulgaria. In addition to signing the constituent documents (which can be sent by email), 2 (two) specific situations arise:

1. According to the Commercial Law and the Commercial Register Act, upon registration of a company, the manager must submit a notarized declaration agreeing to manage the company, submitting a sample of his signature (the so-called specimen).
2. If a limited liability company is registered, the partners must open a fundraising account in which to pay the initial capital. Since the beginning of 2017, banks have significantly complicated the procedure for opening an account by foreigners in connection with the new European Directives on measures against money laundering. This is completed by filling in a questionnaire, which is then sent to the bank's headquarters for verification. It takes between 3 and 10 working days, for which the client pays an additional fee (between 100 and 200 euros), which is not refundable if you refuse to open an account. This procedure may also be performed by an explicitly authorized person, but some banks may refuse and require the person to be present in person.

The problematic point in the above situations is to find where these documents can be certified (specimen and power of attorney).

The first option is for the documents that were translated into the respective language to be certified by a local notary, and then to be certified with an apostille *. The documents are then sent to Bulgaria, the signature of the sworn translator is translated and certified by the Ministry of Foreign Affairs, which certifies the accuracy of the translation into Bulgarian. After that, there is no obstacle for the documents to be submitted to the bank and the Commercial Register by the authorized persons, respectively.

For some countries with which Bulgaria has signed bilateral agreements for legal assistance (Russia, France, Poland, Romania, Italy, Austria, Greece, etc.), it is enough to certify the documents with a local notary, exempting them from legalization with an apostille. However, the translation of documents and their certification remain mandatory.

The easiest and cheapest option is to have the documents certified by the Consular Service of the Republic of Bulgaria in the respective country. Then the requirement for translation and legalization is dropped. An inconvenience is a fact that in many cases the Consular Service is far from the person who wants to use its services.

What Comes After the Company Registration

Once the registration of the company is ready, another important aspect should be considered. If the partner is also a manager of the company, within 7 days from the start of the activity, there will be an obligation to start insurance. However, if the foreigner is a citizen of an EU Member State and presents an A1 certificate of applicable law (issued by the tax office of the respective country), which certifies that the applicable insurance law is in another EU Member State, he/she will be able to be exempted from paying insurance in Bulgaria. In all cases, the foreign manager must be issued an official number by the NRA or a personal number of a foreigner (PNC).

* The apostille is a certificate stamped to certify a document from the country in which it was issued. Apostille documents are exempt from any other form of certification and legalization, both in the countries of issue and in the countries in which it will be used, if they are parties to the Hague Convention of 1961. For countries outside this Convention, incl. . without bilateral legal aid agreements, further legalization and significantly more complex procedures are needed. It is also possible the opposite - our country has a bilateral agreement with the respective country, with which the requirement for apostille certification will be abolished.