Updated last 26.03.2021
When the shareholders establish the company, they choose its legal form, which they consider suitable for the future activity that corresponds to their interests and capabilities. It is possible, however, that due to certain circumstances (e.g., expansion or reduction of the activity, attracting investments, etc.) the selected form becomes unsuitable. In this case shareholders may change it, according to special rules, governed by the Commercial Act (CA).
Upon change of the legal form, the existing (transforming) company is terminated, without carrying out liquidation procedure, and a new company is established that assumes all the rights and obligations of the terminated company. The transformation of the company by changing its legal form is different from the Transformation of the company through merger, consolidation, division, spin-off.
The transformation procedure is particularly complex and it may have additional specificities and deviations from the general procedure, outlined below. Therefore, before commencing a change in the legal form, it is highly recommended that you undertake a thorough analysis of the applicable legal framework, specified in the provisions of Section III of Chapter sixteen of the CA.
It is necessary that before commencing the procedure for change of the legal form, a notice is sent to the National Revenue Agency (NRA). The Territorial Directorate of the National Revenue Agency issues to the trader/the applicant a certificate confirming the receipt of the notification within 60 days of the submission date. The notification is a mandatory part of the documents to be attached to the application as per item 5 below.
What are the stages of the procedure for change of the legal form?
 | Preparation of a transformation plan |
The management body[1], or the shareholders having management rights[2], prepare a transformation plan in writing with notarized signatures. Art. 264а of the CA sets out the compulsory contents of this plan. A draft for new articles of association[3] or articles of incorporation[4] for the newly established company must also be prepared and this draft is attached to the transformation plan.
 | Announcement of the plan and disclosure of information |
The drafted plan must be announced in the Commercial Register on the file of the transforming company. The announcement takes place through an application by the management body or the shareholders with management rights, respectively. The application may be submitted online at the following address by means of a qualified electronic signature, and in this way the payable fees will be lower. If the transforming company is joint-stock company (AD), limited liability company (OOD) or limited partnership with share capital (KDA), the transformation plan must be announced at least 30 days prior to the date of the meeting of the General Assembly, where the transformation decision shall be made. Free access of the shareholders in the transforming company to the following information must be provided: transformation plan, the new articles of incorporation/memorandum of association, the details on the appointed auditor (see item 3 below) and the depository[5], the balance sheet as of the last date of the month prior to the preparation of the transformation plan (art. 264b of the CA).
 | Inspection of the transformation plan |
The inspection of the transformation plan may be initiated by various persons, depending on the legal form of the newly established company:
- If the newly established company is an OOD, AD or KDA, the management body/the shareholders with management rights of the existing company have to appoint an auditor, who will audit the transformation plan and draft an audit report. The report is distributed to the shareholders;
- If the newly established company is a general partnership (SD) or limited partnership (KD), the audit of the plan may be performed at the request of a shareholder/partner or by decision of a managing or supervisory body of the transforming company.
When the audit is performed, based on a decision of a management body, the management body appoints an auditor[6]. In all other cases, the auditor is appointed by the Registry Agency.
 | Decision for transformation |
In case of transformation of a SD or KD the consent of all the shareholders, made in writing with notarized signatures, must be provided. In case of transformation of an OOD, AD and KDA, the general assembly of the company must make a decision for the transformation of the company. This decision approves or amends the transformation plan, approves articles of association/articles of incorporation of the newly established company and appoints the mandatory necessary bodies (e.g., in case of transformation of an OOD, the mandatory body to be appointed is the general manager).
The majority required for approval of the decision is different, depending on the type of the transforming company:
- The decision for the transformation of an OOD into another type of company is approved by the general assembly of the shareholders by the majority of the owners of at least 3/4 of company’s capital;
- The decision for the transformation of a joint-stock company (AD) into another type of company is approved by the general assembly of the shareholders, by a majority of 3/4 of the voting shares present at the meeting;
- For the transformation of limited partnership with share capital (KDA) into another type of company, a decision of the shareholders with unlimited liability, made unanimously in writing with notarized signatures is required, as well as a decision of the general assembly of the shareholders, made by a majority of 3/4 of the voting shares present at the meeting.
 | Registration of the change with the Commercial Register |
The change of the legal form must be registered with the Commercial Register, in order to become effective. Upon the registration of the change, the transforming company is terminated and the newly established company is formed. The rights and obligations of the transforming company pass entirely over to the newly-established company.
The registration is based on an application, submitted by the management body/shareholder having management rights in the newly-established company. The application template is available at the following address in Group C (in Bulgarian: В) in the drop-down menu (template B21). The application may be submitted online, and in this case the fees are lower. The application must be accompanied by the respective documents, listed in the appendix to the template.
| Important to know | |
 | No new shareholders can be admitted in the company throughout the procedure for change of the legal form. When a change of the legal form of a sole-owner company is carried out, no transformation plan needs to be prepared and there is no need to provide information (see item 1 and item 2 above). If the newly established company is OOD, AD or KDA, the amount of its capital cannot be higher than the net value of the property of the transforming company[7]. In this case the auditor (see item 3 above) verifies the fulfilment of that requirement. |
| For more information | |
 | For more information on the Transformation of the enterprise by changing its legal form and the related regulatory framework please refer to the websites of the: |
[1] In the case of joint-stock company, limited partnership with share capital and limited liability company.
[2] In case of a general or limited partnership.
[3] If the newly established company is a general or limited partnership, or limited liability company.
[4] If the newly established company is joint-stock company or limited partnership with share capital.
[5] The depository is a natural person or legal entity, authorized by the management body of the transforming company, to store the temporary certificates or shares, which have to be handed-over to the members or the shareholders of the transforming companies (art. 262x (in Bulgarian: 262ч) of the CA).
[6] The auditor must be a registered auditor. A list of registered auditors can be found here: Auditors’ Register. The auditor cannot be a person, who in the past two years has been the auditor of the company, which appoints it or who has prepared the evaluation of the non-financial contribution in the share capital of the company. The appointed auditor cannot be appointed as such of any of the owners in the transforming companies two years after the transformation date.
[7] Net value of the property is the difference between the value of the rights and obligations of the company as per its accounting balance sheet (art. 247а of the CA).