August 2023




The Bulgarian Parliament has enacted legislative amendments that introduce a new form of company in addition to the traditional ones – a Variable Capital Company (VCC). This is a vital change and is poised to be a game-changer in terms of business opportunities for startups in Bulgaria.

The legal frame of this new type of company is governed by the revised Commercial Act (“CA”), published in State Gazette No. 66/01.08.2023. The practical aspects will be introduced with amendments in the secondary legislation within 6-month term.

This is the most crucial change in the commercial legislation in Bulgaria within the past few decades.


The Variable Capital Company (VCC) is a new legal entity that offers the opportunity to initiate business activities in Bulgaria with reduced complexity, greater time efficiency, and cost-effectiveness.

The VCC incorporation process does not require for startups to declare the amount of their capital. Shareholders changes are not subject to mandatory registration as well.

The VCC model provides the startups vital advantages compared to the standard type of limited liability or joint-stock companies, such as:

  • Capital and Shareholders fluctuation is possible without registration with the Bulgarian Commercial Register;
  • Possibility to introduce incentives to key employees, such as Stock Option Plans, etc.;
  • Reduced documentary requirements and avoidance of bank account opening processes for registered capital, leading to a shorter time for company incorporation;
  • Flexible terms might be introduced with the company’s Articles of Association regarding the management of the company, share transfer procedures, voting rights, etc.


1. Who can be a VCC?

The VCC could be incorporated by one or more physical persons or legal entities.

It needs to comply cumulatively with the following requirements:

– Personnel below 50; and

– Annual turnover and/or asset value bellow BGN 4 mil. (i.e. EUR approximately 2 mil.)

Once the VCC does not meet the above requirements anymore, it is obliged to initiate a corporate transformation in the form of one of the other capital companies introduced in the Bulgarian CA. Otherwise it is subject to termination by the court.

2. How the capital is calculated and defined?

The VCC does not register and announce its capital during its incorporation process. The capital is variable and is divided into shares with a par value of minimum 1 stotinka (i.e. approximately 0,5 eurocents). The shares may be distributed in separate classes having different privileges.

The General Meeting of the Shareholders defines the amount of the capital yearly during the Annual Financial Statements review.

3. How are incentives for key employees implemented?

The General Meeting of the Shareholders or the Management Board (if authorized by the General Meeting) may define a right for employees to acquire shares from the capital of the VCC.

The law requires the execution of a separate agreement in simple written form between the company and the employee for this purpose.

The employees may be restricted from subsequent transfer of these shares for a period not longer than 5 years upon acquisition.

In case of inheritance, the heirs of the former employee may exercise their right to acquire shares within 6-month period.

The total amount of shares which may be acquired from employees is 15% from the capital of the VCC.

The right of share acquisition may be provided to any employee, regardless of the type of their agreement at place. This implies that not only labor agreements but also any kind of civil agreements (for example with freelancers) are applicable.

4. How to transfer shares in the VCC?

The shares are freely transferred in written form with notary certification of the signatures. The Articles of Association may introduce simple written form as well.

The share transfer does not require any approval from the other Shareholders.

The law allows the VCC to establish different rules for the share transfer process through the company’s Articles of Association.

In comparison: the process of share transfer in the standard forms of legal companies in Bulgaria is strictly defined by law and the internal company’s rules can barely change it.


The VCC is subject to registration with the Bulgarian Commercial Register following the same technical specifics as the other types of legal entities in Bulgaria. The specific requirements (if any) will be shortly introduced with amendments in the secondary legislation.

Usually, once the corporate documents for company’s incorporation are duly prepared and signed, it will take 2-3 working days for registration with the Commercial Register.

The practical advantage deriving from the nature of the VCC is that the founders are not required to open an initial bank account and to go through the bank KYC processes which is time and cost -saving. The bank account opening process usually takes a week time and in case a foreign shareholder participates it may take more than a few months.

The VCC is subject to the standard requirements for announcement of their ultimate beneficial owners with the Commercial Register.




©2023 Dinova Rusev and Partners Law Office

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This material represents a general overview of the recent developments in Bulgarian legislation as of the date indicated herein. Nothing in this newsletter is intended to provide legal or other professional advice. You should not rely on any information contained in this newsletter as if it were legal or other professional advice. Legal advice can be provided only after thorough analysis of the specific facts and circumstances of your case, as well as consideration of issues that may not be addressed in this material.

Dinova Rusev & Partners Law Office does not accept any liability for losses to any person or entity, acting or refraining from action as a result of this publication.

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