Merchant
Article 1
(1) (Amended, SG No. 83/1996) For the purposes of this Act a merchant shall mean any natural or legal person engaged by occupation in any of the following transactions:
1. purchasing goods or other chattels for the purpose of reselling them in their original, processed or finished form;
2. (amended, SG No. 83/1996) sale of one's own manufactured goods;
3. (amended, SG No. 83/1996) purchasing securities for the purpose of reselling them;
4. (amended, SG No. 83/1996) commercial agency and brokerage;
5. (amended, SG No. 83/1996) commission, forwarding and transportation transactions;
6. (amended, SG No. 83/1996) insurance transactions;
7. (amended, SG No. 83/1996) banking and foreign-exchange transactions;
8. (amended, SG No. 83/1996) bills of exchange, promissory notes and cheques;
9. (amended, SG No. 83/1996) warehousing transactions;
10. (amended, SG No. 83/1996) licence transactions;
11. (amended, SG No. 83/1996) supervision of goods;
12. (amended, SG No. 83/1996) transactions in intellectual property;
13. (amended, SG No. 83/1996) hotel operation, tourist, advertising, information, entertainment, impresario and other services;
14. (amended, SG No. 83/1996) purchase, construction or furnishing of real property for the purpose of sale;
15. (amended, SG No. 83/1996) leasing.
(2) Merchants are:
1. companies;
2. the cooperatives, except housing cooperatives.
(3) Any person which has established a business, which in accordance with its purposes and volume requires that its activities be conducted on a commercial basis even if not listed under para 1, shall also be deemed a merchant.
Persons Who Are Not Merchants
Article 2
The following shall not be deemed merchants:
1. natural persons engaged in farming;
2. artisans, persons providing services through their own labour or members of the professions, except where their activity may be defined as a business within the meaning of Article 1, para 3;
3. persons providing hotel services by letting rooms in their own home.
CHAPTER TWO
(Repealed, SG No. 38/2006, effective 1.07.2007 - (*) amended, in
relation to becoming effective, SG No. 80/2006)
COMMERCIAL REGISTER

Keeping a Commercial Register
Article 3
(Supplemented, SG No. 66/2005, repealed, No. 38/2006, effective
1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006)
Obligation to Register
Article 4
(Amended, SG No. 66/2005, repealed, No. 38/2006, effective 1.07.2007 -
amended, in relation to becoming effective, SG No. 80/2006)
Registration Effect
Article 4a
(New, SG No. 84/2000, repealed, No. 38/2006, effective 1.07.2007 -
amended, in relation to becoming effective, SG No. 80/2006)
Public Nature of the Commercial Register
Article 5
(Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006)
Publishing of Registration
Article 6
(Amended, SG No. 103/1993, supplemented, SG No. 66/2005, repealed,
No. 38/2006, effective 1.07.2007 - amended, in relation to becoming
effective, SG No. 80/2006)
CHAPTER THREE
TRADE NAME AND SEAT

Definition
Article 7
(1) A trade name shall be the name under which a merchant shall carry on its business and under which it shall sign.
(2) (Amended, SG No. 103/1993) In addition to the necessary content established by law, a trade name may also denote the purposes of a business, the names of the partners, and a freely chosen extension. A trade name must correspond to the truth, must not deceive, and must not be offensive to public order and morals.
(3) (New, SG No. 103/1993) The merchant shall mandatorily inscribe its trade name in Bulgarian. It may additionally inscribe it in a foreign language.
Trade Name of a Branch
Article 8
The trade name of a branch shall incorporate the trade name of the merchant and the extension "branch".
Trade Name During Liquidation
Article 9
(Supplemented, SG No. 63/1994)
The trade name of a merchant which has been declared in liquidation shall carry the extension "in liquidation", and upon declaration of bankruptcy - "in bankruptcy".
Change of Trade Name
Article 10
(1) A trade name may be changed upon an application by the merchant which has registered it.
(2) Should a trade name contain the name of a retiring partner, it may be preserved only with that partner's consent.
Exclusive Right
Article 11
(1) A trade name may be used only by the merchant which has registered it.
(2) In case of use of another's trade name the interested parties shall be free to seek an injunction, as well as damages for such use.
Seat and Registered Office
Article 12
(1) A merchant's seat shall be the community where its registered office is located.
(2) A merchant's address shall be the address of its registered office.
Obligation to Provide Data
Article 13
(1) (Previous Article 13, SG No. 84/2000, supplemented, No. 66/2005, amended and supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) A merchant shall provide the following data on all its commercial correspondence and its web site if available: trade name; seat and registered office; standard identification code and bank account. A merchant may also provide a forwarding address. Where a commercial company shows the amount of its capital, it must also indicate what portion of it has been paid in.
(2) (New, SG No. 84/2000, amended, SG No 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The company data shall be shown on the business correspondence of the branch.
Change of Seat
Article 14
(1) (Amended, SG No. 58/2003) (1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Any relocation of a merchant's registered office to another community shall be declared for entry into the commercial register.
(2) (Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(3) (Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(4) (Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
CHAPTER FOUR
ENTERPRISES AND TRANSACTIONS WITH THEM

Transactions With an Enterprise
Article 15
(1) An enterprise as a set of rights, obligations and factual relations shall be transferable by a transaction in writing with the signatures attested by a notary public. The transferor shall advise all creditors and debtors of the effected transfer.
(2) (New, SG No. 58/2003) Where the entire enterprise of a company is transferred, such transfer shall require a decision taken in accordance with Article 262p.
(3) (Renumbered from Paragraph 2, supplemented, SG No 58/2003) Absent another agreement with the creditors, upon the transfer of an enterprise the transferor shall be liable jointly and severally with the transferee. Creditors of recoverable liabilities shall first address the transferor up to the amount of rights obtained.
Registration
Article 16
(1) (Amended, SG No. 58/2003, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The transfer of an enterprise shall be registered in the commercial register simultaneously in the files of both the transferor and the transferee.
(2) (New, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(3) (New, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(4) (Amended SG 104/1996, renumbered from Paragraph 2, SG No. 58/2003) Should the contract transfer real property or another interest therein, the contract shall be registered with the recordation office as well.
Provision of security for creditors
Article 16a
(New, SG No. 42/1999, amended, SG No. 58/2003)
(1) (Amended and supplemented, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The transferee shall manage separately the enterprise transferred onto it for a period of 6 months as from the registry entry of the transfer.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Within the lime limit referred to in paragraph (1), any creditor of the transferor or of the transferee holding a claim that has not been secured and has arisen prior to the date of registration of the transfer may request execution or securing, in compliance with their rights. If the request is not satisfied the creditor shall enjoy the right of privileged satisfaction from the rights that used to be held by its debtor.
(3) Members of the governing body of the transferee shall be liable jointly and severally before creditors for the separate management.
CHAPTER FIVE
BRANCHES

Branch
Article 17
(1) A merchant may open a branch outside the community where its seat is located.
(2) (Amended, SG No. 58/2003, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) A branch shall be registered in the commercial register on the basis of a written application indicating:
1. the seat and purposes of the branch;
2. data concerning the person who manages the branch, and concerning the scope of his representation powers.
(3) (Amended, SG No. 58/2003) The application referred to in paragraph (2) which shall enclose the notarized consent, with a signature specimen, of the person who manages the branch.
(4) (Amended, SG No. 58/2003, supplemented, SG No. 66/2005, repealed, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(5) (Amended, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(6) (New, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(7) (New, SG No. 58/2003, repealed, SG No. 66/2005) .
Branch of a foreign person
Article 17a
(New, SG No. 66/2005)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) A branch of a foreign person registered with the right to engage in commercial activity in accordance with its national law shall be registered in the commercial register.
(2) In addition to the data under Article 17(2), the application for registration shall also contain data on:
1. The legal form and company or the name of the foreign person, as well as the branch name, if different from the one of the foreign person;
2. the register and number, under which the foreign person was recorded, if provided for by applicable law;
3. the law of the state, applicable to the foreign person, if different from the law of an EU Member State;
4. persons, which represent the foreign person according to the register, where it was recorded, where such a register exists, the manner of representation, as well as the liquidators and receivers and their powers.
(3) The following data shall also be recorded in the register:
1. those under paragraph 2, as well as any change thereto, including of winding down of the branch;
2. of dissolution of the foreign person, initiation of liquidation, continuation of activity, termination and conclusion of liquidation;
3. regarding all acts of the bankruptcy court, which are recorded in the register, where on the foreign person was entered, as well as the resolutions under Article 759(1) and Article 760(3), if any;
4. regarding striking out of the foreign person.
(4) A transcript of the following shall be submitted to the register:
1. the founding act, articles or statute of the foreign person, to contain all amendments and supplements, including after the registration of the branch;
2. each annual financial statement of the foreign person, after it has been registered or delivered in accordance with the legislation of the country, where it was registered.
Relocation of a Branch
Article 18
The rules pertaining to a merchant shall apply mutatis mutandis to the seat and registered office of a branch and its relocation.
Account Books of a Branch
Article 19
A branch shall keep its account books as an independent merchant, without preparing a separate balance sheet. The branch of a legal person which is not a merchant within the meaning of this Act and the branch of a foreign person shall further prepare a balance sheet.
Jurisdiction
Article 20
Actions based on disputes arising from a direct relationship with a branch may be brought against the merchant at the seat of the branch as well.
CHAPTER SIX
AGENCY
Section I
Direct Agency

Procurator (Manager)
Article 21
(1) (Amended, SG No. 70/1998) A procurator shall be a natural person commissioned and authorized by a merchant to manage its enterprise for compensation. Such authority may be given to more than one person for either a separate or joint exercising of the procuration. The signatures on the procurator's mandate (procuration) shall be notarized and it shall be submitted by the merchant for registration in the commercial register together with a specimen signature of the procurator.
(2) A procurator shall sign by adding his own name to the merchant's trade name and an extension indicating the procuration.
Procurator's Powers
Article 22
(1) A procurator shall be entitled to perform or effect any acts or transactions related to the carrying on of the business activities, to represent the merchant, and to authorize third parties to perform specific acts. He may not authorize third parties with those of his powers which are derived by operation of law.
(2) A procurator may not alienate or encumber any real property of the merchant except when expressly authorized to do so. The authorization may be restricted to the business of a single branch. No other restrictions shall be binding upon third parties.
Relationship Between Merchant and Procurator
Article 23
The relationship between a merchant and a procurator shall be governed by an agreement.
Binding Effect of Authorization upon Third Parties
Article 24
An authorization shall be binding upon third parties only after being registered in the commercial register.
Termination of Authorization
Article 25
(1) An authorization shall be terminated upon withdrawal by the merchant, and the registration of such withdrawal in the commercial register.
(2) An authorization shall not be terminated by virtue of a merchant's death or placing under judicial disability.
Agent
Article 26
(1) An agent shall be a person authorized by a merchant to perform, for compensation, the acts set forth in the mandate. Absent any other instructions, an agent shall be deemed authorized to perform all acts related to the merchant's usual business. The authorization shall be made in writing and the signature shall be notarized.
(2) An agent shall need express authorization to alienate or encumber real property, to accept bills of exchange, to obtain a loan, or to engage in litigation. Any other restrictions on its mandate shall be binding upon a third party only if that party new or ought to have known of such restrictions.
(3) An agent may not transfer its powers to a third party without the merchant's consent.
(4) An agent shall sign by adding its own name to the trade name and an extension indicating the agency.
Relationship Between Merchant and Agent
Article 27
The relationship between a merchant and an agent shall be governed by an agreement.
Termination of the Mandate
Article 28
The authorization of an agent shall be terminated in accordance with the provisions of civil law.
Restrictions and Liability
Article 29
(1) A procurator or agent may not, without the merchant's consent, effect commercial transactions either on their own behalf or on the behalf of a third party within the framework of their authorization. Consent shall be deemed given if at the time of authorization the merchant knew of the carrying on of such activities and their termination was not agreed upon expressly.
(2) In case of a breach of the obligations set forth in the preceding para the merchant shall be entitled to seek damages or to state that the transactions effected by the authorized persons have been effected on its behalf. The statement shall be made in writing not later than one month of its becoming aware of the transaction, but not later than one year of the effecting of the transaction, and shall be addressed to the procurator or agent and to the third party.
(3) Actions pursuant to para 2 shall expire by limitation after five years from the date the transaction was effected.
Shop Assistant
Article 30
(1) The relationship between a merchant and its assistant shall be governed by a contract.
(2) A shop assistant may not effect transactions on the merchant's behalf. When working in a generally accessible sales area, a shop assistant shall be deemed authorized to effect the transactions which are usually effected in such an area.
Restrictions
Article 31
A shop assistant may not engage in any commercial activity independently or on the behalf of third parties in competition with his employer, except with the latter's express consent.
Section II
Sales Representative

Definition
Article 32
(1) A sales representative shall be a person engaged independently and by occupation in assisting the business of another merchant. A sales representative may be authorized to effect transactions in the name of the merchant, or in its own name but on the behalf of the merchant.
(2) (Supplemented, SG No. 38/2006) The contract between the merchant and the sales representative shall be executed in writing. The merchant may not refer against a sales representative to agreements in deviation of the provisions of Articles 33, 34, Article 36, Paragraph (4) and (5) and Article 40 that stand to the detriment of said representative.
Sales Representative's Obligations
Article 33
(1) (Amended, SG No. 83/1996, previous Article 33, SG No. 38/2006) A sales representative shall cooperate or effect transactions with due care, taking into consideration the merchant's interests. It shall forthwith notify the merchant of any transaction effected by it.
(2) (New, SG No. 38/2006) The sales representative shall be obligated to follow the instructions of the merchant, providing said merchant with the entire information at his/her disposal in relation to the activity thereof.
Merchant's Obligations
Article 34
(1) (Amended and supplemented, SG No. 38/2006) The merchant shall be obligated to provide the trade representative the necessary information and documents for conclusion and execution of the commissioned deals.
(2) (Supplemented, SG No. 38/2006) The merchant shall be obligated to promptly notify the trade representative whether said merchant accepts the deal concluded without authority of representation, as well as whether he has concluded a deal prepared thereby.
(3) (New, SG No. 38/2006) The merchant shall be obligated to provide the trade representative with the information necessary for the implementation of the activity thereof, including of possible considerable reduction of volume of concluded deals as compared to the expected.
Commission Under Del Credere Contracts
Article 35
A sales representative which undertakes to be personally liable for the performance of obligations under effected transactions shall be entitled to an additional commission which shall be agreed upon in writing. The parties may not agree in advance that no such commission shall be owed.
Right to Commission
Article 36
(1) (Amended and supplemented, SG No. 38/2006) A sales representative shall be entitled to a commission for all transactions effected by it or through its assistance during the term of its contract with the merchant. A commission shall also be paid for transactions prepared but not concluded, except in the cases where this is due to a reason for which the merchant may not be faulted.
(2) Where a sales representative is entrusted with a specified territory or circle of clients, it shall also be entitled to a commission for all transactions concluded without its assistance, but with persons from the same territory or with the same clientele.
(3) A sales representative shall be entitled to a commission for any of the merchant's claims which it has collected.
(4) (New, SG No. 38/2006) The merchant shall be obligated to provide the sales representative the information necessary for calculation of the commission due no later than the time limit referred to in Article 38.
(5) (Renumbered from Paragraph (4), supplemented, SG No. 38/2006) Either party shall be entitled to request from the other abstracts from the account books concerning the transactions concluded on the basis of the agency agreement, including those that are necessary to check the commission determined.
Commission Rate
Article 37
(Supplemented, SG No. 38/2006)
Where the commission has not been agreed upon, it shall be deemed to amount to the customary rate paid for the specific activities. If the customary rate cannot be established, the commission shall be determined by the court according to merit.
Commission Payment Term
Article 38
(Amended and supplemented, SG No. 38/2006)
A sales representative's commission shall be paid on a monthly basis. The contract may specify another term for the payment of the commission, but not longer than the end of the month following the quarter during which the relevant transaction was concluded or has to be concluded.
Reimbursement for Customary Expenses
Article 39
A sales representative shall be entitled to reimbursement for the customary expenses related to its activities, unless the agreement provides otherwise.
Compensation and Commission upon Dissolution
Article 40
(Amended, SG No. 103/1993, SG No. 38/2006)
(1) A sales representative, respectively the heirs thereof in the case of his/her death, shall be entitled to a compensation upon termination of agreement when the merchant continues to enjoy benefits from the clientele established by the sales representative or the latter has considerably increased the volume of transactions concluded therewith. The right to such compensation shall be judged in view of all circumstances, including the existence or absence of restrictive commercial clauses.
(2) Such compensation shall be equal to the annual commission of the sales representative, calculated on the basis the sales representative's average annual commission for the entire duration of its agreement, but for not more than the last five preceding years.
(3) The compensation referred to in Paragraph (2) may not be claimed when:
1. more than one year has expired following the termination of the contract without the sales representative having informed the merchant in writing of claiming the compensation due.
2. the contract is rescinded at the fault of the trade representative or has been terminated unilaterally by the trade representative pursuant to Article 47 (1) or (2), except where this has occurred as a result of the permanent incapacitation or age thereof.
3. the trade representative has transferred the legal relationship to another person, including with the agreement of merchant.
(4) Upon termination of contract the sales representative may claim compensation for already concluded or prepared for conclusion deals.
(5) The sales representative shall not be entitled to a commission under Article 36 where pursuant to Paragraph (4) it is due to a previous trade representative, except in the cases where according to circumstances the commission should be divided between the two.
Restrictions Following Termination of Contract
Article 41
(1) Any restrictions on the activities of a sales representative subsequent to the termination of the agreement shall be agreed upon in writing.
(2) Restrictions must encompass the same territory and type of goods or services as the agency agreement. They may not be for more than two years following the termination of the contract. The merchant shall owe a respective compensation for the period of restriction.
(3) Should a sales representative declare the agreement avoided through a fault of the merchant, the sales representative shall be free to discharge itself from the said restrictions not later than one month from the date of the avoidance.
Effect of Restriction
Article 42
Even when not authorized to conclude contracts a sales representative may accept acts performed by third parties to protect their rights against imperfect performance by the merchant. A sales representative may act to secure evidence in name of the merchant. Any restriction on these rights shall be binding upon third parties only if they knew or ought to have known of the said restriction.
Ratification of Contract
Article 43
Should a sales representative conclude contracts without authorization, and the third party did not know of that fact, the contract shall be deemed ratified by the merchant if the merchant fails to reject it upon being notified of it by the sales representative or the third party and inform them correspondingly.
Prohibition on Representation of Competitors
Article 44
A sales representative may represent several merchants as long as they are not in competition among themselves. It may reach agreement with a merchant to be its exclusive sales representative.
Scope of Agency
Article 45
The subject and territory of a sales representative shall be determined by the agency agreement.
Relationship Between Merchant and Sales Representative
Article 46
(1) The internal relationship between the sales representative and the merchant shall be governed by the agreement between them. Absent any other provision, a sales representative shall arrange for its own premises. If the compensation is not indicated in the agreement, the customary compensation for the type of representation shall be due.
(2) Representation under the preceding paragraph may not be delegated to another party in the same territory.
(3) A sales representative shall indicate in the documents issued by it and on its commercial correspondence the information required under Article 13.
Termination of Representation
Article 47
(1) (New, SG No. 103/1993, amended, SG No. 38/2006) Where the sales representation agreement has been concluded for an indefinite term, during the first year any of the parties thereto may terminate it with a month's prior notice, within the second year - with a two month's prior notice, and within the third year - with a three months' prior notice, the parties thereto being unable to negotiate shorter terms. Where a longer period of prior notice has been agreed, that period should be identical for both parties. If not otherwise agreed, the termination of the agreement shall be effective from the end of the calendar month in which the term of prior notice has expired.
(2) (New, SG No. 103/1993) An agreement which has been concluded for a definite period may be terminated before its expiration if the party wishing to terminate it compensates the other party for the damages caused.
(3) (New, SG No. 103/1993) The rights of the sales representative under Article 40 may not be prejudiced by the termination pursuant to paras 1 and 2.
(4) (New, SG No. 38/2006) In case following the expiry of contract for trade representation both parties continue to fulfil their obligations there under, said contract shall be considered extended for an indefinite term. In this case, when determining the term of prior notice referred to under Paragraph (1) the duration of the contract prior to the expiry of its term shall also be taken into consideration.
(5) (Renumbered from Paragraph (1), SG No. 103/1993; renumbered from Paragraph (4), amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) A sales representative that has ceased activity shall apply, within the time limit set forth in Article 4, for expungement of entry into the commercial register.
(6) (Repealed, renumbered from Paragraph (5), amended, SG No. 38/2006, effective 1.07.2007 - amended in relation to becoming effective, SG No. 80/2006) Should a representation be terminated by reasons of death or placing under disability of the sales representative, the heirs or, respectively, the guardian, and in case of bankruptcy the respective court, shall be obligated to request expungement from commercial register.
Applicability
Article 48
The provisions of Articles 32 to 47 shall not apply to persons engaged as representatives or brokers in stock exchange transactions, or as representatives of persons engaged in auction operations.
Section III
Broker

Definition
Article 49
(1) A broker shall be a merchant which by occupation acts as an intermediary so that transactions may be entered into.
(2) (Amended, SG No. 86/1996) As far as brokerage for contracts for the carriage of goods by sea and for stock exchange transactions are concerned, the provisions for the said activities shall apply even when the brokerage is performed by a mercantile broker.
Broker's Journal
Article 50
(1) A broker shall keep a journal in which it shall record on a daily basis all executed contracts. At the end of each day the broker shall date and undersign all entries for that day.
(2) Contracts shall be recorded consecutively in the order of their execution; an entry shall include the names of the contracting parties, the time of execution of the contract and the essential arrangements.
(3) A broker must, upon request, provide the parties with an abstract from its journal containing the full entry concerning their contract.
Brokerage
Article 51
A broker shall be entitled to a commission from one or both parties in accordance with the arrangement reached. Absent such an arrangement, the customary brokerage for the type of transaction in the specific circumstances shall be owed by both parties.
Section IV
Trade Secrets

(Title new, SG No. 103/1993)
Obligation to Protect Trade Secrets
(Title amended, SG 103/1993)
Article 52
In carrying on their activities a procurator, an agent, a shop assistant, a sales representative and a broker must protect the trade secrets of the persons which have commissioned them to perform certain acts, as well as their good name as merchants.
CHAPTER SEVEN
ACCOUNT BOOKS

Obligation to Keep Accounts
Article 53
(1) A merchant shall keep accounts in which it shall record the movements of its enterprise's property. Such movements shall be recorded in chronological order.
(2) A merchant shall, through inventory performed within the time periods prescribed by the Accountancy Act , establish the availability and value of the items of the assets and liabilities of its enterprise's property.
(3) (Supplemented, SG No. 66/2005) A merchant shall sum up the results of its commercial activities on the basis of the entries in its books and inventory, and prepare an annual financial statement and, where necessary, the relevant accounting notes. In the instances, provided for by law, the annual financial statement shall be verified by a certified public accountant.
Continuity Of Opening and Closing Balance Sheet
Article 54
The opening balance sheet for each year shall correspond to the closing balance sheet for the preceding year. A balance sheet shall also be prepared when a merchant winds up its activities.
Admissibility as Evidence
Article 55
(1) Regularly kept account books and entries therein shall be admissible as evidence between merchants for establishing commercial transactions.
(2) Account books kept in violation of the provisions of this Act or the Accountancy Act shall be inadmissible as evidence in favour of the party whose duty it is to keep them.
PART TWO
TYPES OF MERCHANTS
DIVISION ONE
SOLE PROPRIETOR
CHAPTER EIGHT
NATURAL PERSON MERCHANT

Definition
Article 56
Any natural person possessing capacity whose domicile is in the country may register as a sole proprietor.
Restrictions
Article 57
Ineligible to be a sole proprietor shall be a person:
1. who is bankrupt and his rights have not been restored;
2. (amended, SG No. 63/1994) who has intentionally gone bankrupt and has left unsatisfied creditors.
3. (new, SG No 63/1994) who has been convicted for bankruptcy.
Registration
Article 58
(1) A sole proprietor shall be registered on the basis of an application which shall state:
1. the name, domicile, address and Unified Civil Code (EGN);
2. the trade name under which the activities shall be carried on;
3. the seat and the address of the registered office;
4. the purposes of the business.
(2) A specimen of the merchant's signature and an affidavit stating that the person has not been deprived of the right to carry on commercial activities shall be attached to the application.
(3) (New, SG No. 124/1997) Entered in the register shall be all data specified under para 1.
(4) (Renumbered from Paragraph 3, SG No. 124/1997) A person may register only one trade name as a sole proprietor.
Trade Name of Sole Proprietor
Article 59
A sole proprietor's trade name shall incorporate without abbreviation the person's given name and either the surname or patronymic by which he is generally known.
Transfer of Trade Name
Article 60
(1) A sole proprietor's trade name may be transferred to a third party only together with his enterprise. The consent to transfer a trade name shall be given in accordance with Article 15, para 1.
(2) A sole proprietor's heirs, on acquiring the enterprise, shall be free to retain its trade name.
(3) In cases under the preceding paragraphs the new owner's name shall be added to the trade name.
(4) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The transfer shall be registered in the commercial register.
Deletion from the Register
Article 60a
(New, SG No. 84/2000)
The registration of a sole proprietor shall be deleted from the commercial register:
1. (amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) upon termination of the sole proprietor's activity or establishing his/her residence abroad - upon a written request from said sole proprietor;
2. (amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) in case of the sole proprietor's death - upon an application from the heirs;
3. (amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) in case of legal disability of the sole proprietor - upon an application from the guardian or the trustee.
DIVISION TWO
STATE - OWNED AND MUNICIPAL ENTERPRISE
CHAPTER NINE
PUBLIC ENTERPRISE MERCHANT

Status
Article 61
A state-owned and municipal enterprise shall be either a single person limited liability company or a single person joint-stock company. State-owned and municipal enterprises may also form other companies or groups of companies.
Formation
Article 62
(1) State-owned enterprises shall be formed as or transformed into single person limited liability companies or single person joint-stock companies pursuant to a procedure to be established by a law.
(2) Municipal enterprises shall be formed as or transformed into single person limited liability companies or single person joint-stock companies through a resolution of the municipal council.
(3) State-owned enterprises which are not companies may be formed with a law.
DIVISION THREE
COMPANIES
CHAPTER TEN
GENERAL

Definition
Article 63
(1) A company is an association of two or more persons for effecting commercial transactions with joint means.
(2) In cases provided by a law a company may be incorporated by one person.
(3) Companies shall be legal persons.
Types of Companies
Article 64
(1) The types of companies are:
1. general partnership;
2. limited partnership;
3. limited liability company;
4. joint-stock company;
5. partnership limited by shares.
(2) Only the companies set forth in this Act may be established.
(3) (New, SG No. 58/2003) Companies referred to in paragraph (1), subparagraphs (1) and (2) shall be personal, and those in subparagraphs (3) through (5) shall be equity companies.
(4) (Renumbered from Paragraph 3, amended, SG No. 58/2003) Under a law it may be envisaged that a certain activity can be performed only by a certain type of companies.
Partners in a Company
Article 65
(1) A company's founders shall be Bulgarian or foreign natural or legal persons possessing capacity.
(2) A person may participate in one or more companies to the extent such participation is not prohibited by law.
(3) (New, SG No. 84/2000) Whenever a company participates in another company, its rights of associate or single owner shall be exercised by the person entitled to represent the company or by an expressly authorized person.
Preliminary Agreement to Form a Company
Article 66
Persons wishing to form a company may reach agreement on the acts which must be performed so that the incorporation may be prepared. For a breach of obligations based on that agreement the parties shall be liable only for the actual damages caused.
Formation of a Company
Article 67
A company shall be deemed formed on the date of its registration in the commercial register. The application for registration shall be filed by the appointed managing organ.
Interpretation of the Articles of Association
Article 68
The will of the parties and the objective of the interpreted provision shall be taken into account when interpreting the Articles of Association.
Liability for Acts Performed by the Company Prior to Registration
Article 69
(1) Any acts by the founders performed in the name of the as yet unincorporated company prior to the date of its registration shall create rights and obligations for the persons who have carried out the said acts. When transactions are effected it shall mandatorily be noted that incorporation is pending. The persons who have effected the transactions shall be liable jointly and severally for undertaken obligations.
(2) When the transaction has been effected by the founders or a person authorized by them, the rights and obligations shall be transferred ex lege to the incorporated company.
Voidability of Incorporated Company
Article 70
(1) (Amended, SG No. 84/2000) The incorporation of a company shall be voidable only when one of the following violations has been made:
1. there is no constitutive agreement or the constitutive agreement has not been concluded in the form prescribed by the law;
2. the provisions of article 159 and article 163 have not been complied with, in the case of a joint-stock company or a partnership limited by shares;
3. (supplemented, SG No. 66/2005, repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
4. the purpose of the company contradicts law or good morals;
5. the constitutive agreement or the articles of incorporation does not contain the name, the purpose of the company or the size of the contributions, as well as the capital, when required by law;
6. the part of the capital prescribed by law has not been paid in;
7. a smaller number of persons possessing capacity than provided by the law have participated in the incorporation of the company.
(2) (Amended and supplemented, SG No. 84/2000, supplemented, SG No. 58/2003, amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Any interested party, as well as the public prosecutor, may request from the district court of the company's registered office that the company be declared void within one year after the establishment of the company and where the incorporation had been subject to promulgation, after such publication. In the cases under Items 4, 5 and 6 of Paragraph (1), the court shall declare a company void only if the violation has not been already eliminated or cannot be eliminated in a suitable period given by the court in a resolution.
(3) (Supplemented, SG No. 66/2005, amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The court's judgement to declare the company void shall be effective from the date of entry into force. As of that moment the company shall be deemed terminated and the court shall send the judgement for entry into the commercial register, after which liquidation shall be carried out by a liquidator appointed by the official on registration with the Registry Agency.
(4) (New, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(5) (Renumbered from Paragraph 4, SG No 58/2003) Where acts in the name of the company declared void have been carried out, the founders shall be liable jointly and severally and their liability shall be unlimited.
(6) (New, SG No. 84/2000, renumbered from Paragraph 5, SG No 58/2003, amended, SG No. 59/2007) Article 605 of the Code of Civil Procedure does not apply to the incorporation of a company.
Protection of Partnership
Article 71
Any partner in a company may bring an action to the district court of the company's seat to protect its right to be a partner and its individual rights as a partner, when these have been violated by the company's organs.
Non-Monetary Contributions
Article 72
(1) Should a partner or, respectively, a shareholder, make a non-monetary contribution, the articles or, respectively the Articles of Association, shall state the name of the contributor, a full description of the non-monetary contribution, its monetary value, and the grounds for the contributor's rights.
(2) (Supplemented, SG No. 103/1993, amended and supplemented, SG No. 84/2000, supplemented, No. 66/2005, amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The contribution in a limited liability company, a joint-stock company or a partnership limited by shares shall be valued by three independent experts appointed by the official on registration with the Registry Agency. The conclusion of the experts shall contain a full description of the non-monetary contribution, the method of valuation, the resulting valuation and its consistence with the amount of the share of the capital or the number, the nominal and issuing value of the shares subscribed by the contributor. The conclusion shall be presented at registration in the Commercial Register with the application for entry.
(3) (New, SG No. 84/2000, amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The valuation stated in the articles or, respectively, the Articles of Association, shall not be higher than the valuation assigned by the experts.
(4)(Renumbered from Paragraph 3, SG No 84/2000) Should the contributor not agree with the valuation, it may participate in the company with a monetary contribution or withdraw from participation in the company.
(5) (Renumbered from Paragraph 4, SG No 84/2000) The contribution may not have as a subject future labour or services.
Paying Up of Non-Monetary Contributions
Article 73
(1) The contribution of a right for the creation or transfer of which a notarial form is required shall be effected with the articles. For contributions to a joint-stock company the consent in writing of the contributor and a description of the contribution with a notarized signature shall be attached to the Articles of Association.
(2) The contribution of any other rights shall be made pursuant to the form the law provides for their creation or transfer.
(3) ( Supplemented, SG No. 84/2000) The contribution of a claim shall be made with the articles or, respectively, the Articles of Association, and the contributor shall attach evidence of having notified the debtor of the transfer of the claim. The requirement for notification does not apply when the claim is against the company itself.
(4) Title to a contribution shall be acquired from the moment of the company's formation.
(5) (Amended SG 104/1996) Where a contribution has as a subject a real right over real property, the respective organ of the company shall, after such right has arisen, present an abstract of the articles, certified by a recordation judge, for recording in the recordation office and, whenever necessary, separately the contributor's consent as well. Such organ shall present an abstract of the Articles of Association certified by a recordation judge and the contributor's consent. In making the recording the recordation judge shall ascertain the contributor's rights.
Remission and Set-Off Ban
Article 73a
(New, SG No. 84/2000)
The obligations of the partners in a limited liability company and of the stock-holders for contributions to the capital shall not be remitted except when reduced, nor offset.
Concealed Non-Monetary Contribution
Article 73b
(New, SG No. 84/2000)
(1) When a joint-stock company, within a 2-year period of its incorporation, acquires rights at a price exceeding 10 per cent of the capital, from a person who has subscribed shares at the incorporation of the company, this will require a decision of the General Meeting of the Shareholders and art. 72, paragraph 2 shall apply to the transferred rights.
(2)(Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The transaction shall have effect after entry of the decision of the General Meeting in the Commercial Register.
(3) Paragraphs 1 and 2 shall not apply to rights acquired in the course of the company's usual activity, on the stock exchange or under the supervision of an administrative or judiciary body.
Payments to Partners and Shareholders
Article 73c
(New, SG No. 58/2003)
Payments to partners and shareholders arising from participation stakes or shares in a company which have been pledged or placed under an attachment shall be made if the creditor which holds such pledge or attachment does not object within one month following a written notice. In the case of an objection, the amount due shall be deposited with a bank to secure the creditor.
Repeal of a Resolution of the Company's General Meeting
Article 74
(1) Every partner or shareholder may bring an action before the district court of the company's seat for the repeal of a resolution of the general meeting when such resolution is inconsistent with a mandatory provision of the law or with the articles or, respectively, the Articles of Association of the company. The action shall be brought against the company.
(2) The action shall be brought within 14 days of the date of the meeting when the plaintiff was present or was duly notified, or otherwise within 14 days of learning of the resolution, but not later than three months after the date of the general meeting.
(3) A partner or shareholder may intervene in a proceeding in accordance with the provisions of the Code of Civil Procedure. It may carry on the proceedings even after the withdrawal of the original plaintiff.
(4) (New, SG No. 59/2007) The action shall be examined according to the procedure established by Chapter Thirty-Three "Proceedings on Collective Actions" of the Code of Civil Procedure, where the contested resolution has been passed by the general meeting of a joint-stock company with issued bearer shares or by an investment company of the open-end type. Exclusion from participation shall not be admitted in this case.
Subsequent Voiding of Annulled Resolution
Article 75
(1) The instructions given by the court in repealing a general meeting resolution concerning the interpretation of the law, the memorandum of association or the Articles of Association shall be binding on the general meeting whenever it discusses the same issue again.
(2) Resolutions or acts by the company's organs which are in contravention of an effective court ruling are null and void. Each partner or shareholder may at any moment refer to such nullity or request its proclamation by the court.
CHAPTER ELEVEN
GENERAL PARTNERSHIP
Section I
General Provisions

Definition
Article 76
A general partnership shall be a company formed by two or more persons for the purpose of effecting commercial transactions by occupation under a joint trade name. The partners shall be liable jointly and severally and their liability shall be unlimited.
Trade Name
Article 77
The trade name of a partnership shall consist of the surnames or trade names of one or more of the partners with the extension "sabiratelno druzhestvo" [general partnership] or "sadruzhie" ("s-ie") [partners].
Content of Articles of Partnership
Article 78
A partnership's articles shall be drawn up in writing with notarized signatures of the partners and shall state:
1. (amended and supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) the name and domicile or, respectively, the trade name, the seat and standard identification code, as well as the address of each partner;
2. (amended, SG No. 103/1993, supplemented, SG No. 124/1997) the trade name, the seat, the head-office address, and the purposes of the partnership;
3. the type and amount of each partner's contribution and the valuation thereof;
4. the manner of distribution of profits and losses among the partners;
5. (amended, SG No. 103/1993) the manner of management and representation of the partnership.
Registration of the General Partnership
Article 79
(1) The application for registration of the general partnership in the commercial register shall be signed by all partners and the articles of partnership shall be attached to it.
(2) Registered in the register shall be the information under Items 1, 2 and 5 of the preceding article.
(3) The persons authorized by the articles of partnership to represent the partnership shall submit specimen signatures.
Section II
Partners' Legal Relationships

Primacy of the Articles of Partnership
Article 80
The partners' legal relationships shall be governed by this Section, unless the articles of partnership provide otherwise, with the exception of the provision of Article 87.
Compensation for Expenses and Damages
Article 81
(1) A partner shall be entitled to reimbursement for necessary expenses incurred in the course of the partnership's business and to compensation for damages suffered in connection with such business.
(2) The partnership shall pay the interest as set by law on such expenses incurred or damages suffered by a partner.
Obligation to Pay Interest
Article 82
A partner which is in arrears in paying its monetary contributions or receives or, respectively, takes partnership money for itself without being entitled to do so, shall owe the partnership the repayment of all such moneys and the interest as set by law. Should the damages for the partnership be greater, the partnership may seek compensation for the balance.
Prohibition on Competition
Article 83
(1) (Supplemented, SG No. 103/1993) A partner may participate in another company or enter into transactions related to the purposes for which the partnership was set up, on its own account or on account of a third party, only with the consent of the other partners.
(2) (Amended, SG No. 103/1993) In case of a violation of para 1 the partnership may request compensation for the damages suffered or state that it shall assume the rights and obligations under the concluded transactions. The statement must be made in writing within one month of acquiring knowledge of the transaction, but not later than one year of its conclusion, and be forwarded to the partner and the third party.
(3) The right to an action pursuant to the preceding paragraph shall expire after three months from the date of the partners' becoming aware of the said act, or after three years of the commitment of the said acts when the partners have no knowledge of them.
Management
Article 84
(1) Each partner shall be entitled to take part in the management of the partnership's business, except when management has been assigned with the articles of partnership to one or several of the partners or to a third party.
(2) The consent of all partners shall be required for the acquisition or disposal of real rights over real property, for the appointment of a manager who is not a partner, or for executing an agreement for a cash loan exceeding a sum fixed in the articles of partnership.
Revocation of Management Assignment
Article 85
(Amended, SG No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006)
The resolution to assign the management to one or several partners may be revoked by the district court of the partnership's seat upon an action brought by some of the partners, if the managers have committed a breach of their obligations, as well as on other grounds provided for in the articles of partnership. The judgement of the court shall be sent ex officio to the Registry Agency for entry into the Commercial Register.
Partner's Right to Exercise Control
Article 86
A partner which does not participate directly in the management shall be entitled to obtain information on the partnership's business, to inspect the books, the partnership and other papers, and to ask for explanations from the managers.
Resolutions
Article 87
Where the articles of partnership require that resolutions be adopted with a majority vote, each partner shall be entitled to one vote. Resolutions shall be recorded in the minutes book.
Section III
Partners' Relationship With Third Parties

Liability of the General Partnership
Article 88
(Amended, SG No. 103/1993)
When bringing an action against the partnership the plaintiff may also name as defendants one or several of the partners. Forcible execution shall be directed first against the partnership, and, in case of impossibility for satisfaction, against the partners.
Representation
Article 89
(1) Each partner shall represent the partnership, unless the articles of partnership provide otherwise.
(2) A limitation upon the representative powers of a partner shall not be binding upon bona fide third parties if it is not registered in the commercial register.
Revocation of Representative Powers
Article 90
The representative powers of a partner may be revoked pursuant to Article 85.
Partners' Plea
Article 91
A partner may, in addition to the partnership's pleas, make its personal pleas before the partnership's creditors.
Liability of Newly Admitted Partners
Article 92
The liability for all of the partnership's debts of a newly admitted partner in an existing partnership shall equal that of the other partners.
Section IV
Dissolution of a Partnership and Termination of a Partners'
Participation

Grounds for Dissolution
Article 93
A general partnership shall be dissolved upon:
1. (supplemented, SG No. 103/1993) expiration of its term or under other circumstances provided in the articles of partnership;
2. the agreement of the partners;
3. declaring the partnership bankrupt;
4. where there is no other provision, death or the placing under judicial disability of a partner or dissolution of a partner which is a legal person;
5. (amended, SG No. 63/1994) request of the trustee in bankruptcy in case of bankruptcy of a partner;
6. notice of termination from a partner;
7. a court ruling in the cases established by law.
Dissolution upon Notice from a Partner
Article 94
Where a partnership has been formed for an indefinite period of time each partner may request its dissolution by sending at least six months prior notice in writing to all remaining partners, unless the articles of partnership provide otherwise.
Dissolution by Court Order Dismissal of Partner
Article 95
(1) The district court may dissolve a partnership upon an action brought by a partner when another partner has deliberately or in gross negligence omitted to perform an obligation of its under the articles of partnership or the performance of the obligation has become impossible. This rule shall also apply whenever a partner acts against the interests of the partnership.
(2) Upon an action brought by a partner the court may, instead of dissolving the partnership, dismiss the partner which is at fault.
Dissolution upon Notice from a Private Creditor of a Partner
Article 96
(1) The creditor of a partner which in the course of six months cannot be satisfied by forcible execution upon the debtor's personal property may attach that partner's liquidation share and request the dissolution of the partnership upon a notice in writing pursuant to the procedure set forth in Article 94.
(2) A partnership shall not be dissolved in case the partnership or the remaining partners repay the debt following the attachment pursuant to the preceding paragraph. In this case only the participation of the debtor partner shall be terminated, unless the partners decide otherwise.
Perpetuation of Partnership
Article 97
(1) The partners may provide in the articles that the partnership shall continue to exist in the case of termination of the participation of a partner. In this case the remaining partners shall buy out the share of the partner which has terminated its participation, and in the case of a partner's death, those of its heirs who wish shall be admitted as partners. The heirs shall state their intent to be admitted as partners not later than three months from the date of the opening of the succession.
(2) In case the heirs do not wish to be admitted as partners, as well as in case of termination of the participation of a partner, the partnership shall pay the value of the share in the partnership's assets of the decedent or the partner which has terminated its membership, and their share in the annual profits for the period up to the death or termination of the participation.
Limitation
Article 98
(1) The right of action against a partner for obligations of the partnership shall expire by limitation after five years, except where the right of action against the partnership is subject to a shorter limitation.
(2) ( Supplemented, SG No. 58/2003) The limitation period shall run from the date on which the dissolution of the partnership, its transformation or the termination of the participation of the partner, is registered in the commercial register.
(3) An interruption of the limitation with respect to the dissolved partnership shall also apply to those partners which were partners at the time of the dissolution.
CHAPTER TWELVE
LIMITED PARTNERSHIP
Section I
General Provisions

Definition
Article 99
(1) A limited partnership shall be formed with articles of partnership between two or more persons for carrying out commercial activities under a common trade name, whereby for the partnership's obligations one or more of the partners shall be liable jointly and severally and their liability shall be unlimited, and the remaining partners' liability shall not exceed the amount of the agreed upon contribution.
(2) (Repealed, renumbered from Paragraph 3, SG No. 103/1993) The provisions for the general partnership shall apply mutatis mutandis to the limited partnership, to the extent this chapter does not provide otherwise.
Form
Article 100
The articles of partnership shall be drawn up in writing with notarized signatures of the partners.
Trade Name
Article 101
(1) The company's trade name shall contain the extension "komanditno druzhestvo" [limited partnership] or the abbreviation "KD" and the name of at least one of the general partners.
(2) The names of limited partners shall not be incorporated in the trade name of a limited partnership, but in case this has occurred those partners shall be deemed to bear unlimited liability vis-а-vis the creditors of the partnership.
Content of the Articles of Partnership
Article 102
A limited partnership's articles shall state:
1. the trade name of the partnership;
2. the seat and the registered office;
3. the purposes for which the partnership is set up;
4. (supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) the name and domicile or, respectively, the trade name, the seat and standard identification code, as well as the address of each partner;
5. (repealed, SG No. 84/2000);
6. the type and amount of the partners' contributions;
7. the manner of distribution of profits and losses among the partners;
8. the manner of management and representation of the partnership.
Registration
Article 103
(Amended, SG No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006)
A limited partnership shall be registered with the commercial register by the general partners, which shall file the articles of partnership and specimen signatures.
Section II
Partners' Legal Relationships

Primacy of the Articles of Partnership
Article 104
The partners' legal relationships, to the extent the articles of partnership contain no provision to the contrary, shall be governed by this Section.
Management
Article 105
A limited partnership shall be managed and represented by the general partners. A limited partner has no right to manage the partnership and block resolutions of the general partners.
Acts by a Limited Partner
Article 106
Should a limited partner effect transactions in the name and on behalf of the partnership without being the partnership's manager or agent it shall be personally liable, except when the partnership ratifies the transaction.
Prohibition Concerning an General Partner
Article 107
The rule of Article 83 shall apply to a general partner.
Limited Partner's Rights
Article 108
A limited partner may inspect the partnership's books and request a transcript of its annual financial statement. In case of refusal the district court shall, on the motion of such partner, order that these be placed at the disposal of the partner.
Limited Partner's Participation in Profits and Losses
Article 109
(1) Where a limited partner has not paid in full the stipulated contribution, such contribution shall be deducted from its share of the profits.
(2) A limited partner shall participate in losses up to the amount of the stipulated contribution. It shall not be bound to pay back any profits it has received to offset subsequent losses.
Prohibition on Distribution of Profits
Article 110
Where at the end of a calendar year it is established that a partnership has shown losses which affect the contributions made, no profits shall be distributed before the contributions have been restored to their stipulated amounts.
Section III
Partners' Legal Relationships With Third Parties

Liability of Limited Partner
Article 111
A limited partner shall be liable towards the partnership's creditors to the extent of its stipulated contribution, even when it has not been paid in full.
Liability Prior to Registration
Article 112
A limited partner shall bear unlimited liability with respect to transactions entered into by it in the name of the partnership prior to its formation, or after such formation whenever the creditor did not know that it was contracting with a limited partner.
CHAPTER THIRTEEN
LIMITED LIABILITY COMPANY
Section I
General Provisions

Definition
Article 113
A limited liability company may be formed by one or more persons which shall be liable for the company's obligations with their contributions to the company's registered capital.
Form of Memorandum of Association
Article 114
(1) (New, SG No. 103/1993) The Memorandum of Association shall be executed in writing.
(2) (Previous Article 114, SG No. 103/1993) A partner may be represented by an agent holding a special power of attorney with notarized signature.
(3) (New, SG No. 103/1993) When the limited liability company is formed by one person, a constitutive deed shall be drawn up instead of Memorandum of Association.
Content of Memorandum of Association
Article 115
The Articles of Association shall state:
1. (amended and supplemented, SG No. 124/1997) the company's trade name, seat, and head-office address;
2. the purposes and the time period for which the company is being set up;
3. (supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) the name or, respectively, the trade name, the seat and standard identification code, as well as the address of each partner;
4. (supplemented, SG No. 84/2000) the registered capital. Where the full amount has not been paid at incorporation, the articles shall set the time periods and terms for payment. The time period for paying up the full amount of the capital shall not exceed two years after the company's registration, or the increase of capital respectively;
5. the interests of the partners;
6. the management and manner of representation;
7. the privileges of the partners, where agreed upon;
8. other rights and obligations of the partners.
Trade Name
Article 116
(1) The trade name of a company shall contain the extension "druzhestvo s ogranichena otgovornost" [limited liability company] or the abbreviation "OOD".
(2) Should all the capital be owned by one person, the trade name shall contain the extension "ednolichno OOD" [single person limited liability company]
Capital and Shares
Article 117
(1) (Amended, SG No. 100/1997) The registered capital of a limited liability company shall be not less than BGN 5,000. It shall consist of the interests of the company's partners, and no interest shall be smaller than BGN 10,.
(2) (Amended, SG No. 66/2005) The sum total of all interests shall be equal to the registered capital, and the value of each interest shall be a multiple of 10
(3) The interests of the individual partners may be of unequal value.
(4) An interest may be held jointly by several persons.
Liability of Founders
Article 118
(1) The founders shall be liable jointly and severally before the company for damages caused in the course of its formation, if they have not acted with due care.
(2) The founders shall not be entitled to remuneration for the formation of the company from the registered capital.
Registration
Article 119
(1) For registration of a company in the commercial register it shall be necessary:
1. to file the Articles of Association;
2. to have an appointed manager or managers;
3. (amended, SG No. 84/2000) each partner to have paid at least one third of its interest, but not less than BGN 10;
4. at least 70 per cent of the registered capital to have been paid.
(2) The data under Items 1, 2, 3, 4 (only the amount of the registered capital) and 6 of Article 115 shall be registered in the register and published.
(3) (New, SG No. 114/1999, amended, SG No. 39/2005) For recording in the commercial register the performance of a business activity as an investment intermediary and of any other activity for which a separate law stipulates the performance thereof after obtaining permission from a government authority, the respective license or permission shall be presented.
(4) (New, SG No. 84/2000) In case of amending or supplementing the Articles of Association, a copy of the articles containing all amendments and supplements and certified by the body representing the company, shall be presented at the Commercial Register.
Section II
Partners' Rights and Obligations

Shares
Article 120
(1) Each partner shall pay up or contribute its interest as provided in the Articles of Association.
(2) (Repealed, SG No. 84/2000).
Consequences of Failure to Pay Up or Contribute One's Share
Article 121
(1) The failure to pay up or contribute an interest shall constitute grounds for the expulsion of a partner from the company. A partner which has failed to pay up or contribute its interest within a specified period shall owe interest at a rate determined by operation of law, and compensation for damages in excess of such interest.
(2) Where the interest cannot be paid up or contributed by the partner owing such payment or contribution, and cannot be sold to a third party, the remaining partners must pay up the balance in proportion to their interests or reduce the company's registered capital in accordance with established procedures.
Admitting a New Partner
Article 122
A new partner shall be admitted by the general meeting upon an application in writing, in which it shall state that it accepts the terms of the Articles of Association. The resolution to admit the partner shall be registered in the commercial register.
Partners' Rights
Article 123
Each partner shall be entitled to take part in the management of the company, in the distribution of profits, to be informed of the company's affairs, to review the company's books and to liquidation proceeds.
Partners' Obligations
Article 124
The partners must pay up or contribute their interests, take part in the management of the company, provide assistance for the carrying out of its activities, as well as carry out the resolutions of the general meeting.
Termination of Participation in a Company
Article 125
(1) The participation of a partner shall be terminated upon:
1. death or disability;
2. expulsion;
3. dissolution and liquidation, in the case of a legal person;
4. bankruptcy.
(2) A partner may terminate its participation in a company with a notice in writing made at least 3 months prior to the termination.
(3) Accounts shall be settled on the basis of the balance sheet for the last day of the month of termination of the participation.
Expulsion of a Partner
Article 126
(1) (Amended, SG No. 58/2003) A partner which has not paid up or contributed its interest stake shall be deemed expelled is it fails to pay up or pay in its stake within a time limit as determined additionally by the general meeting, which cannot be less than one month. The time period shall be determined by a majority of one half of the capital. The manager shall inform the partner in writing of such additional time period and warn it of the expulsion.
(2) In the case of para 1 the partner shall lose its title to any contributions made.
(3) A partner may be expelled by the general meeting following a notice in writing where it:
1. fails to perform its obligations for providing assistance for the carrying out of the activities of the company;
2. fails to abide by resolutions of the general meeting;
3. acts against the interests of the company.
4. (new, SG No. 84/2000, amended, SG No. 58/2003) fails to make an additional cash payment, in case the partner has not exercised its right to retire referred to in article 134, paragraph (2).
Company Share
Article 127
Each partner shall have a company interest in the company's assets the amount of which shall be determined in proportion to its interest in the registered capital, unless otherwise agreed.
Certificate of Participation
Article 128
The certificates issued to the partners for evidencing their participation in the company shall not be negotiable securities.
Transfer of Shares
Article 129
(1) An interest in a limited liability company may be transferred and inherited. The transfer of an interest from one partner to another shall be unrestricted, and the transfer to third parties shall be subject to the provisions for admitting new partners.
(2) An interest in a limited liability company shall be transferred with notarized signatures and shall be registered in the commercial register.
Liability upon Transfer
Article 130
The transferee shall be liable jointly and severally with the transferor for any payments to the registered capital due at the date of transfer.
Partition of a Share
Article 131
The partition of an interest shall be admissible only with the consent of the partners, unless otherwise agreed.
Joint Ownership of an Interest
Article 132
Where one interest belongs to several persons they may exercise their rights over it only jointly. They shall be liable jointly and severally for any obligations arising from such interest. The joint owners of the interest shall designate a person to represent them before the company.
Profits and Payments
Article 133
(1) The partners cannot claim their interests as long as the company exists. They are only entitled to part of the profits in proportion to their interests, unless otherwise agreed.
(2) No interest on the partner's profits may be agreed upon.
Additional Monetary Contributions
Article 134
(1) For covering losses and in case of temporary shortage of cash the partners may be required, by a general meeting resolution, to make additional monetary contributions within a fixed period. The additional contributions shall be in proportion to the respective interests in the capital, unless otherwise determined.
(2) (Amended, SG No. 58/2003) A partner which has not voted for the decision referred to in paragraph (1) shall have the right to terminate its participation in the company in accordance to article 125, paragraphs (2) and (3). This right shall be exercisable within one month following the meeting, for partners that have attended or have been legitimately invited, or following the notice, for all other partners.
(3) (Amended, SG No. 58/2003) The additional contributions shall not affect the company's registered capital. It may be agreed that the company shall pay interest on them. Article 73c shall not apply to refunds of additional cash contributions.
Section III
Management

Types of Organs
Article 135
(1) The company's organs shall be:
1. the general meeting;
2. the manager (managers).
(2) The manager does not necessarily have to be a partner.
General Meeting of Partners
Article 136
(1) The general meeting of partners shall consist of the partners.
(2) The company's manager shall take part in the general meeting's sittings in a consultative capacity.
(3) Where the number of employees exceeds 50, they shall be represented in the general meeting in a consultative capacity.
Powers of the General Meeting
Article 137
(1) The general meeting shall:
1. amend the Articles of Association;
2. (amended, SG No. 103/1993) admit and expel partners, give consent on the transfer of an interest to a new partner;
3. approve the annual report and balance sheet, distribute the profits and resolve on their payment;
4. resolve on the increase or decrease of the registered capital;
5. appoint a manager, fix his remuneration and relieve him of liability;
6. resolve on setting up or closing down branches and participation in other companies;
7. resolve on the acquisition or alienation of real property and real rights therein;
8. resolve on bringing a company action against the manager or comptroller and appoint an attorney to proceed with the suits against them;
9. resolve on additional monetary contributions.
(2) Each partner has as many votes in the general meeting as its interest of the capital, unless the articles provide otherwise.
(3) (Amended, SG Nos. 103/1993, 84/2000, supplemented, SG No. 58/2003) Resolutions under Items 1, 2 and 9 of para 1 shall be adopted with a majority of more than three quarters of the capital, and resolutions under Item 4 - unanimously; a greater majority may be provided in the Articles of Association. The partner whose expulsion is put to a vote shall not vote and its interest stake shall be deducted from the capital when determining the majority. All remaining resolutions shall be adopted with a majority of the capital, unless the articles provide otherwise.
(4) The partners may vote by proxy only when such proxy holds a special power of attorney in writing; the above rule shall not apply to partners which are legal persons or to agents by operation of law.
(5) The general meeting shall adopt resolutions on labour and social issues only after hearing the position of a representative of the company's employees.
Convening a General Meeting
Article 138
(1) A general meeting shall be convened by the manager at least once every year.
(2) The manager shall also convene a general meeting upon the request in writing of the partners whose interests amount to at least one tenth of the capital. Should the manager fail to convene a general meeting within two weeks, the partners which have requested its convening shall be entitled to do so.
(3) (Supplemented, SG No. 58/2003) The manager shall convene a general meeting immediately should the losses exceed one fourth of the registered capital, and also when the net worth of the company's property under article 247a, paragraph (2) should fall below the amount of the registered capital.
Notice of General Meeting
Article 139
(1) The general meeting shall be convened by a notice in writing received by each partner at least 7 days before the date of the meeting, unless the articles provide otherwise. The notice shall specify the business to be transacted.
(2) general meeting resolutions may be adopted in absentia when all partners have stated in writing their consent for the resolution.
Registration of Resolutions
Article 140
(1) The general meeting resolutions which are related to registrations pursuant to Article 119, para 2 shall be registered in the commercial register.
(2) Para 1 shall apply to the resolutions of the owner of a single person company.
(3) (New, SG No. 84/2000, amended, SG No. 58/2003) Resolutions related to amending or supplementing the Articles of Association or termination of the company shall come into effect after their entry in the Commercial Register.
(4) (New, SG No. 58/2003) Increase or reduction of capital, admission or expulsion of a partner, transformation of the company, election or dismissal of a manager, as well as appointment of a liquidator shall come into effect after their entry in the Commercial Register.
Management and Representation
Article 141
(1) The manager shall organize and direct the activities of the company in accordance with the law and the general meeting resolutions.
(2) (Supplemented , SG No. 84/2000) The company shall be represented by the manager. Where several managers have been appointed each one of them may act independently, unless the articles provide otherwise. Other restrictions of the representative power of the manager shall not have effect with regard to third persons.
(3) (Amended, SG No. 84/2000, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The name of the manager, who shall present a notarized consent with a specimen signature, shall be registered in the commercial register.
(4) (New, SG No. 58/2003) The empowerment of the manager can be withdrawn at any time and his name can be removed from the commercial register.
(5) (New, SG No. 58/2003, amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The manager may request his own removal from the commercial register under a written notice addressed to the company. Within one month of receiving such notice, the company must apply for registration of his discharge in the commercial register. If the company fails to do so, the manager may declare for registration this circumstance himself and that entry shall be made regardless of whether another person has been elected to replace him.
(6) (New, SG No. 66/2005) The empowerment and its removal will have effect in regard to good faith third parties as of its registration.
(7) (New, SG No. 58/2003, renumbered from Paragraph 6, SG No 66/2005) Relations between the company and the manager shall be regulated under a management contract. The contract shall be executed in writing on behalf of the company by a person authorized by the general meeting of partners, or by the sole proprietor.
Prohibition on Competition
Article 142
(1) Without the consent of the company the manager may not:
1. effect commercial transactions in his own or in a third party's name;
2. participate in partnerships and partnerships limited by shares, and in limited liability companies;
3. hold positions in managing organs of other companies.
(2) The limitations under para 1 shall apply when the activities carried out are similar to those of the company.
(3) (Amended, SG No. 58/2003) For violations of his obligations under para 1 the manager shall owe indemnity for damages caused to the company.
Company Books
Article 143
(1) The company shall keep a book of interests and minutes book on the general meeting resolutions.
(2) The value of each partner's interest, the payments made and all relevant changes thereto shall be recorded in the book of interests.
(3) The manager shall be responsible for the regular keeping of the company books.
Comptroller
Article 144
(1) The articles may provide for the appointment of a comptroller (comptrollers) who shall supervise the observance of the articles, the taking of proper care of the company's property and shall report to the general meeting.
(2) The following may not be comptrollers:
1. the managers, their deputies and company employees;
2. spouses, descendants or ascendants and collateral relatives to the third degree of the persons under the preceding Item;
3. persons who with a sentence have been deprived of the right to hold a position of financial accountability.
(3) In a single person company the comptroller shall be appointed by the owner.
Liability of the Manager and the Comptroller
Article 145
The manager and the comptroller shall be financially liable for damages caused to the company.
Auditors
Article 146
(1) Supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The company's annual financial statement shall be audited by one or several auditors who shall be certified public accountants in the cases provided by the law.
(2) Such audit shall be a condition for approving the annual financial statement.
(3) The auditors shall be appointed by the general meeting before the expiration of the calendar year. They shall be liable for the proper and unbiased audit and for maintaining confidentiality.
(4)(New, SG No. 84/2000, amended, SG No. 66/2005, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The adopted annual financial statement shall be presented at the Commercial Register.
Management of a Single Person Limited Liability Company
Article 147
(1) The single owner of the capital shall manage and represent the company either personally or through an appointed by it manager. In case the owner is a legal person the manager of such legal person or a person designated by him shall manage the company.
(2) (Supplemented , SG No. 84/2000) The single owner of the capital shall resolve on the issues falling within the powers of the general meeting, minutes of which shall be taken in the relevant form for the general meeting resolutions.
(3) (New, SG No. 84/2000) Agreements between the single owner and the company, when it is represented by the single owner, shall be concluded in a written form.
Section IV
Amending the Articles of Association

Increase of Capital
Article 148
(1) The registered capital may be increased through:
1. increasing the value of the interests;
2. subscribing new interests;
3. admitting new partners.
(2) The partners may increase the value of the interests pro rata to their holdings, unless the Articles of Association or the general meeting resolution provide otherwise.
Reduction of Capital
Article 149
(1) (Amended, SG No. 70/1998, No. 84/2000) The registered capital may be reduced to not less than the minimum amount, established by law, by a resolution to amend the Articles of Association observing the requirements of Articles 150 and 151. In such a case, a simultaneous reduction or increase of the registered capital may be made under the procedure of article 203.
(2) The resolution shall state the purpose of the reduction, its amount and the manner through which it shall be accomplished.
(3) The reduction may be effected through:
1. reducing the value of interests;
2. cancellation of the interest of a partner which has terminated its participation;
3. relieving of the obligation to pay up the unpaid portion of the registered capital.
Notice to Creditors
Article 150
(1) (Supplemented, SG No. 66/2005, amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The resolution to reduce the registered capital shall be submitted to the Commercial Register and published. With the publication thereof it shall be considered that the company has declared readiness to provide security for claims or to pay its obligations as of the moment of publication to the creditors which do not agree with the reduction.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The creditor's consent for the reduction shall be assumed if within three months of the publication they do not express in writing their objection.
(3) (Repealed, SG No. 84/2000).
Registration of the Reduction
Article 151
(1) The amendment to the articles with which the registered capital is reduced shall be registered upon expiration of the time period specified in the previous article.
(2) Attached to the application for registration shall be proof of observance of the requirements of Article 150 and a statement in writing of the manager that either security has been provided or the debt has been repaid to the creditors which have not consented to the reduction.
Creditors' Protection
(Heading amended, SG No. 104/2007)
Article 152
(1) (Redesignated from Article 152, SG No. 104/2007) If the data provided by the managing director for recordation of the reduction are untrue, he shall be liable for the damages caused to the creditors to the extent they could not be satisfied from the company. Where there are several managing directors, they shall be liable solidarily.
(2) (New, SG No. 104/2007) Any creditor referred to in Article 150 (1), who has expressed his opposition to the time limit under Article 150 (2) and has not received satisfaction or sufficient security of the claim thereof within the said time limit, may approach the court with a motion to duly grant an injunction for the claim thereof according to the procedure for securing of actions by means of a garnishment or preventive attachment. The injunction shall be dissolved if recordation of the reduction of capital is refused or if the creditor receives satisfaction of the claim thereof.
Payments Pursuant to Reduction
Article 153
(Supplemented, SG No. 84/2000)
Payments to the partners pursuant to a reduction of the registered capital may be made only after the reduction has been registered, and after the creditors who have not agreed with the reduction have received security or payment.

Section V

Dissolution of the Company
Dissolution and Liquidation of the Company

Article 154
(1) The company shall be dissolved:
1. with the expiration of the term set in the articles;
2. (amended, SG No. 84/2000) upon decision of the partners adopted with a three quarters majority of the interests, unless the articles provide for a greater majority;
3. through a consolidation or merger with a joint-stock company or another limited liability company;
4. upon being declared bankrupt;
5. by a decision of the district court in cases provided for by law.
(2) The articles may provide for other grounds for dissolution of the company.
Dissolution by a Decision of the Court
Article 155
(Amended, SG No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006)
The company may be dissolved by a decision of the district court of its registered office upon:
1. an action by the partners showing serious cause. The action shall be brought against the company if the plaintiffs' interests represent more than one fifth of the registered capital;
2. (amended, SG No. 84/2000) an action by the public attorney where the activities of the company are in contravention to the law.
3. (new, SG No. 58/2003) an action by the public attorney where for three months there has not been any manager registered for the company.
Liquidation of a Company
Article 156
(1) In the case of dissolution of a company pursuant to Article 154, Items 1, 2 and 5 and Article 155 a liquidation procedure shall be initiated.
(2) The company's liquidator shall be its manager, except where another person has been appointed with the articles or with a resolution of the general meeting.
(3) Upon request of the comptroller or of partners holding at least one tenth of the interests the court may appoint another liquidator.
(4) The liquidation of the company shall be performed pursuant to Chapter Seventeen.
Dissolution of a Single Person Limited Liability Company
Article 157
(1) A company in which the capital is owned by a single natural person shall be dissolved upon the death of such person, except where provided otherwise or where the heirs wish to continue its activities.
(2) Where the capital is owned by a single legal person the company shall be dissolved with the dissolution of that legal person.
CHAPTER FOURTEEN
JOINT-STOCK COMPANY
Section I
General Provisions

Definition
Article 158
(1) A joint-stock company is a company the capital stock of which is divided into shares. The company shall be liable before its creditors with its assets.
(2) The trade name of the joint-stock company shall include the extension "aktsionerno druzhestvo" [joint-stock company] or the abbreviation "AD".
Number of Founders
Article 159
(Amended, SG No. 84/2000)
(1) A joint-stock company may be found by one or more natural or legal persons.
(2) When a joint-stock company is formed by one person, a constitutive deed shall approve the Statutes and appoint the first supervisory board or board of directors.
(3) The constitutive deed shall be drawn up in writing.
Founders
Article 160
(1) (Amended, SG No. 84/2000) Founders are those persons who have subscribed shares at the constituent meeting.
(2) Persons declared bankrupt may not be founders.
Capital and Shares
Article 161
(1) The capital stock and the value of the shares shall be designated in leva.
(2) (Amended, SG Nos. 100/1997, 84/2000) The minimum value of the capital stock of a joint-stock company shall be 50 000 leva.
(3) (Amended, SG Nos. 25/1992, 70/1998) The minimum amount of the capital stock required for performing banking, insurance activities or voluntary health insurance activities shall be determined by a separate law.
(4) (Supplemented, SG Nos. 84/2000, 66/2005) The capital stock must be fully subscribed. The company may not subscribe shares from its capital. Should this prohibition be violated at the incorporation of the company, the founders shall be jointly liable for the subscribed shares. If any one person subscribes shares on its behalf and at the account of the company, they shall be deemed purchased entirely at the account of that person.
Nominal Value of a Share
Article 162
(Amended, SG No. 84/2000)
The minimum nominal value of a share shall be 1 lev. Larger nominal values of shares must be in full levs.
Section II
Incorporation

Constituent Meeting
Article 163
(Amended, SG Nos. 63/1995, 84/2000)
(1) A joint-stock company shall be founded at a constituent meeting attended by all the persons subscribing for shares. A founder may be represented by a special proxy whose signature has been certified by the notary public.
(2) Shares shall be subscribed at the constituent meeting.
(3) The constituent meeting shall:
1. take a decision for the incorporation of the company;
2. adopt the Statutes;
3. establish the amount of the incorporation costs;
4. elect a supervisory board, respectively a board of directors.
(4) The decisions pursuant to paragraph 3, Items 1 and 2 shall be adopted unanimously; minutes shall be taken pursuant to article 232.
(5) When a joint-stock company is formed by one person, a constitutive deed shall be drawn up.
Content of the Prospectus
Article 164
(Repealed, SG No. 63/1995)
Content of the Statutes
Article 165
(Amended, SG No. 84/2000)
The Statutes shall contain:
1. the company's trade name, seat, and head-office address;
2. the purposes, and the time period, if any;
3. (supplemented, SG No. 66/2005) the amount of the capital, as well as the portion thereof, which must be paid-in at the foundation of the company, the type and number of shares, the rights of the individual classes of shares, any special terms of their transfer, as well as the nominal value of the individual share;
4. the bodies of the company, their mandate and number of members;
5. the type and value of the non-monetary contributions, if any, the persons making them, the number and nominal value of the shares which they shall be given;
6. the advantages, if any, which the founders, by name, have reserved for themselves;
7. the terms and procedure for issuing callable stock, if such is foreseen;
8. the manner of distribution of profits;
9. the manner of calling the General Meeting;
10. other terms with respect to the incorporation, existence and dissolution of the company.
Contributions
Article 166
(1) (Amended, SG No. 84/2000) Monetary payments shall be made to a fund-raising bank account opened by the managing board, or the board of directors respectively, in the company's name, with an indication of the name of the payer, and any payments with deposited sums shall be effected with the unanimous decision of this body.
(2) The provisions of Articles 72 and 73 shall apply mutatis mutandis to non-monetary contributions.
(3) (New, SG No. 84/2000) If, within three months, the managing board, respectively the board of directors, does not certify to the bank that the company has applied for registration, the payers may withdraw their payments in full. The members of the respective board shall be jointly liable for the payment of the deposited sums.
Interim Certificate
Article 167
(1) (Amended, SG No. 84/2000) For payments or contributions for subscribing to shares the shareholders shall receive interim certificates signed by an authorized member of the managing board, or the board of directors respectively.
(2) The shareholders shall receive their shares upon presentation of interim certificates.
Constituent Meeting
Article 168
(Repealed, SG No. 84/2000)
Subscription
Article 169
(Amended, SG No. 58/2003)
A joint-stock company may be incorporated by subscription to raise capital only if a law specifically provides for the conditions and procedure to do so.
Functions of the Constituent Meeting
Article 170
(Repealed, SG No. 84/2000)
Incorporation of a company with subscribed capital
Article 171
(Repealed, SG No. 84/2000)
Content of the Statutes
Article 172
(Supplemented, SG No. 124/1997, repealed, No. 84/2000)
Liability of Founders
Article 173
(Repealed, SG No. 84/2000)
Requirement for Registration of the Company
Article 174
(1) For the registration of a joint-stock company in the commercial register it shall be necessary that:
1. the Articles of Association have been adopted;
2. the full amount of the capital stock has been subscribed;
3. (amended, SG No. 84/2000) the part of the value of each share as provided in the Articles of Association has been paid up, but not less than 25 per cent of the nominal value or issue price of each share as provided in the Articles of Association;
4. (supplemented, SG No. 58/2003) the members of the board of directors or, respectively, the supervisory and managing board have been appointed;
5. the remaining requirements of the law have been fulfilled.
(2) (Amended, SG No. 84/2000, supplemented, SG No. 58/2003, amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The data pursuant to Article 165, Items 1 - 4, 5 (only the type and the value of the non-monetary contribution) and 10, and the names of the members of the board of directors, or, respectively, the supervisory and managing board, shall be registered in the commercial register. The minutes of the constituent meeting and a list of the persons who have subscribed shares at the incorporation, certified by the managing board or the board of directors, shall be attached to the application for entry. Should the shares be acquired by one person after the incorporation of the company, the name, respectively the trade name and the standard identification code of the shareholder shall be entered in the register.
(3) (New, SG No. 114/1999, amended, SG No. 39/2005) For recording in the commercial register the performance of banking and insurance activity, activity as a stock exchange, as an investment intermediary, investment company, management company and of any other activity for which a separate law stipulates the performance thereof after obtaining permission from a government authority, the respective license or permission shall be presented.
(4) (New, SG No. 84/2000) Should the Articles of Association be amended or supplemented, a copy of the Articles of Association with the amendments as of the respective date, certified by the person(s) representing the company, shall be provided to the commercial register.
Section III
Shares

Nominal Value of the Shares. Denominations
Article 175
(1) A share shall be a security which shall attest to the fact that its owner participates in the capital stock with the nominal value indicated on it.
(2) A joint-stock company may not issue shares of a different nominal value.
(3) Shares may be issued in denominations of 1, 5, 10 and multiples of 10 shares.
Issue Price
Article 176
(1) The issue price is the price at which the shares shall be purchased by the founders or, respectively, the subscribers in case the capital is raised through subscription.
(2) The issue price shall not be lower than the nominal value. Shares may also be subscribed at a price higher than the nominal value.
(3) The difference between the nominal value and the issue price shall be set aside for the company's reserve fund.
Indivisibility
Article 177
Shares are indivisible. Where a share belongs to several persons they shall exercise their rights in it jointly by designating a proxy.
Types of Shares
Article 178
(1) Shares may be registered or bearer shares. Preferred shares may also be issued.
(2) (New, SG No. 84/2000) A joint-stock company may also issue book-entry shares. The issuance and disposal of book-entry shares shall be done following a procedure established by a law.
(3) (Renumbered from Paragraph 2, SG No 84/2000) Bearer shares shall not be delivered until payment of their nominal value or issue price.
(4) (Renumbered from Paragraph 3, SG No 84/2000) Where bearer shares are delivered before payment of the full issue price the amount of the instalments shall be indicated on them.
Shareholders' Register
Article 179
The joint-stock company shall keep a shareholders' register in which the names and addresses of the owners of registered shares shall be recorded and the type, nominal value and issue price, quantity and serial numbers of the shares shall be indicated. The same shall be applied for interim certificates.
Exchange of Shares
Article 180
(Amended, SG No. 84/2000)
Bearer shares shall be exchanged for registered shares and vice versa upon request of the shareholder after payment in full of their price, unless the Articles of Association provide a procedure for this.
Shareholders'' Rights
Article 181
(1) A share entitles its owner to one vote in the general meeting of shareholders, to a dividend and to a share in the assets in case of liquidation in proportion to the nominal value of the share.
(2) Where a company issues shares with special rights this must be indicated and provided for in the Articles of Association.
(3) (Supplemented, SG No. 84/2000) The shares providing equal rights form a separate class. Restriction of the rights of individual shareholders of one class shall not be allowed.
Preferred Shares
Article 182
(1) (Supplemented, SG No. 103/1993) Preferred shares may provide a guaranteed or additional dividend or share in the company's assets in case of liquidation, as well as other rights provided for in this Act or the Articles of Association. The Articles of Association may provide that preferred shares have no voting rights, which must be indicated on the respective share.
(2) Preferred shares having no voting rights shall be included in the nominal value of the capital stock.
(3) (New - SG No. 63/1995) It shall not be allowed more than 1/2 of the shares to be non-voting shares.
(4) (Renumbered from Paragraph 3, SG No. 63/1995) Where a dividend due from a preferred share without voting rights is not paid in the course of 1 year and the delayed payment is not made during the following year together with the dividend due for that following year, the preferred share shall acquire voting rights pending payment of the delayed dividends. In this case the preferred shares shall be taken into account in determining the quorum and majority.
(5) (Renumbered from Paragraph 4, SG No 63/1995) In order to adopt a resolution with which the advantages arising from the nonvoting preferred shares are to be restricted, it shall be necessary to obtain the consent of the preferred shareholders, which shall convene at a separate meeting. The meeting may conduct business if not less than 50 per cent of the preferred shares are represented. Resolutions shall be adopted with a vote of at least three quarters of the shares so represented. The preferred shares shall acquire the right to vote upon the removal of the advantages.
Contents of a Share
Article 183
(1) A share shall contain:
1. the designation `share' for a denomination of one or `shares' for larger denominations, preceded by the respective number thereof;
2. type of the shares;
3. the number of the denomination and the serial numbers of the shares comprised therein;
4. the trade name and seat of the joint-stock company;
5. the amount of the capital stock;
6. the total number of shares, their individual nominal value and their denomination structure;
7. the coupons and their maturity;
8. the signatures of two persons having authority to bind the company, and the date of issue.
(2) (New - SG No. 63/1995) A printed signature on the share shall also be considered valid signature.
(3) (Renumbered from Paragraph 2, SG No 63/1995) Filled in on the face of a registered share shall be the name of its first owner.
Coupons
Article 184
(1) Unless otherwise provided in the Articles of Association, shares shall be issued with dividend coupons for 20 years.
(2) Coupons may not be transferred separately from the shares.
(3) A coupon shall carry the designation `Coupon', the trade name of the joint-stock company, the number of the coupon, indication as to the share and its denomination, and the year for which dividend is payable on presentation thereof.
Disposal with shares
(Title amended, SG 58/2003)
Article 185
(1) (Supplemented, SG No. 58/2003) Bearer shares shall be transferred and pledged by delivery.
(2) Registered shares shall be transferred by endorsement which, to be binding on the company, must be recorded in the registered shareholders register. The Articles of Association may provide for other conditions for the transfer of registered shares.
(3) (New, SG No. 58/2003) Registered shares shall be pledged by endorsement with a qualification "as security", "as pledge", or another phrase referring to collateral. The pledge shall be effective with respect to the company as from its registration in the book of registered shareholders. Voting rights attached to pledges shares shall be exercised by the shareholder unless the pledge agreement provides otherwise. Article 473 shall not apply.
Liability of Transferor of Registered Shares
Article 186
The transferor of registered shares which have not been fully paid up or from which other obligations towards the company arise shall be liable jointly and severally with the transferee. The transferor's liability shall lapse upon the termination of a period of two years from the date that the transfer was recorded in the shareholders register.
Transfer of Interim Certificates
Article 187
(1) An interim certificate may not be transferred prior to the incorporation of a company.
(2) Transfers of interim certificates shall be subject to the provisions of Article 185, para 2.
(3) (New, SG No. 104/2007, effective 1.07.1991) The transfer of an interim certificate shall have the same effect as a transfer of the shares certified thereby.
Acquisition of own shares
Article 187a
(New, SG No. 63/1995, amended, SG No. 70/1998, No. 114/1999,
repealed, new, SG No. 84/2000)
(1) A company may acquire its own shares only:
1. for reduction of capital under Article 200, Item 2;
2. (amended, SG No. 66/2005) in the case of legal succession, except for transformation;
3. if it is free;
4. if it is involved in securities transactions by occupation and acquires the shares in executing the order of a third person;
5. in the case of expulsion of a shareholder pursuant to article 189, paragraphs 2 and 3;
6. as a result of a forcible execution of a shareholder's obligation to the company;
7. if the shares have been issued as preferred shares for that purpose;
8. in the case of a buy-back.
(2) (Amended, SG No. 66/2005) In the cases under paragraph 1, Items 3, 4, 6, 7 and 8, the shares must have been paid-in in full.
(3) The company shall discontinue the exercising of the rights on own shares until their transfer.
(4) (Amended, SG No. 66/2005) The total nominal value of the own shares acquired pursuant to paragraph 1, except for those acquired under Item 1 , shall not exceed 10 percent of the capital; The company shall transfer the possessed own shares exceeding this value within a period of three years.
(5) Should the share acquired in the cases under paragraph 1, Items 2 - 8 not be alienated within the period referred to in paragraph 4, they shall be cancelled and article 200, paragraph 2 shall be applied.
(6) (Amended, SG No. 58/2003) Own shares shall not be taken into account when determining the net value of the company's property according to article 247 a, paragraph 2.
Buy-Back of Shares
Article 187b
(New, SG No. 63/1995, amended, SG No. 114/1999; repealed,
new, SG No. 84/2000)
(1) A joint-stock company may buy back its own shares on the basis of a decision of the General Meeting of the Shareholders, which determines:
1. the maximum number of shares subject to buy-back;
2. (amended, SG No. 104/2007) the terms and procedure under which the board of directors or the management board shall effect the buy-back within a specified period not longer than five years;
3. the minimum and the maximum buy-back price.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The decision under Paragraph (1) shall be adopted by a majority of the represented capital, and if the buy-back is not expressly provided for in the Articles of Association - by a majority of two-thirds of the represented shares. The decision shall be entered in the commercial register.
(3) (Supplemented, SG No. 66/2005) The buy-back shall be effected pursuant to article 247a, paragraphs 1 and 2. The aggregate face value of shares bought back and of those under Article 187a(4) shall not exceed 10 percent of the capital. In regard to the shares bought back, which exceed this amount, Article 187d shall apply.
(4) (New - SG No. 66/2005) The Managing Board or, respectively, the Board of Directors, shall carry out the buy-back in compliance with the requirements of paragraphs (1)-(3).
Preferred Shares for Buy-Back
Article 187c
(New, SG No. 84/2000)
(1) The Articles of Association may provide for the issue of shares subject to a buy-back under terms and procedure stipulated in it.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The company shall present the buy-back proposal to the commercial register, which shall be made public.
(3) The buy-back may be effected only with sums intended for distribution according to article 247a, paragraphs 1, 2 and 3.
(4) The company shall form a reserve in the amount of the nominal value of all the shares bought back pursuant to paragraph 1. This reserve may be distributed among the shareholders only in case of reduction of the capital by the amount of the shares bough-back, or may be used for increase of the capital.
Inadmissible Acquisition of Own Shares
Article 187d
(New, SG No. 84/2000)
If a company has acquired own shares in violation of articles 187a-187c, such shares shall be transferred within one year of their acquisition. Otherwise, the shares shall be cancelled and article 200, Item 2 shall be applied.
Disclosure of Information
Article 187e
(New - SG No. 84/2000, amended, SG No. 66/2005, SG No. 105/2006)
The annual activity report of the company shall obligatorily state:
1. the number and the nominal value of own shares acquired or transferred during the year; the portion of the capital, which they represent, as well as the price, at which the acquisition or the transfer took place;
2. the grounds for the acquisitions made during the year;
3. the number and the nominal value of the possessed own shares and the portion of the capital, which they represent.
Cases Equal to Acquisition of Own Shares
Article 187f
(New, SG No. 84/2000)
(1) The provisions of article 187a through 187e shall also apply when:
1. shares of the company are acquired and possessed by one person at the expense of the company;
2. shares of the company are acquired and possessed by another company, in which the first company has, directly or indirectly, a majority of the voting rights, or on which it can, directly or indirectly, exercise control;
3. a company receives as a collateral own shares or shares of a company referred to in Item 2.
(2) (Amended, SG No. 66/2005) When a company has subscribed own shares at its incorporation or during an increase of the capital, they must be transferred immediately. Otherwise the shares shall be invalidated and Article 200, item 2 shall apply. Article 187a(3), Article 187e shall apply to them.
(3) (Supplemented, SG No. 66/2005, amended, SG No. 59/2006) A company shall not provide loans or secure the acquisition of its shares by a third person. This restriction shall not apply to transactions concluded by banks and financial institutions in the course of their usual activity, if as a result of it the net value of the property continues to meet the requirements of Articles 247a(1) and (2).

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