Variable Capital Company in Bulgaria – Advantages and Convenience for Business

*ДПК (DPK) in Bulgarian

What is a Variable Capital Company (VCC)?

Bulgarian entrepreneurs can now register the new type of companies - a company with variable capital (VCC). In terms of its characteristics, it is a mix between a JSC and an LLC (you can learn more about the different types of companies in our article - "Choosing the Right Business Entity in Bulgaria".

The main goal of the VCC is to facilitate small and medium-size enterprises, startups and investors looking for a more dynamic and convenient structure. Unlike an LLC, a VCC can be managed by a manager or by a management board, and the capital can be increased and decreased without a Commercial Register filing.

Of course, there are some restrictions - a VCC can only be an enterprise that has an average number of employees of less than 50 people and an annual turnover and/or value of assets that does not exceed €2,045,167.52 (the equivalent of BGN 4,000,000).

The amount is converted at the official rate of BGN 1.95583 to €1 (Act on the Introduction of the Euro in Bulgaria, Art. 12–13).

Main characteristics of the VCC according to the Commerce Act

1. Simplicity of the capital structure – With a VCC, a specific amount of capital is not required to be entered in the Commercial Register. This allows for easy increase or decrease of capital without additional administrative procedures.
2. Easy admission and termination of shareholders – New partners can enter or leave without changing the constituent act and without being entered in the Commercial Register.
3. Minimum capital – The law does not require a minimum capital.
4. Liability – As with an LLC, the partners have limited liability up to the amount of their share contributions.

Advantages of the VCC for business in Bulgaria

• Flexibility in investments – Startups and growing companies can easily attract new investors without going through heavy legal and registration changes.
• Low administrative burden – There is no need to enter changes in capital movements every time, which saves time and costs.
• Better access to finance – Investors are more likely to participate when they can easily get in and out of the company structure.
• A modern approach – the VCC brings Bulgaria closer to European practices, where similar forms already exist and are successfully used by entrepreneurs.
• Business stability – Despite the dynamics, the VCC offers legal certainty and protection for the partners through the framework of the Commercial Law.

Who is the VCC suitable for?

• Startups looking for rapid growth and frequent change in ownership structure.
• Small and medium-sized enterprises that want to facilitate the process of accepting new partners.
• Investors and funds who want flexible rules for entering and exiting business.

Conclusion

The introduction of variable capital companies in Bulgaria is a significant step towards the modernization of Bulgarian commercial law. This legal form provides flexibility, security and easier access to capital, which makes the Bulgarian business environment more attractive for entrepreneurs and investors.