In the State Gazette dated August 1, 2023, amendments to the Commercial Act were published, creating a new type of commercial company – the Variable Capital Company (VCC).
Who is the Variable Capital Company suitable for?
The legal option of establishing a VCC is intended to respond appropriately to the rapidly evolving business of startup companies developing innovative, high-tech products and services.
Are there any mandatory requirements for a company to be a VCC?
A Variable Capital Company (VCC) is a mixed form between a personal and capital commercial company.
A mandatory condition for establishing a VCC is for the company to be a micro or small enterprise.
The definition of what constitutes a small or micro enterprise is regulated in Article 3 of the Small and Medium-sized Enterprises Act (SMEs Act).
Small enterprises have an average number of employees of fewer than 50 and an annual turnover not exceeding 19,500,000 BGN.
Micro-enterprises have an average number of employees of fewer than 10 and an annual turnover not exceeding 3,900,000 BGN.
Important! When a VCC no longer meets these requirements, the company must be transformed into a Limited Liability Company or Joint Stock Company.
What are the features of a VCC?
A company with variable capital does not have a statutory minimum capital as a Limited Liability Company or a Joint Stock Company has. The amount and changes occurring in the capital are not subject to registration with the Commercial Register. Moreover, in the case of a Variable Capital Company (VCC), the partners and changes in the partnership will not be subject to registration with the Commercial Register.
In the case of a Limited Liability Company or Joint Stock Company, the minimum value of 1 stake/share is 1 BGN, whereas in the case of the new type of company, this minimum is 0.01 BGN.
Non-monetary contributions can also be made in a VCC through a simplified procedure.
Similar to joint-stock companies, a VCC will have the option to acquire its own shares. It can also issue shares with different privileges and convertible loans. Restrictions and obligations on the disposal of the company shares might also be created, which has not been the case before.
Management of a VCC
A VCC can be managed by a single or collective body, and unlike a Limited Liability Company., in the case of a VCC, the manager might also be a legal entity.
One of the interesting features of a Variable Capital Company is that, for the first time, remote holding and voting of the General Meeting is envisaged. This will be done through the use of electronic means.
Transformation and Liquidation
The legislator has provided for the option for the existing trading companies to be transformed into Variable Capital Companies.
There is no deadline set out by the law for how long a company can exist as a VCC, as long as it meets the requirement of being a small or micro-enterprise.
The transformation and liquidation of a VCC will follow the general procedure applicable to other types of trading companies.
Can I currently register a VCC?
Yes, as of December 15, 2024, the Registry Agency provides a technical opportunity for registering a VCC.
In Conclusion
Through the new form of commercial company, both Bulgarians and foreigners will find it easier to establish joint ventures in Bulgaria and offer their companies on the stock exchange.
The Variable Capital Company is extremely appropriate for startups seeking to attract qualified employees, growth and international investors.
We have no choice but to await the implementation of the technical infrastructure and to register the first new VCC.
If you need consultation and assistance, you can contact our team at contact@legalmasters.bg, tel. 0893050449, or through the Facebook page of the law office.