Overview of the Liquidation Process
The liquidation of a Bulgarian company typically applies to limited liability companies (EOOD/OOD) but also extends to other legal forms such as stock companies (AD), Limited partnerships (KD), Limited Partnership with Shares (KDA), etc. (with variations in process). Below is a step-by-step guide :
I. Step-by-Step Guide to Voluntary Liquidation
1. Adopt a Resolution for liquidation
The company’s decision-making body (General Assembly, Sole Owner, or Partners) must issue a formal decision to liquidate, appoint a liquidator, and define a timeline for the liquidation process (where the minimum is 6 months).
2. Apply for a Liquidation Certificate
The process of liquidation requires submitting an application to the tax authorities – National Revenue Agency (NRA) to obtain a certificate. This may lead to a tax revision to confirm the company’s compliance with tax obligations up to the start of liquidation, but it is not a must.
3. File Certificate and Management Resolution with the Trade Register and Register the Liquidator
Once received, the certificate from the National Revenue Agency must be submitted to the Bulgarian Commercial Register at the Registry Agency, along with the Liquidation resolution, documents for appointment of liquidator and other required documents.
The appointed liquidator must be entered in the Commercial Register. The liquidator assumes full responsibility for managing the company throughout the liquidation, including legal representation, settlements, and communications.
The liquidator may be a company director, shareholder, or independent third party.
4. Notify Creditors
The liquidator must formally notify all known and unknown creditors of the company’s liquidation status. A notice is published in the Commercial Register, initiating a six-month creditor claim period.
5. Coordinate with the National Social Security Institute (NSSI)
The liquidator must obtain certification from the NSSI, confirming that all employment-related records and payroll documentation have been submitted, or that the company had no employees.
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Sell all assets, pay all debts
The main role of the liquidator is to turn all company assets in cash, to dismiss all the employees and to pay all the company debts.
7. Prepare and Maintain Accounting Documents
Throughout the liquidation period, the company must:
– Maintain complete accounting records;
– Prepare a starting and closing balance sheet;
– Ensure tax compliance during the entire process;
8. Submit an Annual Financial Report
If liquidation spans more than a fiscal year or crosses into the next calendar year, the company must submit an Annual Financial Report to the Trade Register during liquidation.
9. Final Deletion from the Trade Register
Once the liquidation term and the 6-month period for creditor claims has expired and all liabilities are settled, the liquidator may apply to deregister the company from the Commercial Register applying resolution of the company owners for closing the company and other required documents. This marks the formal termination of legal existence.
II. Expedited liquidation procedure *
Expedited liquidation proceedings of a company are conducted when the company is terminated by a decision of the general meeting and/or consent of the partners. For this, a decision to conduct expedited proceedings is also required, which is taken by the general meeting of the limited liability company, the joint-stock company and the company with variable capital, and for other commercial companies – unanimously by the unlimited partners, when the company:
1. has not carried out any activity or has terminated its activity more than 12 months ago;
2. has not hired workers and employees or has terminated its employment relationship with them more than 12 months ago;
3. has not been registered under the Value Added Tax Act or has terminated its registration more than 12 months ago;
4. has no outstanding liabilities to the state and municipalities;
5. has no pending proceedings for the establishment of tax liabilities and liabilities for mandatory social security contributions, to which the National Revenue Agency is a party;
6. is not a defendant in court proceedings, a debtor in enforcement or order proceedings or no enforcement has been initiated against him under the Special Pledges Act or the Financial Collateral Contracts Act.
The company’s assets shall be distributed only when three months have passed from the date of the announcement of the invitation to the creditors in the commercial register. Notices to NRA and NSSI are sent directly by the Commercial register.
* The procedure requires technical adaptation of the Commercial register which is still pending at May, 2025.
III. Judicial Dissolution of a Company
A company may also be terminated by court order following Prosecutor’s or partners’ request under specific legal grounds, including:
– Shareholder deadlock or serious internal disputes;
– Engaging in illegal or non-compliant business activity;
– lack of registered company manager for more than 3 months;
– insolvency;
Following a court ruling, a liquidator is appointed, and the process follows the standard liquidation procedure.
IV. Key Considerations
Public Access: The Bulgarian Trade Register is open to the public, ensuring transparency for creditors and authorities.
Liquidator Responsibilities: Includes legal representation, settling liabilities, preparing financials, and ensuring compliance with tax and labor laws.
Professional Support: Legal and accounting professionals are strongly recommended to handle paperwork and filings accurately.
