A manager of a LLC in Bulgaria may be any local or foreign natural person of full capacity to act (regardless of residence).
More often the sole owner of the capital or the partner with the largest share in the capital are appointed as a manager. But it is also possible a third party to become a manager of a LLC in Bulgaria.
The election or dismissal of a manager become effective as of the recording in the Commercial Register. The manager submits a notarised consent with a specimen of the signature in order to be subscribed with the Commercial Register.
The empowerment of the manager may be withdrawn at any time.
The manager may request to be released by a written notice to the company. Within one month after receipt of such notice, the company must appoint a new manager. If the company fails to do so, the manager may apply for this circumstance to be recorded in the Commercial Register. In this case, the name of the manager shall be deleted, regardless of whether a new manager of the company has been elected.
A person who has declared bankruptcy or who has been a managing director, a member of a managing or controlling body of a company, dissolved due to bankruptcy, in the last two years prior to the date of the decision to declare bankruptcy, in case there were unsatisfied creditors, cannot be appointed as a manager.
Manager may not also be a person, who has been a managing director, a member of a managing or controlling body of a company, with regard to which non-performance of obligations to establish and maintain the stock levels, prescribed thereto under the Crude Oil and Petroleum Products Act, has been established by an effective penal order.
As well, attorneys are also not allowed to be appointed as managers of a LLC.
RIGHTS AND OBLIGATIONS
The manager represents the company. When the LLC has multiple managing directors, each of them may act independently, unless the Articles of Association provides for otherwise. Any other restrictions of the representative power of the manager have no effect vis-a-vis third parties.
The relationships between the LLC and the manager is arranged by a management contract. The contract is concluded in writing on behalf of the company by a person authorised by the Partners’ General Meeting, or by the sole owner.
If the manager is not a partner, he/she takes part in the sessions of the General Meeting in an advisory capacity.
The manager convene the General Meeting at least once every year. The manager shall also convene the General Meeting upon written requisition by partners holding shares of more than 1/10 of the capital. If the manager fails to convene the Meeting within 2 weeks, the requisitioning partners are entitled thereto.
The manager must convene the General Meeting immediately should the losses exceed 1/4 of the capital, as well as when the net worth of the company falls below the amount of the registered capital.
Without the consent of the company, the manager of a LLC in Bulgaria may not:
- conduct any commercial transactions on their own behalf or on behalf of any third party;
- be a partner in general and limited partnerships and in limited liability companies;
- hold positions in management bodies of other companies.
This restrictions apply when the business conducted is similar to that of the company. The manager owe compensation for damages caused to the company in case of any violations of the abovementioned restrictions.
It is important to know that the manager of a LLC in Bulgaria is also financially liable for any damages caused to the company. The General Meeting or the sole owner of the capital adopt decisions to raise any company claims against the manager.
Any person who, in his/her capacity as manager, conceals any facts and circumstances which he/she has been obligated to state to the revenue authority or the public enforcement agent and, as a result of this, any obligations for taxes and/or compulsory social insurance contributions cannot be collected, is liable for the outstanding obligation.
The manager is also liable for the outstanding tax and social security obligations of the LLC in case when he/she performs in bad faith one of the following actions as a result of which the property of the company is reduced, resulting in non-payment of obligations for taxes and/or compulsory social insurance contributions:
- makes in-kind payments or payments in cash from the property of the LLC, constituting hidden profit or dividend distribution, or alienates property, including the enterprise of the company gratuitously or at prices much lower than market ones;
- performs actions involving encumbrance of the property of the LLC to secure another person’s debt and the said property is converted into cash in favour of the third party.
The LLC and the manager are not obliged to sign a management contract or to determine the remuneration of the manager therein. But when a management contract determines the amount of manager remuneration, the contract is treated as an employment contract for the purposes of social security law. This means that the manager is compulsorily insured against all social security risks – common disease and maternity, disability due to a common disease, old age or death, industrial accidents and occupational diseases, and unemployment.
If there is no management contract or the amount of manager remuneration is not determined, less social security contributions are due. In this case, the manager has an obligation to insure himself/herself as a self-insured person and is compulsorily insured only against disability due to a common disease, old age or death.
However, if the manager is a citizen of an EU Member State and submits an A1 certificate of applicable law by the tax office of the respective country, certifying that the applicable social security legislation is in another EU Member State, he or she will not pay such contributions in Bulgaria.
For more information or if you want to set up a Bulgarian company please do not hesitate to contact us by e-mail: email@example.com or call us on: +359 2 851 72 59.