According to the Commerce Act every company may open a branch outside the residential area where its seat is located. The opening of a branch is carried out through its registration in the Commercial Register. Most often, companies take action to register a branch not so much for reasons of a legal nature, but rather for organizational and economic reasons – following from the specific features of the branch as a legal form for carrying out business activity.
Not only companies may open their branches – other merchants and legal entities are also entitled to do so (e.g., Sole Proprietors, cooperatives, NGOs and foreign persons with the right to engage in business activity; the latter may also open trade representation offices with the BCCI). This article will focus only on the procedure for registration of a branch of a Bulgarian company and will not take into account any specifics that might exist in terms of other legal entities opening their branches.
Application and Necessary Documents
A special application needs to be filed with the Commercial Register for the branch to be registered – a standard form Б2 (Application form for registration of circumstances pertaining to a branch). The application should be submitted by the company’s representative (director, executive officer, etc.); a lawyer may be authorized for such purposes as well – the power of attorney should be explicit but does not require any notarization of the signature. The application may be filed electronically (via the Internet) as well – by being signed with an electronic signature.
The following documents need to be enclosed to the application:
Resolution for opening a branch;
Notarized consent and signature specimen of the branch manager;
Declaration on the truthfulness of the stated for registration circumstances and acceptance of the submitted for announcement acts;
Document for paid state fee.
In certain cases (when required by special legislation) other documents might be necessary as well, such as a document (diploma, certificate by the Bulgarian National Bank, etc.) for professional qualification or legal capacity of the branch manager.
Pursuant to the Tariff on the State Fees Collected by the Registry Agency, the state fee for registration of a branch in the Commercial Register is 40 Levs. When the application is filed electronically, including by an authorized to that end lawyer, the due fee would be in the amount of 20 Levs.
The notary fee for attestation of the signature of the branch manager on the consent and signature specimen document is in the amount of 6 Levs. Information about the due attorney fee may be found on page Fees.
The branch is not an independent holder of rights and obligations but it has a relatively independent management and a territorially separated activity. That in turn determines the main characteristics of the branch.
The business name of the branch includes the name of the company together with the addition “branch”. The respective settlement (city, town, village) where the seat and address of management of the branch is located should also be indicated (moving the seat and address of management of the branch is governed by the rules relating to the company – to be applied accordingly).
The Commerce Act does not contain any explicit provisions regarding the subject of activity of the branch, nor any restrictions or requirements as to whether or not the activity of the branch should be independent or coinciding with the one of the company. So far as the commercial enterprise is a legal expression of the business, the branch should be viewed as an internally separated aggregate within the commercial enterprise that is homogeneous with the remaining part of the commercial enterprise. Keeping separate account books (without preparing a separate balance sheet – Art. 19 of the Commerce Act, “Account Books of a Branch”) is an expression of the said internal separation. The relative property separation of the branch allows it to be transferred through a transaction – following the same procedure applicable to the transfer of a commercial enterprise.
The law requires that the written application for registration of the branch in the Commercial Register contain information about the person who will be in charge of its management, as well as information about the scope of such person’s representative powers. When the manager of the branch is authorized as a commercial agent, the scope of the representative powers will be determined in accordance with the text of the respective power of attorney, i.e. according to what the principal (the company through its legal representative) has been willing to authorize the agent for. The power of attorney should take into account the long-lasting nature of the branch, as well as be consistent with its subject of activity. The manager of the branch may be authorized to act as a procurator as well – following from the provision of Art. 22 of the Commerce Act (“Powers of the Procurator”), stating that the authorization of the procurator may be restricted to the business of a single branch.
The Commerce Act determines the body that is competent to adopt a resolution for opening a branch of the respective company. In the case of a limited liability company (LLC) the General Meeting shall be the competent body – the resolution should be adopted by a majority of more than 1/2 of the capital. In the case of a joint-stock company (JSCo.) the Board of Directors (one-tier system) or the Management Board (two-tier system) shall be the competent body; the provisions of the By-Laws of the particular JSCo. should be always taken into consideration – not only that they might contain deviations and restrictions in that regard, but they also set forth the procedure to be followed by the respective body when adopting its resolutions. In order to open a branch of a General Partnership, the consent of all partners thereof would be required.
The unified identification code (UIC) of the branch is allocated upon the initial registration of the branch in the Commercial Register – the UIC is a 4-digit one and is added to the 9-digit code of the company.