Irrespective of whether a Limited Liability Company (LLC) has been established with or without a term of existence, it may always be dissolved and deleted from the Commercial Register on the grounds provided for in the Commerce Act – following the completion of a liquidation procedure.

General Information

Termination grounds are legal actions or facts resulting in the business activity of a company being discontinued and the company itself ceasing to exist as a legal entity. Such grounds are set out in Art. 154, par. 1 of the Commerce Act: upon expiration of the term set in the Articles of Association; by resolution of the shareholders; by transformation of companies by merger (through absorption or consolidation); upon being declared bankrupt; by decision of the district court in cases provided for by the law. A company wherein the capital is owned by a single natural person (a single-person LLC) is dissolved upon the death of such person, unless provided for otherwise or where the heirs wish to continue the business.

By resolution of the shareholders as a termination ground has the greatest practical significance, also with a view to the purposes of the current article – such ground is symmetrical to the registration of the LLC and expresses the autonomy of the shareholders to dissolve the company that they have created. The resolution of the shareholders is a form of out-of-court dissolution and it needs to be adopted by a majority of 3/4 of the capital (unless the Articles of Association provide for greater majority).

The main consequence of the dissolution of an LLC is the opening of liquidation proceedings for the latter. As a result the business name of the company changes as well – “in liquidation” must be added thereto.

Liquidation proceedings are set out in Art. 156 of the Commerce Act. Its fourth paragraph refers to Chapter Seventeen of the Commerce Act providing for general regulation on the wind-up procedure (applying to other types of companies as well, such as Joint-Stock Companies and General Partnerships1).

The main purpose of the liquidation is to prepare the company for deletion from the Commercial Register as a legal entity. Liquidation tasks aim at achieving such purpose, also taking into account the interests of the company’s creditors. Respectively, liquidation tasks include collecting outstanding receivables, liquidating the available property, paying off debts, distribution of residual assets between the shareholders. The liquidator may not enter into new transactions, unless so needed for the purposes of the liquidation.

The director of the company is also its liquidator, unless another person has been appointed as such by a resolution of the General Meeting. More than one liquidator may be appointed, especially where the workload in carrying out the liquidation is expected to be particularly heavy – in such situations liquidators may represent the company only jointly. The liquidator represents the company and has the rights and obligations of its executive body (his/her registration in the Commercial Register entails termination of the director’s representative and managing powers).

The main obligations of the liquidator are aimed at completion of the aforementioned liquidation tasks. Some of the particular tasks of the liquidator include: filing with the Commercial Register of applications for entering of the dissolution and deletion of the LLC, as well as for announcement of an invitation to the company’s creditors; addressing written invitation to all known creditors to claim their receivables; preparing opening and final balance sheets, as well as explanatory reports thereto; notifying the National Revenue Agency of the liquidation to be initiated; requesting VAT deregistration (if applicable), as well submitting tax return forms as required by the various tax laws; delivering payrolls to the National Social Security Institute.

Liquidation should be completed within a time period to be determined by the General Meeting of Shareholders; if needed, such term may be extended. Residual assets may be subject to distribution only after 6 months from the publication of the invitation to the creditors in the Commercial Register have expired (which is why companies very often determine the liquidation time period in a similar manner – e.g., “6 months from the date of announcement of the invitation under Art. 267 of the Commerce Act”).

Application and Necessary Documents

A special application needs to be filed with the Commercial Register for the dissolution and liquidation to be registered – a standard form application B6 (Б6 in Bulgarian). The following documents need to be enclosed to the application:

Minutes with resolutions of the General Meeting;

Certificate that the National Revenue Agency has been notified pursuant to Art. 77 of the TSIPC of the wind-up proceedings;

Notarized consent and signature specimen of the liquidator;

Declaration on the truthfulness of the stated for registration circumstances and acceptance of the submitted for announcement acts;

Document for paid state fee.

In order for the invitation to the creditors to be published in the Commercial Register, a G1 application form needs to be submitted, together with the invitation under Art. 267 of the Commerce Act enclosed thereto, as well as a declaration on the truthfulness of the stated for registration circumstances and acceptance of the submitted for announcement acts and a document for paid state fee.

Deletion of an LLC from the Commercial Register should be requested through filing an A4 application form, together with the following documents enclosed thereto:

Minutes with resolutions of the General Meeting;

Balance sheet as of the date of completion of the liquidation;

Explanatory report to the final balance sheet;

Annual report of the liquidator;

Declaration under Art. 273 of the Commerce Act;

Certificate that the payrolls have been delivered to the NSSI pursuant to Art. 5, par. 10 of the Social Insurance Code;

Declaration on the truthfulness of the stated for registration circumstances and acceptance of the submitted for announcement acts;

Document for paid state fee.

Other documents might be necessary as well, such as, for example, invitations evidencing the proper calling of the General Meeting and/or other documents in accordance with the specifics of the particular situation.

The applications should be filed by the liquidator, including electronically (via the Internet) – by being signed with an electronic signature. 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.

Fees and Other Costs

Pursuant to the Tariff on the State Fees Collected by the Registry Agency, the due state fees with regard to the applications to be submitted to the Commercial Register in a company’s liquidation proceedings (as outlined here above) amount to the total of 110 Levs (or 55 Levs, when the applications are submitted electronically, including by an authorized to that end lawyer).

Information about the due attorney fee may be found on page Fees. Additional costs will apply as well, such as fees for notarization (6 Levs), fees for retaining accountant and/or liquidator services (if needed), etc.

Footnotes:

1 You may find additional information about the termination of General Partnerships in Blog article Specifics in the termination of a membership in a General Partnership.