I. Legislative Framework and Commercial Significance
The OOD (Ltd.) and EOOD (Sole Ltd.) are regulated by Part Three, Chapter Thirteen of the Commercial Act (Търговски закон, ТЗ), Articles 113–157. These provisions draw heavily on the German Gesellschaft mit beschränkter Haftung (GmbH) model, from which the Bulgarian limited liability company derives its conceptual architecture: a company with a defined and registered membership, capitalised by contributions from its members, whose liability to the company's creditors is limited to the amount of those contributions. The Commercial Act provisions are supplemented by the Accountancy Act, the Corporate Income Tax Act, and the applicable anti-money laundering legislation, including the beneficial ownership registration requirements.
The OOD (Ltd.) accounts for the substantial majority of all commercial entities registered in Bulgaria. Its prevalence reflects its practical advantages: low minimum capital, simple formation procedure, flexible governance by agreement among members, and a well-established and predictable body of case law. Foreign investors overwhelmingly prefer the OOD (Ltd.) or EOOD (Sole Ltd.) for subsidiaries, property-holding vehicles, and trading companies operating in Bulgaria, and the form is equally common among domestic entrepreneurs across all sectors of the economy.
II. Formation
An OOD (Ltd.) is formed by the conclusion of a memorandum of association — referred to in Bulgarian law as the дружествен договор (literally, the "company contract") — between two or more founding members, executed in writing with notarially certified signatures of all members. An EOOD (Sole Ltd.) is formed by a unilateral founding act (учредителен акт) executed by the sole owner, also with notarially certified signature. The founding document must contain, as a minimum: the company name and registered seat; the names and addresses of the members; the registered capital and the contributions of each member; the nominal value of each member's interest; the management structure; and the procedure for adopting decisions.
Following execution of the founding document, the capital contributions must be paid — in cash contributions, by deposit to a temporary bank account opened in the company's name; in in-kind contributions, by transfer or delivery of the contributed asset. Once contributions are made, the application for registration is filed with the Registry Agency. The company acquires legal personality and the status of a commercial entity upon entry in the Commercial Register.
III. Capital and Membership Interests
The minimum registered capital of an OOD (Ltd.) or EOOD (Sole Ltd.) is €1 — a nominal threshold that has been in force since the 2009 amendment to the Commercial Act and which effectively makes capital adequacy irrelevant as a formation requirement. The registered capital is divided into membership interests (дялове), the nominal value of each of which must be at least €0.51. Each member holds one or more interests, the aggregate nominal value of which equals the member's contribution to the registered capital.
Membership interests are not represented by negotiable instruments and cannot be transferred by endorsement or delivery. They are registered interests: the identity of each member and the nominal value of their interest are entered in the Commercial Register and in the company's internal register of members. A transfer of a membership interest requires a written agreement with notarially certified signatures and registration of the transfer in the Commercial Register before it becomes effective against the company and third parties.
IV. Governance: The General Meeting
The General Meeting (Общо събрание) is the supreme governing body of the OOD (Ltd.) and has exclusive statutory competence over: amendment of the articles of association; increase and decrease of registered capital; appointment and dismissal of managers; approval of annual financial statements; decisions on profit distribution; decisions on the acquisition or disposal of real property and real rights over real property (unless the articles delegate this authority to the manager); and decisions on transformation and dissolution. An EOOD (Sole Ltd.) has no General Meeting; all decisions within the competence of the General Meeting are taken unilaterally by the sole owner and recorded in writing.
Ordinary resolutions of the General Meeting require a simple majority of all registered capital — not merely of the capital represented at the meeting — unless the articles provide for a higher threshold. This "majority of all capital" rule is stricter than the corresponding rule applicable in an AD (JSc.), where resolutions require a majority only of the capital represented at a quorate meeting, and means that members who are absent from the General Meeting effectively vote against any resolution by their non-participation. The articles may moderate this rule for specified categories of decision, but may not reduce the majority below one-half of all registered capital for ordinary resolutions.
V. Governance: The Manager
The day-to-day management and legal representation of an OOD (Ltd.) is vested in one or more managers (управители), appointed by the General Meeting. A manager need not be a member of the company and may be a Bulgarian or foreign national, a natural person or — subject to certain limitations — a legal entity. The manager acts as the company's legal representative in all matters not reserved to the General Meeting, signs contracts and other documents on the company's behalf, and is personally responsible for the conduct of the company's registered activities in compliance with the law.
The manager's authority to bind the company is unlimited as against third parties: a third party dealing with a registered manager is entitled to rely on the manager's authority to bind the company, regardless of any internal restrictions on the manager's authority that may appear in the articles of association or a General Meeting resolution. Internal restrictions — for example, a requirement of joint signatures by two managers, or a General Meeting approval for transactions above a specified value — are binding on the manager vis-à-vis the company but are not enforceable against third parties who had no knowledge of them.
VI. Transfer of Membership Interests
Transfer among existing members
A transfer of a membership interest between existing members of the company is freely permitted unless the articles of association impose restrictions. The transfer is effected by a written agreement with notarially certified signatures; it must be reported to and registered by the company, and the registration in the Commercial Register must be updated. No General Meeting approval is required for a transfer between members unless the articles expressly provide for it.
Transfer to third parties
A transfer of a membership interest to a person who is not already a member of the company requires the consent of the General Meeting, adopted by a majority of more than one-half of the registered capital, unless the articles provide otherwise. This consent requirement reflects the intuitu personae character of the OOD (Ltd.) — the principle that the identity of the members is significant to the other members — and gives the existing membership an effective veto over the admission of new members through the secondary market.
In practice, the consent requirement is frequently supplemented by contractual pre-emption provisions in the articles or a shareholders' agreement, requiring the selling member to offer the interest to the existing members before approaching a third party. Pre-emption provisions must be carefully drafted to specify the trigger events, the price mechanism (market value, book value, or a contractually agreed formula), and the consequences of a failure to exercise — provisions that have generated substantial litigation in the absence of clear drafting.
VII. Profit Distribution
The distribution of profit in an OOD (Ltd.) requires a resolution of the General Meeting adopted after the approval of the annual financial statements for the relevant financial year. The Commercial Act does not impose a mandatory dividend obligation; the General Meeting may resolve to retain all or part of the profit as reserves. However, an arbitrary or discriminatory refusal to distribute profit — for example, a pattern of retaining all profits while paying excessive management fees to the majority member — may be challenged by minority members as an abuse of majority rights.
Profit is distributed among members in proportion to their nominal interests in the registered capital, unless the articles provide for a different allocation. An unequal distribution — for example, a preferred distribution in favour of certain members — is permissible if expressly provided for in the articles, but must apply uniformly to the relevant class of interest: discriminatory distributions in favour of individual members are void.
VIII. Exclusion of a Member
Bulgarian law provides a mechanism — unique among EU corporate forms in its explicit statutory formulation — for the exclusion of a member from an OOD (Ltd.) in circumstances of serious breach of the member's obligations to the company or conduct that makes the continuation of the company with that member impossible. The exclusion procedure is initiated by a resolution of the General Meeting (adopted without the participation of the member to be excluded) and confirmed by a court judgment. Upon exclusion, the excluded member's interest is transferred to the company and must be cancelled or sold to another member or a third party approved by the General Meeting within six months.
The exclusion mechanism is a remedy of last resort for deadlocked or dysfunctional closely held companies and has been the subject of extensive litigation, particularly in the context of two-member companies where each member holds fifty percent of the capital. The courts have applied the exclusion provisions with caution, requiring clear evidence of a serious and ongoing breach before ordering exclusion, and have been reluctant to use the mechanism as a substitute for consensual resolution of shareholder disputes.
IX. Dissolution and Liquidation
An OOD (Ltd.) may be dissolved voluntarily — by a resolution of the General Meeting adopted by a majority of three-quarters of all registered capital — or involuntarily, by a court order in circumstances specified by the Commercial Act, including: expiry of the term for which the company was constituted; a court judgment annulling the founding document; insolvency; and a failure to comply with statutory requirements. Upon dissolution, the company enters liquidation: a liquidator (who may be the existing manager) is appointed, the company's assets are realised, its creditors are paid in full, and the surplus — if any — is distributed among the members in proportion to their interests.
The liquidation procedure must be completed within six months of the dissolution resolution; if the liquidation cannot be completed within this period, the liquidator must file for an extension. A company that has been struck off the Commercial Register without completing the liquidation procedure — a common occurrence where the company has no assets and the members simply abandon it — remains technically in existence until the deregistration is formally completed, which may create residual liability issues for the managers.
X. Practical Recommendations for Foreign Investors
For the majority of foreign investors establishing a presence in Bulgaria — whether for trading, manufacturing, service provision, or property holding — the EOOD (Sole Ltd.) is the natural starting point: it offers the full protection of limited liability, minimal capital requirements, a simple governance structure, and a well-established regulatory framework, all at a low formation and ongoing compliance cost. The transition to an OOD (Ltd.) becomes appropriate when additional members are introduced — whether as equity investors, local partners, or key employees — and the governance framework needs to reflect the interests of multiple stakeholders.
The articles of association of an OOD (Ltd.) with multiple members should be drafted with care, addressing in particular: the majority requirements for different categories of decision; the pre-emption regime on transfer of interests; the provisions for deadlock resolution; the scope of the manager's authority and the oversight mechanisms available to members; and the grounds and procedure for member exclusion. These provisions cannot be left to the statutory defaults if the members' relationship is to be governed with the clarity and predictability that a commercial partnership requires.