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How to increase the capital of a company in Bulgaria - LLC or LTD
Increase of company capital - LLC / LTD
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Increasing the capital of a company in Bulgaria to a limited liability company - LLC or LTD, is a key step in the development of any commercial company. This procedure is often carried out when the company needs additional funds for investment, expansion of its activities or to improve its financial performance. The capital increase can lead to a number of positive effects for the firm, including an increase in trust among customers and creditors, which is especially important in a dynamic economic environment.

One way to increase capital is through capitalization of accumulated and retained earnings from previous years. This means that instead of distributing the profits as dividends among the partners or shareholders, they are converted into the capital of the company. This approach not only improves the indicators in the balance sheet of the firm, but also strengthens its financial stability and growth potential.

Another possible mechanism for capital increase is the conversion of loans granted by partners into equity. This can be an effective way to strengthen the capital base of the company without having to find external financing. In addition, this strategy can help the company improve its financial performance and credit rating.

In addition, companies can carry out capital increases through additional cash contributions from existing or new partners. This provides an opportunity for the company to raise additional capital, which can be used to implement investment plans, expand the business or improve operational processes.

The capital increase procedure includes a number of legal requirements that must be complied with, including the relevant decisions of the management bodies of the company, amendments to the constituent documents and entries in the commercial register. It is important that this process is carried out with appropriate legal and accounting support to ensure its correctness and effectiveness.

How is the capital increase of a limited liability company carried out in Bulgaria?

Increasing the capital of a limited liability company (LLC or LTD) in Bulgaria is an important step for the financial strengthening and expansion of the business. This procedure can be initiated for various reasons, including the need for additional resources for investment, expansion of activity or improvement of the capital structure.

Capital increase procedure

  1. Determination of the type of contributions:The first step in the procedure is to determine the type of contributions - cash or non-cash. Cash contributions are direct financial investments in the capital of the company. Non-cash contributions can include various assets such as real estate, equipment, intellectual property, or other values that can be beneficial to the business.
  2. Assessment of non-cash contributions:If non-cash contributions are chosen, they must be assessed by three independent experts appointed by the Registry Agency. This assessment shall ensure that the value of the contributions corresponds to their real market value. The capital may not be increased by a value higher than that determined by the experts.
  3. Decision to increase capital:The decision to increase the capital is made by the general meeting of partners. In the case of an LLC, this decision must be taken unanimously by all partners. It is important that this decision is documented by a protocol, which must have notarized signatures and content.
  4. Registration of changes:After making the decision and making the contributions, the changes in the company's capital must be entered in the Commercial Register. This includes updating the data on the capital of the company and the submission of relevant documentation certifying the changes made.

Increase of the capital of the Ltd by increasing the value of the shares

Increasing the capital of a limited liability company (LTD) in Bulgaria by increasing the value of the shares is a procedure provided for in the Commercial Law and represents one of the ways of financial strengthening of the company. This method is particularly suitable for companies that want to increase their capital without attracting outside investment or changing the existing ownership structure.

When this approach is chosen, the amount by which the value of each share increases must actually be paid into the company's account. For example, if it is stated in the company contract or the act of incorporation of the LLC that the nominal value of each share is BGN 1, it can be increased to BGN 100. This means that each partner or the sole owner of the capital is obliged to contribute the increased value of his shares to the capital of the company.

The procedure begins with the decision of the partners of the company on an increase in the value of the shares. This decision must be formalized and entered in the Commercial Register. It is important to note that in the process of increasing capital, the opening of a special collection account is not required, and the amounts can be deposited directly into the current account of the company.

After the corresponding amounts have been deposited and the capital changes have been officially registered, the company has more funds available for its operational needs, investment plans or to strengthen its financial stability. This capital increase can also lead to an improvement in the credit rating of the company, as well as increase its attractiveness for potential investors and partners.

Increase of the capital of the Ltd by subscribing new shares

The increase in the capital of an LLC through the registration of new shares is a procedure regulated in the Commercial Law of the Republic of Bulgaria. This method allows existing partners or the sole owner of the capital to acquire additional shares in the capital of the company, thereby increasing the total amount of capital.

Under this approach, each shareholder usually subscribes new shares proportional to his existing participation in the capital of the company before the increase. For example, if there are two partners in an LLC holding an equal number of shares, and the capital of the company increases with new shares, each partner will acquire an equal number of these new shares. However, the company agreement or the decision of the general meeting may provide that the partners are not obliged to participate proportionally in the capital increase.

The value of the new shares must be paid into the current account of the company. It is not necessary to open a special collection account for this purpose.

An interesting aspect of this process is the possibility that the value of new shares can be formed from part or all of the accumulated and undistributed profits of the company for previous years. This means that instead of paying these funds as dividends, they can be reinvested in the company as a capital increase.

In the event of an increase in capital through loans and additional cash contributions, also called the contribution of accounts receivable, a preliminary assessment by experts appointed by the Registry Agency is required. The purpose of this assessment is to establish that the loans and contributions have actually been granted to the company. Valuation is also required for the sale of real estate, machinery, trademarks and other similar assets.

These steps ensure that the capital increase is carried out in a transparent and lawful manner, while protecting the interests of the shareholders and the company as a whole. Entering the capital increase in the commercial register is the final step that formalizes the entire process and makes the changes publicly credible.

Increase of the capital of the Ltd by accepting new partners

Increasing the capital of an LLC by accepting new partners is a procedure that allows the company to expand its ownership and strengthen its financial base. This methodology is distinguished by the introduction of additional resources into the company, while providing opportunities for business expansion and entry into new markets.

When a new partner joins the LLC, he registers new shares of the capital. The process involves two parallel procedures: acceptance of the new partner and an increase in the capital of the company. It is possible for the new partner to deposit cash directly into the current account of the company, which is the simplest and fastest option for increasing capital.

If the new partner decides to contribute property as a non-cash contribution, for example, real estate, then a preliminary assessment of this property by experts appointed by the Registry Agency is necessary. This step is mandatory and aims to establish the real market value of the imported property.

An interesting aspect of the capital increase of the Ltd is the possibility to carry it out with the company's own funds. This can be done through capitalization of retained earnings of past years or funds accumulated in the reserve fund. Although such a possibility is expressly provided for in the Commercial Law on Joint-Stock Companies, such an approach is also possible in the case of Ltd. and LLC. A special feature of LLC and LTD is that the decision to increase the capital is not required to be taken within 3 months after the adoption of the annual financial report, which provides flexibility in the management of the company's finances.

Increasing capital through the admission of new partners is a significant step in the development of the company, providing new opportunities for investment, expansion of activities and strengthening of market positions. In this context, it is important that the procedure is carried out in accordance with legal requirements and with appropriate legal support to ensure the legality and success of the entire process.

Necessary documents for increasing the capital of the LLC/Ltd

When increasing the capital of a limited liability company, different types of documents are applied, according to which of the above hypotheses described in this article was applied.

Necessary documents for capital increase when accepting a new partner in the Ltd.

When increasing the capital of an LLC or LTD in Bulgaria by accepting a new partner, certain documents and procedures are required to ensure the legal validity of this step. The process does not follow the rules of Art. 129 of the Commercial Law on the transfer of company shares to third parties (that is, the sale of shares does not take place), which means that the new partner is freely accepted into the company.

  1. Application under Art. 122 of the Commercial Law:In this application, the new partner declares that he accepts the terms of the partnership agreement.
  2. Protocol of Decision of the Sole Proprietor of the Capital:This document certifies the decision of the sole owner of the capital to accept the new partner and indicates by how many shares the capital increases.
  3. Minutes of Decision of the Partners:In the event that the company already has more than one partner, this document certifies the decision of the partners to accept a new partnership agreement and a new partner
  4. New company contract: The official articles of association of the company, current at the time of the admission of the new partner and which lists all the members, the new amount of capital and all other important changes.
  5. Declarations under Art. 13, para. 4 and para. 5 of the ZTRRULNC:These declarations confirm the veracity of the circumstances claimed and the acceptance of the acts submitted for publication, and that they have been provided by the applicant.
  6. Power of attorney:In the event that the documents are submitted by a person other than the trader.
  7. State Fee:A fee of BGN 30 is required when submitting an online A4 application.

The newly admitted partner must deposit the value of the new shares into the company's open current account. The basis for depositing is “capital increase”. The commercial register and registry of the ULNC do not require the presentation of a certificate from the bank for the contributed capital.

It is important that the whole process is carried out in accordance with legal requirements and is supported by properly prepared documents. This provides legal certainty for the company, new and existing partners, as well as for all interested parties.

Necessary documents for capital increase by subscribing new shares or increasing the value of already existing shares in the Ltd in Bulgaria

Increasing the capital of a limited liability company (LTD) in Bulgaria by registering new shares is a procedure that requires preparation and submission of a number of documents. These documents are required for registration of changes in the Commercial Register and to certify the legality of the capital increase.

  1. Protocol of Decision of the Sole Proprietor of the Capital:This document is required if the company is an LLC. It certifies the decision of the sole owner to increase the capital and indicates the number of new shares that are added to the capital.
  2. Minutes of Decision of the Partners:In case the company is an LLC with more than one partner, this document certifies the decision of the partners to increase the capital and accept new shares.
  3. New Company Agreement:The official articles of association of the company, which must be updated to reflect the adoption of the changes - including the new amount of capital, new shares and any other important amendments.
  4. Declarations under Art. 13, para. 4 and para. 5 of the ZTRRULNC:These declarations confirm the veracity of the circumstances claimed and the acceptance of the acts submitted for publication, and that they have been provided by the applicant.
  5. Power of attorney:If the documents are submitted by a person other than the trader, a power of attorney is required.
  6. State Fee:A fee of BGN 30 is required to submit an A4 online application.

Why trust Elan Consulting” to increase the capital of a limited liability company?

Choosing the right financial and legal process management consultant is key to the success of any business venture. Elan Consulting offers reliability, expertise and a personalized approach, especially when it comes to increasing the capital of a limited liability company.

First of all, Elan Consulting has extensive expertise in the field of corporate finance and business law. This ensures that every aspect of the capital increase process will be handled with a professional and thoughtful approach. Consultants in the company are aware of the latest changes in legislation and practices, which ensures compliance with current regulations.

Secondly, Elan Consulting offers individualized solutions that meet the unique needs and goals of each client. We believe that each business has its own specific characteristics and needs a personalized approach when increasing capital. Our goal is to offer solutions that are fully tailored to your unique business processes and goals.

Thirdly, “Elan Consulting” is distinguished by a high level of customer service. We value our relationship with customers and strive to offer not only expert solutions, but also an excellent customer experience. Our clients can count on timely communication, transparency and constant support throughout the process.

Fourth, Elan Consulting's many years of experience in the field of corporate finance and business management provides clients with the assurance that their financial interests are in the hands of proven professionals. The company prides itself on its successful case studies and long-term relationships with its customers.

Fifth, Elan Consulting offers competitive prices for its services without compromising on quality. We understand that financial efficiency is key to any business, and that's why we strive to provide high quality services at reasonable prices.

Finally, the company maintains strict confidentiality and security of information. All customer data and information are processed with the highest degree of confidentiality and compliance with legal data protection requirements.

In conclusion, Elan Consulting offers reliability, professionalism and personalized service, which makes the company an ideal choice for any company looking for support in increasing its capital.

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Frequently Asked Questions

What are the main steps to increase the capital of OOD in Bulgaria?

The main steps include making a decision by the partners to increase the capital, determining the method of increase (for example, by making cash contributions or registering new shares), and registering the changes in the Commercial Register. It is also important to prepare and submit the necessary documents, including minutes of decisions and declarations of authenticity.

Can the capital increase be carried out by making non-cash contributions?

Yes, the increase in the capital of an LLC can be carried out by making non-cash contributions, such as real estate, machinery or intellectual property. In such cases, an expert assessment is required to establish the market value of the contributions.

What are the legal consequences of increasing the capital of an LLC?

An increase in capital may lead to a change in the percentage distribution of shares between partners, especially if the increase is made by accepting new partners. This can also affect voting rights and dividend policy in the company. Therefore, it is important that any decision to increase capital is made with a full understanding of all legal and financial implications.

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