Registration of a pawnshop in Bulgaria is a process that requires a thorough knowledge of the legislation and specific requirements. The company “Elan Consulting” is ready to advise and assist you in this whole process, whether you are in Sofia, Burgas, Pomorie, Karnobat, Sunny Beach, Aytos, Nessebar, Sozopol, Primorsko or anywhere in the country.
Many of our clients ask us questions such as: “How to open a pawnshop?”, “What capital is needed for a pawnshop?”, and “What internal rules for a pawnshop should be drawn up?”. It is important to note that for the opening of a pawnshop, a number of legal requirements must be observed, including the requirements of the “Ordinance on the Activities of Pawnshops” and entry in the “Public Register of Pawnshops”.
Other common questions include: “Can I sell a pawnshop business?”, “What are the opinions about pawnshop gold?”, and “What is the other name of a pawnshop?”. These questions indicate the wide range of topics that interest our clients and for which we can provide competent consulting and accounting services.
Elan Consulting is here to answer all your questions and provide you with comprehensive support in connection with the opening and management of a pawnshop. Whether you are interested in specific aspects such as “pawnshop equity”, “pawnshop money” or what are the requirements of the “pawnshop business ordinance”, we are ready to help you navigate the entire process and ensure that your business meets all legal and regulatory requirements.
Contact us to learn more and get professional help for your new business.
How to open a pawnshop in Bulgaria?
Opening a pawnshop in Bulgaria is a process that requires compliance with a number of legal and regulatory requirements. The first step is the registration of the pawnshop under the Commercial Act and the Commercial Register Act, as well as the registration as a personal data administrator under the Personal Data Protection Act. In order to carry out transactions with articles of precious metals and precious stones, an entry is also required under Art. 13, para. 2 of the Currency Act.
The pawnshop must have a commercial premises, which includes a space for receiving customers and a warehouse for storing the pledged items, as specified in Art. 6, para. 1 of the Ordinance on the Activities of Pawnshops. The room must meet the requirements for fire safety, be equipped with security cameras and signal-security equipment (SOT) under Art. 6, para. 2.
According to Art. 3, para. 1 of the Ordinance, a pawnshop is a person who by profession provides cash loans secured by a pledge on movable property. In the company of the pawnshop, the designation “pawnshop” must be included (art. 3, para. 5). The pawnshop shall publish in a visible place for consumers the information referred to in Article 4, including the name and designation “pawnshop”, the general conditions of the pawnshop activity, the valuation methods, the conditions for storing the bets, the amounts and terms of the loans, as well as the conditions of satisfaction in case of non-repayment of the loans.
A prosecutor, a manager, a member of a management and control body or a partner with unlimited liability in a pawnshop cannot be a person who has been convicted of an intentional crime, declared bankrupt or has been a manager of a company terminated due to bankruptcy (art. 5).
The registration of the pawnshop is also carried out by entering in a public register under Art. 7. In addition, the pawnshop must adopt internal rules for the control and prevention of money laundering, which are approved by the Chairman of the State Agency “National Security” (Art. 7, para. 3).
When concluding a transaction, the pledger fills out a sample declaration and provides the pledged item to the pawnshop (Art. 14). The pawnshop is obliged to store the pledged items with the care of a good merchant, taking all necessary measures to ensure their integrity and protection against encroachments (art. 19). In case of non-fulfillment of the obligation to return the borrowed amount, the pawnshop has the right to sell the pledged item and be satisfied with its price (art. 23).
The pawnshop may not agree on a monthly amount of interest on loans greater than 3% for loans in BGN and in foreign currency (art. 18). All documents related to pledge transactions are kept for a period of 5 years (art. 12).
Control over the activities of pawnshops is carried out by officials appointed by the Minister of Internal Affairs and the Chairman of the Consumer Protection Commission (Art. 29). They have the right to free access to commercial premises and to request the necessary documents and information (art. 30).
What are the requirements for registration of a pawnshop and how does the procedure go?
Registration of a pawnshop is a mandatory step that guarantees the legitimacy of its activities. According to the Bulgarian legislation, the process and requirements for registration are clearly defined in the normative acts. These requirements and procedures are in accordance with Ordinance on the activity of pawnshopsand The Anti-Money Laundering Measures Act.
Legal form and capital:
Pawnshops can function as sole proprietorships or collective limited liability companies (EOOD or Ltd). Bulgarian legislation sets the minimum amount of capital for the creation of such companies at only BGN 2. The regulations in the sphere of activity of pawnshops do not provide for a capital obligation greater than this minimum.
Important! A pawnshop can also be registered by a company with only 2 leva capital!
Internal rules against money laundering:
In accordance with The Anti-Money Laundering Measures Act, pawnshops are obliged to develop and implement internal rules to prevent money laundering. These rules must be registered with the Financial Intelligence Directorate of the DANS, thus ensuring compliance with the legal provisions.
IMPORTANT! According to Art. 7, para. 3 of the Ordinance on the Activities of Pawnshops- The Pawn Shop adopt internal control rulesand prevent money laundering. The internal rules also include criteria for the recognition of suspicious operations, transactions and clients aimed at terrorist financing. The adopted internal rules shall be approved by the Chairman of the State Agency “National Security” after their submission in accordance with Article 16, paragraph 3 of the Law on Measures against Money Laundering.
What is the procedure for registering a pawnshop?
The registration process of a pawnshop in Bulgaria is strictly regulated by the national legislation. It includes several key steps to ensure full compliance with the legal framework.
Registration in the Commercial Register
The initial step of the process is registration of the company in the Commercial Register. This is a basic requirement and prerequisite for the next steps of the procedure.
Registration with the Ministry of Economy
Once the company is registered in the Commercial Register and in the name and the term “pawnshop” is included, then depending on the planned services offered, the registration in the specialized register of the Ministry of Economy follows - in the so-called Register of persons engaged in mining, processing and transactions in precious metals and precious stones and articles with and from them by occupation
Important! The registration of a pawnshop in the Register of persons who carry out activities in mining, processing and transactions with precious metals and precious stones and articles with and from them by occupation, is mandatory only if you plan to carry out transactions with such articles - that is, if you do not plan, sheis not mandatory!
Registration of pawnshops with the Ministry of Economy is an important aspect of the registration procedure, which ensures compliance of pawnshops activity with the legal framework in Bulgaria. According to the Ministry of Economy, persons who carry out activities of mining, processing and transactions with precious metals and precious stones and products with and from them by occupation are obliged to register with the Ministry within 14 days before starting the activity.
The entry in the Public Register is made on the basis of a written application in a form according to Appendix No. 1 of the Ordinance, which the person can download or receive at the reception of the Directorate “Registration, Licensing and Control” at the address: Gr. Sofia, ul. “Prince Alexander I” No. 12. The entry in the public register is certified by the issuance of a certificate by the Ministry.
1. What documents are needed?
The main documents to be attached in original or certified copy to each application for registration are as follows:
1. a contract for joint activity, as well as an EIC for companies registered under Art. 357 of the ZDA or carrying out the activity under other specific regulatory acts;
2. copies of an identity card or a statement regarding the data of the identity card, for the purpose of issuing an official criminal record to the persons representing the applicant, as well as to the natural persons requested to be entered in the register for carrying out the activities requested for registration under the Ordinance. For persons Bulgarian citizens for whom it is not possible to issue an electronic official criminal record certificate at the request of the person — a criminal record certificate. For foreign citizens, a criminal record issued in accordance with Ordinance 8 of the Ministry of Justice on the functions and organization of criminal justice bureaus, and when they do not have a criminal record in accordance with their national legislation, accompanied by an official translation by a sworn translator;
2. Submission of documentation
Submission of the necessary documentation to the Ministry of Economy for approval.
3. Obtaining a certificate.
After approval, the Ministry of Economy issues a certificate that allows the pawnshop to carry out transactions with precious metals and stones.
4. Acceptance of internal rules.
As mentioned earlier, the pawnshop adopts internal rules to control and prevent money laundering. The internal rules also include criteria for the recognition of suspicious operations, transactions and clients aimed at terrorist financing. The adopted internal rules shall be approved by the Chairman of the State Agency “National Security” after their submission in accordance with Article 16, paragraph 3 of the Law on Measures against Money Laundering.
The registration process is essential for the legitimate operation of the pawnshop. Compliance with all requirements and the presentation of properly prepared documentation is essential for the successful passage of registration procedures. The experts of the accounting company “Elan Consulting” have in-depth knowledge in this area and can provide professional support throughout the entire registration process.
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