GENERAL PROVISIONS

(1)

A company is an association of two or more persons for effecting commercial transactions with joint means.

(2)

In cases provided by a law a company may be incorporated by one person.

(3)

Companies shall be legal persons.

(1)

The types of companies are:

1.

general partnership;

2.

limited partnership;

3.

limited liability company;

4.

joint stock company;

5.

partnership limited by shares.

(2)

Only the companies set forth in this Law may be established.

(3)

Banking and insurance activities may be carried out only by joint stock companies or cooperatives.

(1)

A company's founders shall be Bulgarian or foreign natural or legal persons possessing capacity.

(2)

A person may participate in one or more companies to the extent such participation is not prohibited by law.

(3)

(New - SG 84/2000) If a company participates in another, its rights of a partner or sole owner shall be executed by the person having the right to represent it or by explicitly authorized person.

Persons wishing to form a company may reach agreement on the acts which must be performed so that the incorporation may be prepared. For a breach of obligations based on that agreement the parties shall be liable only for the actual damages caused.

A company shall be deemed formed on the date of its registration in the commercial register. The application for registration shall be filed by the appointed managing organ.

The will of the parties and the objective of the interpreted provision shall be taken into account when interpreting the by-laws.

(1)

Any acts by the founders performed in the name of the as yet unincorporated company prior to the date of its registration shall create rights and obligations for the persons who have carried out the said acts. When transactions are effected it shall mandatorily be noted that incorporation is pending. The persons who have effected the transactions shall be liable jointly and severally for undertaken obligations.

(2)

When the transaction has been effected by the founders or a person authorized by them, the rights and obligations shall be transferred ex lege to the incorporated company.

(1)

(Amended - SG 84/2000) The incorporation of a company shall void only if one of the following offences has been admitted:

1.

if has not been concluded  Articles of Partnership or it has not been concluded in the required form by the law;

2.

if the requirement of Art. 159 and 163 have not been fulfilled for the joint stock company and the partnership limited by shares;

3.

if the company has been registered not by the court of its seat;

4.

if the purposes of the business of the company contradict the Law or the Good manners;

5.

if the Articles of Partnership or the By-laws do not regulate the trade name, the purposes of the business of the company or the size of the contributions, as well as the registered capital of the company when the Law requires it;

6.

if the stipulated by the Law  part of the registered capital has not been installed;

7.

if in the founding of the company have participated legally able persons lees than the number required by the law.

(2)

(Amended, SG 84/2000) Any interested party, as well as the public prosecutor, may request  the district court of the registration of the company, the company be declared void.In the cases under par. 1, item 3-6, the court shall declare the company void, if the offence has not been already eliminated or it has not been eliminated within suitable term defined by the court.

(3)

The court's ruling to declare the company void shall be effective from the date of entry into force. As of that moment the company shall be deemed terminated and that fact shall be registered on the court's own motion in the commercial register, after which liquidation shall be carried out by a court-appointed liquidator.

(4)

Where acts in the name of the company declared void have been carried out, the founders shall be liable jointly and severally and their liability shall be unlimited.

(5)

(New, SG-84/2000) Article 498 of the Civil Procedure Code shall not apply concerning the  company formation.

Any partner in a company may bring an action to the district court of the company's seat to protect its right to be a partner and its individual rights as a partner, when these have been violated by the company's organs.

(1)

Should a partner or, respectively, a shareholder, make a non-monetary contribution, the articles or, respectively the by-laws, shall state the name of the contributor, a full description of the non-monetary contribution, its monetary value, and the grounds for the contributor's rights.

(2)

(Supplemented - SG 103-1993, Amended, SG-84/2000) The contribution in a limited liability company, a joint stock company or a partnership limited by shares shall be valued by three experts appointed by the court which shall register the company, at the request of the contributor. The valuation shall comprise the full description of the non-monetary contributions, the evaluation method, the obtained assessment and its compliance with the size of the partners' interest in the capital or with the number, nominal value or emissions value of the shares, registered by the contributor. The valuation shall be presented for entry in the register, after it  has been accepted by the court.

(3)

(New, SG-84/2000) The valuation stated in the articles of the company or, respectively, the by-laws, shall not be higher than the valuation assigned by the experts before the court.

(4)

(Previous Par. 3, SG-84/2000) If the contributor do not agree with the valuation, he may participate in the company with monetary contribution or may withdraw from participation in the company.

(5)

(Previous Par. 4, SG-84/2000) The contribution shall not have as a subject future labor or services.

(1)

The contribution of a right for the creation or transfer of which a notarial form is required shall be effected with the articles. For contributions to a joint stock company the consent in writing of the contributor and a description of the contribution with a notarized signature shall be attached to the by-laws.

(2)

The contribution of any other rights shall be made pursuant to the form the law provides for their creation or transfer.

(3)

(Suplemented, SG-84/2000) The contribution of a claim shall be made with the articles or, respectively, the by-laws, and the contributor shall attach evidence of having notified the debtor for the transfer of the claim. The requirement for notification shall not apply if the claim regards the company itself;

(4)

Title to a contribution shall be acquired from the moment of the company's formation.

(5)

(Amended - SG 104/1996) Where a contribution has as a subject a real right over real property, the respective organ of the company shall, after such right has arisen, present an abstract of the articles, certified by a recordation judge, for recording in the recordation office and, whenever necessary, separately the contributor's consent as well. Such organ shall present an abstract of the by-laws certified by a recordation judge and the contributor's consent. In making the recording the recordation judge shall ascertain the contributor's rights.

The obligation of the partners in a limited liability company and of the shareholders in a joint stock company for installments in the registered capital, can not be remitted, except in case of its reduction, neither it can be deducted.

.
Article 73b (New, SG- 84/2000)

(1)

A decision of the general meeting of the shareholders shall be required in case a joint stock company within two years from its founding, acquires rights at a price exceeding with 10 % of its capital from a person who has registered stocks at the founding of the company and Art. 72, par. 2 shall apply for the transferred rights.

(2)

The transaction shall enter into force from the entry of the decision of the general meeting in the commercial register. The decision shall be published in State Gazette.

(3)

Paragraphs 1 and 2 shall not apply for rights acquired during the usual activity of the company, at the stock exchange or under supervision of the court or state body.

(1)

Every partner or shareholder may bring an action before the district court of the company's seat for the repeal of a resolution of the general meeting when such resolution is inconsistent with a mandatory provision of the law or with the articles or, respectively, the by-laws of the company. The action shall be brought against the company.

(2)

The action shall be brought within 14 days of the date of the meeting when the plaintiff was present or was duly notified, or otherwise within 14 days of learning of the resolution, but not later than three months after the date of the general meeting.

(3)

A partner or shareholder may intervene in a proceeding in accordance with the provisions of the Code of Civil Procedure. It may carry on the proceedings even after the withdrawal of the original plaintiff.

(1)

The instructions given by the court in repealing a general meeting resolution concerning the interpretation of the law, the memorandum of association or the by-laws shall be binding on the general meeting whenever it discusses the same issue again.

(2)

Resolutions or acts by the company's organs which are in contravention of an effective court ruling are null and void. Each partner or shareholder may at any moment refer to such nullity or request its proclamation by the court.

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