- What is a Variable Capital Company?
In 2023, Bulgarian legislation introduced a new type of commercial entity — the Variable Capital Company (VCC). It represents a modern and flexible alternative to the limited liability company (LLC), suitable for startups, small and medium-sized enterprises, and foreign investors.
The main difference from the traditional LLC is that the VCC’s capital is not fixed and is not recorded in the Commercial Register. This allows for easy entry and exit of shareholders and quick adaptation to the company’s actual business needs. At the same time, the VCC also incorporates certain features of a joint-stock company, providing better governance and growth opportunities.
- Requirements and Key Features
To be registered, a Variable Capital Company must meet specific criteria:
- It must qualify as a small or micro enterprise – with up to 50 employees and turnover/assets not exceeding 4,000,000 BGN.
- It must have at least one shareholder (individual or legal entity).
- The company name must include the designation “ Variable Capital Company ” or the abbreviation “VCC”.
- Procedure for Registering a VCC
- Preparation of the Articles of Association. This document regulates the company’s management, shareholders’ rights and obligations, conditions for the admission of new members, and profit distribution.
- Choosing a company name. The name must be unique and must include “VCC” or “ Variable Capital Company.”
- Filing an application with the Commercial Register. Registration is carried out online through the electronic portal of the Registry Agency.
- No Minimum Capital Requirement. Unlike the traditional LLC, a VCC does not require an initial bank account or a minimum amount of registered capital.
- Advantages of the Variable Capital Company
- Flexibility and speed – the capital may change according to business needs without requiring a formal amendment in the Register.
- Less bureaucracy – simplified registration and management procedures.
- Ideal for startups and investors – particularly useful when attracting new partners or funding.
- Ease of shareholder entry and exit – through clearly regulated internal rules.
- Potential Risks and Legal Considerations
Despite its advantages, it is crucial that the Articles of Association of a VCC be drafted by an experienced commercial lawyer to prevent future shareholder disputes. Moreover, if the company exceeds the statutory thresholds for turnover or number of employees, it must be converted into an LLC or a joint-stock company (JSC).
- Conclusion
The Variable Capital Company marks a significant step forward in the modernization of Bulgarian commercial law. It combines the advantages of an LLC and a joint-stock company, offering greater freedom and flexibility to entrepreneurs.
This article reflects the opinion of Attorney Yasen Kraychev and is intended for informational purposes only; it does not constitute legal advice. Kraychev Partners Law Office has extensive experience in commercial law and full legal service for both Bulgarian and international companies. If you wish to engage our services, do not hesitate to contact us for a consultation.