Public Limited Companies (JSC) in Bulgaria: Incorporation, Management, and Audit (Complete Guide)

1. Introduction: Understanding the Joint Stock Company (JSC / AD) in Bulgaria

A Joint Stock Company (known in Bulgarian as “Акционерно дружество” or “АД”) is one of the most prestigious, reputable, and comprehensive corporate structures for conducting business in Bulgaria. Structured as a capital-based company, its share capital is divided into shares. The defining feature of a JSC is its capacity to raise significant investment capital by issuing new shares, making it the vehicle of choice for large-scale industrial projects, banking institutions, insurance companies, and enterprises preparing for a public listing on the stock exchange.

In contrast to a Limited Liability Company (OOD), a JSC is characterized by a more formal corporate governance structure, higher minimum capital requirements, and mandatory independent financial audits in most scenarios. With Bulgaria’s full integration into the Eurozone in 2026, the rules governing incorporation, capital maintenance, and financial reporting for joint stock companies are fully denominated in Euro (EUR). In this comprehensive guide, we will analyze the legal framework, procedural steps, tax implications, and operational features of a Bulgarian JSC in 2026.

2. Minimum Share Capital and Shares in the Eurozone (2026)

Bulgaria’s transition to the Euro in 2026 converted all statutory capital thresholds from Bulgarian Lev (BGN) to Euro (EUR) at the fixed exchange rate of 1.95583. These updated thresholds are codified directly in the Bulgarian Commercial Act (CA) and apply to both new and existing companies:

• Minimum Share Capital: The statutory minimum capital required to register a standard Joint Stock Company is 25,564.59 EUR (the exact equivalent of the historic 50,000 BGN). Special sectors, such as banking, investment brokerage, and insurance, are subject to much higher minimum capital thresholds regulated by the Bulgarian National Bank (BNB) and the Financial Supervision Commission (FSC).
• Minimum Paid-up Capital upon Registration: The Commercial Act stipulates that at least 25% of the nominal value of each subscribed share must be paid up prior to submitting the registration application. This means that a minimum of 6,391.15 EUR must be blocked in an escrow bank account (набирателна сметка) before incorporation documents are filed with the Commercial Register. The remaining 75% of the subscribed capital must be paid up within 2 years of the company’s registration date.
• Nominal Value per Share: The nominal value of a single share cannot be lower than 0.51 EUR (the exact equivalent of 1 BGN), preventing the fragmentation of capital into microscopic units.

3. Types of Shares in a Joint Stock Company

The share capital of a JSC is divided into shares – securities that certify the shareholder’s participation in the company and confer respective financial and non-financial rights. Under the legal framework in force in 2026, the primary classifications and rules for shares are:

1. Registered and Book-Entry Shares:
   • Registered Shares (in physical form): Issued as paper certificates, transferred by endorsement (джиро), and must be recorded in the company’s Shareholder Register to be effective against the company.
   • Book-entry (Dematerialized) Shares: Exist only as electronic records in the Central Depository. Their transfer is executed electronically through licensed investment intermediaries. Book-entry shares are mandatory for public companies listed on the Bulgarian Stock Exchange (BSE).
2. Ordinary and Preference Shares:
   • Ordinary Shares: Confer voting rights (one vote per share) in the General Meeting, the right to dividends, and the right to a liquidation share.
   • Preference Shares: Provide guaranteed or cumulative dividends, priority in liquidation proceeds, or other financial privileges, but typically do not carry voting rights unless their specific rights are affected by a resolution.
3. Abolition of Bearer Shares:

   It is important to emphasize that bearer shares (акции на преносител) were completely abolished in Bulgarian corporate law in 2018 to improve tax transparency and align with European anti-money laundering (AML) standards. All shares in Bulgarian JSCs are registered, ensuring clear traceability of ultimate beneficial owners (UBOs).

4. Step-by-Step Incorporation Procedure

Incorporating a JSC is a formal legal process that requires meticulous documentation and follows several mandatory steps:

• Holding a Constituent Assembly: The meeting must be attended by all natural or legal persons subscribing to shares. The founders resolve to establish the company, adopt the Articles of Association, determine the share capital, subscribe the shares, and elect the initial governing bodies (Board of Directors or Supervisory Board).
• Adopting the Articles of Association: The Articles of Association (Устав) is the constitution of the JSC. It must contain the company name, registered office and address, scope of business, amount of share capital, type and number of shares, shareholder rights, and procedures for convening General Meetings.
• Opening an Escrow Account and Capital Payment: The capital (minimum 25% of the subscribed amount) must be deposited into a temporary escrow account opened with a Bulgarian bank. The bank issues a capital certificate, which is a mandatory attachment for the registration process.
• Filing with the Commercial Register: The application for registration (Form A5) is submitted to the Registry Agency. The state registration fee is 117.60 EUR for electronic filings using a Qualified Electronic Signature (QES), or 235.19 EUR for paper-based filings at the counter. Electronic submission saves 50% of the government fees and accelerates processing times.

5. Governance Structure and Management Bodies

The Bulgarian Commercial Act offers flexibility in structuring the management of a JSC, allowing founders to choose between two distinct systems:

1. One-Tier Management System:

   Under this system, the governing bodies are the General Meeting of Shareholders (GMS) and the Board of Directors (BD). The Board of Directors must consist of at least 3 and no more than 9 members. The Board makes all operational decisions and appoints one or more Executive Directors (Изпълнителен директор) from among its members to represent the company in daily operations.

2. Two-Tier Management System:

   Under the two-tier system, the governing bodies are the General Meeting, the Supervisory Board (SB), and the Management Board (MB). The General Meeting elects the Supervisory Board, whose role is to oversee the Management Board. The Supervisory Board, in turn, appoints the members of the Management Board, who handle the day-to-day operations and represent the company. Members cannot serve on both boards simultaneously, ensuring independent oversight.

6. Mandatory Audit Requirements & The Dormant Company Exemption

Financial audit compliance is a critical consideration for a JSC, as it involves ongoing administrative obligations and auditor fees. The rules in force for 2026 are:

The General Rule: Mandatory Audit

Pursuant to Article 37, Paragraph 1, Item 1 of the Bulgarian Accountancy Act, all Joint Stock Companies (JSCs/ADs) are subject to mandatory independent financial audits by a certified public accountant (registered auditor), regardless of their revenue, asset size, or number of employees. This is a major contrast to LLCs (OODs), which are audited only if they exceed specific small-business size thresholds.

The Special Exemption for Dormant Companies (JSCs Without Activity)

If a Joint Stock Company has not carried out any economic activity during the financial year, it qualifies for a major regulatory exemption:

• Audit Exemption: Dormant JSCs are exempt from mandatory independent financial audits for the inactive financial year.
• Filing Relief: They are not required to prepare and file audited annual financial statements (AFS) with the Commercial Register. Instead, they must submit a simplified Declaration of Inactivity (under Article 38, Paragraph 9, Item 2 of the Accountancy Act) by June 30th of the following year. This declaration is submitted once and does not need to be refiled annually if the company remains inactive.

7. Corporate Taxation in the Eurozone

A Bulgarian JSC is subject to the standard corporate tax regime, which remains highly competitive within the EU:

• Corporate Income Tax (CIT): Corporate profits are subject to a flat tax rate of 10%. The annual tax liability is declared and paid via the Corporate Income Tax Return (under Article 92 of the CITA) by June 30th of the following year.
• Dividend Tax: When a JSC distributes dividends to natural persons (residents or non-residents) or to corporate entities outside the EU, a 5% withholding tax applies. Dividends distributed to Bulgarian companies or companies resident in EU Member States are exempt from withholding tax.
• VAT Registration: A JSC must register for VAT under the standard rules (when taxable turnover exceeds 51,129.19 EUR within 12 months) or may register voluntarily. Monthly VAT declarations are filed by the 14th day of the following month.

8. Frequently Asked Questions (FAQ)

Q1: Can a Joint Stock Company have a single shareholder?
Yes. In this case, the company is registered as a Single-Member Joint Stock Company (EAD). All powers of the General Meeting are vested in the sole owner of the capital, and the company is managed by a Board of Directors appointed by the owner.

Q2: What is the liability of shareholders in a JSC?
The liability of shareholders is strictly limited. Shareholders are liable to the company’s creditors only up to the value of their subscribed shares. Their personal assets are completely protected from the company’s creditors and liabilities.

Q3: How long is the capital blocked in the escrow bank account during incorporation?
The capital remains blocked in the escrow account until the JSC is registered in the Commercial Register (typically 3 to 5 business days after submission). Once registered, the account is converted into a standard corporate current account, and the funds can be used for business operations.

Q4: What is the difference between an LLC (OOD) and a JSC (AD) regarding share transfers?
In an LLC, transferring shares to third parties requires a notarized contract and approval from the General Meeting. In a JSC, share transfers are simpler (by endorsement of physical shares or electronic registry transfer for dematerialized shares), without the need for notarization or approval from other shareholders.

Q5: What are the quorum and voting requirements for General Meetings?
The law defines quorum requirements (usually representing more than 50% of the capital) and voting majorities. Crucial decisions, such as amending the Articles of Association or increasing the share capital, require a qualified majority of 2/3 or 3/4 of the represented capital.

Q6: Can a foreign national be appointed as a director of a Bulgarian JSC?
Yes. Foreign physical and legal persons can freely serve as members of the Board of Directors, Supervisory Board, or Management Board. There are no nationality or local residency requirements for board members.

Q7: When is a company considered “dormant” for the audit exemption?
A company is considered dormant (without activity) if it did not execute any commercial transactions, generate revenue, or incur expenses during the financial year (excluding minor administrative expenses such as bank maintenance fees or registration filing fees).

Q8: What are the penalties for failing to declare inactivity?
If a dormant JSC fails to submit the Declaration of Inactivity by June 30th, the Registry Agency and the National Revenue Agency may impose corporate fines ranging from 250 to 1,500 EUR, alongside personal fines for the company’s legal representatives.

9. Conclusion

The Joint Stock Company is a powerful and flexible corporate structure that provides excellent opportunities for large-scale business operations and foreign investment in Bulgaria. The adoption of the Euro in 2026 simplifies integration with European financial markets and reduces transaction costs. However, given the strict regulatory requirements for governance, audits, and capital maintenance, a JSC requires professional accounting and legal support.

Our professional accounting firm offers comprehensive assistance in JSCs incorporation, escrow account setup, shareholder registry maintenance, ongoing accounting services in accordance with Eurozone standards, and audit support. Contact us for a detailed consultation.