Are you considering forming a Bulgarian KD company? We’re happy to inform you about this Bulgarian business form and entity, Our advisors can also advise you about the legal, tax and practical aspects of having an KD company in Bulgaria.
What is a KD company?
The KD company can be compared with the English LP (Limited Partnership), German KG (Kommandit Geselschaft) and the French SCS (Société en commandite simple). The KD company is formally a partnership and not a corporation.
The KD company has two types of partners:
A managing partner is responsible for managing the company. Generally these partners take care of daily management of the KD company, although daily management may also be delegated to a manager or other authorised person.
Managing partners are personally liable in full for any debts or obligations of the company.
Limited partners can be seen as investors in the company. They will invest money or effects and will be entitled to a part of the profit or another kind of compensation in return. A limited partner isn’t liable for any debts or obligations of the company.
Limited partners are not allowed to do any kind of work for the company, if they do they will be considered like managing partners and will carry liability like general partners.
The Bulgarian KD company is a legal person. Not in every country the equivalent will be a legal person. For example the Dutch CV (Limited Partnership) isn’t a legal entity.
As said before the managing partners of the KD company are fully liable for debts and obligations of the company. For this reason the managing partner is often a legal entity, like a Bulgarian OOD company.
This kind of structure is also very well known in for example Germany, where the so called ‘GmbH & Co. KG’ is an often chosen business structure.
Characteristics of the KD company
- No minimum capital
- At least one managing partner has to be appointed
- At least one limited partner has to be appointed
- Partners can be both corporate and non-corporate entities
- The name of the KD company must contain at least the name of one of the managing partners
Every year some obligations will have to be fulfilled, including filing the annual accounts. The annual accounts of s KD company are usually quite simple and exempted from auditing.
When is a KD company interesting?
The Bulgarian KD company is interesting when:
- a company will have third party investors
- the company will be financed by an already existing holding company
- taxation on profits needs to be on a pass-through principle, so that the partners will pay taxes on their part of the profit instead of the company paying corporation tax
- a company wants to do business in Bulgaria, but doesn’t require a permanent establishment
- a corporate director is desired instead of a physical person
- Joint-ventures and consortiums
In certain cases other company types or business forms can be a better choice, like:
Companies with higher capital requirements will usually prefer the Bulgarian AD (plc / joint stock company), because they’ll be able to trade the shares more freely, for example by registering at the stock exchange or trade the shares by over the counter trading. Also only only Bulgarian AD can offer bearer shares.
In most other caes the Bulgarian OOD (Limited company) is usually the most proper solution. This company type is chosen most by our clients. It’s an untrue statement that the OOD is only for small companies, there are many large corporations in Bulgaria doing business through an OOD / EOOD.
Combining the Bulgarian OOD and KD company
We already mentioned it before that it’s also possible to use legal entities, like the Bulgarian OOD as partners in the KD company. This principle is very interesting for bigger and more complex structures which are being financed by a foreign holding company. In such cases the holding company would usually participate in the KD company as the limited partner and the managing partner would be a Bulgarian OOD company.
The Bulgarian companies act
Bulgaria has a very modern and flexible companies act which makes Bulgarian companies even more suitable for international business. An example of this is the fact that Bulgarian companies have both a Bulgarian and an international name. The Bulgarian name will be in Bulgarian and written in Cyrillic, but the international name can be in any language and may end on any applicable suffix, like Ltd, GmbH, SL or sarl.
Other important benefits of the Bulgarian companies law:
- A Bulgarian company can be registered anywhere in Bulgaria and the administrative address may differ from the registered office
- The registered office doesn’t have to be the place of business
- A Bulgarian company can have several places of business
Forming a Bulgarian company doesn’t take much time, usually the company will be registered within a week after all documents have been filed.
You can come to Bulgaria for forming a Bulgarian company, but the formation process can also be done on distance.
Steps to be taken to register a Bulgarian company
Forming a Bulgarian company is done in a few steps:
- Drawing up the corporate documents (minutes, memorandum/bylaws, signature card and declarations)
- Every director or manager will have to sign the signature card in the presence of a notary public (either in his own country or in Bulgaria)
- Opening of an escrow account for the company’s capital and applying for a declaration of paying-up the capital
- Translation and legalisation of the signature cards (if not signed in front of a Bulgarian notary public)
- Filing all documents at the Bulgarian trade register
After about a week the company will be registered and the company will be able to close the escrow account, apply for a business bank account and and apply for a VAT number.
Our way of working
BulgariaCompanyFormations.com will take every part of the registration process for doing business in Bulgaria out of your hands. All our documents are bilingual (English and Bulgarian), when desired other languages are also a possibility.
Alle documenten die wij opstellen zijn tweetalig (Engels en Bulgaars), desgewenst zijn ook mogelijk.
BulgariaCompanyFormations.com also offers supplemental services:
- Accounting services
- Legal advice
- Tax advice
- Fiduciary services
- Provision of Bulgarian bank accounts
- Applying for a VAT number
- Translation services
- Supplying a Bulgarian registered office
- Consulting services for financing a Bulgarian enterprise through European funds, grants and subsidies
- Consulting services for finding the right location and real estate for Bulgarian companies
- Services to find Bulgarian business partners and starting a joint-venture
We’re very happy to give you more information about this subject or another subject on this website. Please contact us with the button below.Contact us