We are all familiar with terms such as sole proprietorship (ET), limited liability company (OOD, EOOD), joint-stock company (AD, EAD), etc. However, few people know that a new legal form for commercial companies has recently been introduced in Bulgaria—the Variable Capital Company (VCC). Today, we will look at the main advantages and disadvantages of VCCs compared to traditional OODs and EOODs.
Main advantages of a variable capital company (VCC) over a limited liability company (LLC):
1. Capital flexibility
Less administrative burdens and fees.
- For limited liability companies (OOD), the minimum capital is fixed (a minimum of BGN 2, but if it is higher, the change can only be made by decision and entry in the Commercial Register).
- With a VCC (Variable Capital Company), capital can be increased or decreased automatically, depending on the entry/exit of partners or changes in shares, without the need for each change to be entered in the Commercial Register.
2. Easier entry and exit of shareholders
Suitable for startups and companies with frequent changes in participants.
- In a limited liability company (OOD), it is more difficult for a partner to leave – usually a decision by the general meeting, transfer of shares, notarial certification, and a change in the register are required.
- In a VCC (Variable Capital Company), this is much more flexible—partners can join and leave the company without such a complicated procedure.
3. Simplified amendments to the articles of association
Bureaucracy is reduced.
- In the case of a limited liability company (OOD), many of the changes (change of capital, shares, manager) go through a notary public + entry in the Commercial Register.
- In the case of VCC (Variable Capital Company), internal changes can only be regulated in the company’s articles of association and do not always require entry in the Commercial Register.
4. Flexible rights of the shareholders
A huge plus for attracting investors.
- In a limited liability company (OOD), shares and rights are quite strictly regulated by law.
- In a VCC (Variable Capital Company), the articles of association may provide for different classes of shares with different rights (e.g., investors with dividend rights but without management rights).
5. Adaptability to investments
Analogous to a “private limited company” in the UK or an “SAS” in France – a modern form of business with growth potential.
- OOD is more cumbersome when raising capital.
- The VCC (Variable Capital Company) makes it easier to increase capital and accept new partners without having to go through complicated procedures every time.
Disadvantages of a VCC compared to an OOD:
- Relatively new legal form → less practice, courts and the National Revenue Agency are still developing interpretations.
- Banks, investors, and counter-parties are more cautious because they are accustomed to OOD/ADs.
- There may be higher requirements for legal assistance in drafting the articles of association (to ensure that all rights are properly regulated).
Conclusion:
- If you are looking for a stable, classic, and familiar form → OOD is more suitable.
- If you are planning a start-up, attracting investors, or frequent changes in structure → VCC offers much more flexibility and is the modern choice.
If you have any questions or would like to register a VCC – Variable Capital Company, please contact us or use the button below to take advantage of the Euroformat.eu promotion:
Registration of Bulgarian VCC