An acquisition of a registered Bulgarian company or other business can be effected through either an asset purchase (asset acquisition) or a share purchase. Deciding which of the two techniques to utilize depends on the objectives of the acquirer.
Asset Acquisition in Bulgaria
For example, if the purchasing company is interested in a piece of land owned by the target company then the acquirer may offer to obtain the real estate by entering into a sale-purchase contract for that specific asset. In this case the acquirer (the buyer) does not gain control over the target (the seller) but obtains title only over the specific asset. As a result, the acquirer has not accepted any of the liabilities of the target company.
Transfer (Sale) of the Entire Enterprise
The buyer may also enter into a contract for the transfer of the entire enterprise. In this case the buyer obtains the business of the company by directly acquiring all assets, tangible and intangible rights and liabilities. The contract for the sale of the enterprise shall be signed before a notary public, and it shall be further filed with the Bulgarian Commercial Register. If the transfer of the enterprise includes real estate then it shall also be registered in the Property Register. The enterprise seller must inform both its creditors and debtors for the transfer.
Share (Stock) Purchase Acquisition in Bulgaria
Another way for acquiring a company’s assets is by acquiring control of the company itself. In a share purchase transaction the acquirer offers to buy a controlling stake in the target by proposing stock and/or other consideration to the target’s partners (shareholders).
Foreign and local nationals and legal entities are in no way limited from acquiring, holding or trading with shares in Bulgarian companies.
For instance, the acquirer’s objective could be to obtain a number of intangible assets, say, patents. Such complex and numerous assets would have greatly increased the transaction costs had the deal been effected through a number of patent purchase agreements. Thus, by getting the control over the target through the share purchase, the buyer gains control over its assets. The major consequence is that the buyer obtains the company with all of its actual and contingent liabilities.
Acquisition of Shares (Interests) in Bulgarian LLC
An interest (share) in a limited liability company in Bulgaria may be transferred from one partner to another by means of a contract that shall be signed before a notary public. The partners signing the contract can be foreign and/or local individuals or legal entities.
If the interest(s) are transferred to a third party which is not currently a partner in the company then the rules for admitting a new partner will take effect. The new partner shall be admitted by the General Meeting upon an application in writing, in which it shall state that it accepts the terms of the Articles of Association. The change of ownership shall be registered with the Commercial Registry.
Acquisition of Shares (Stock) in JSC
The transfer of stock in a Bulgarian joint-stock company (JSC) can be effected through different means depending on the type of stock that is subject of the transfer.
The transfer of title over the bearer shares is conducted through the physical handling of the stock between the parties.
The transfer of registered shares is effected by endorsement which, to be binding on the company, must be recorded in the Book of Shareholders. The Articles of Association may provide for other conditions for the transfer of registered shares.
Ownership and transfer of dematerialized shares shall be registered with the Bulgarian Central Depository.