Variable Capital Company
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Variable Capital Company –
VCC
In August 2023, Bulgaria introduced the Variable Capital Company (VCC) through amendments to the Bulgarian Commercial Act, aiming to provide a more flexible and streamlined corporate structure for startups and small businesses.
Variable Capital Company
Dynamic Capital Structure:
Unlike traditional companies, the VCC does not require a fixed initial capital. The capital amount is determined annually by the General Meeting of Shareholders based on the company’s financial performance.
Flexible Governance:
Founders can choose between appointing a single director or forming a board of directors, allowing for tailored management structures that suit the company’s needs.
Simplified Share Management:
Shares can be transferred through formal agreements without the need for notary verification, provided the Articles of Association permit it. This facilitates easier entry and exit of investors.
Investor-Friendly Provisions:
The VCC accommodates venture capital mechanisms such as rights of first refusal, drag-along and tag-along rights, convertible loans, and employee stock ownership plans (ESOPs), making it attractive to investors. .
Limitations:
The VCC is designed for small and medium enterprises and must convert to a traditional company structure (e.g., LLC or JSC) if it exceeds any of the following thresholds:
More than 50 employees
Annual turnover exceeding BGN 4 million
Asset value exceeding BGN 4 million
If these thresholds are surpassed, the VCC is required to transform into another company type by the end of the year
following the general meeting that acknowledged the exceedance.
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