What is a joint-stock company (AD / JSC / PLC) according to the Bulgarian commercial law?
I. Capital of a joint-stock company
A joint-stock company is a capital company whose capital is divided into shares. It is responsible to its creditors with its property. The capital and the value of the shares are designated in levs. The minimum value of the capital of a joint-stock company is 50 000 levs / around 25 000 euro. For the registration of a joint-stock company in the Commercial Register it is necessary to be paid up not less than 25 per cent of the nominal value or issue price of each share as provided in the Articles of Association. The remaining part must be paid in within a period stipulated in the Articles of Association, but not later than two years after the company's registration, or respectively the entry of the capital increase.
II. Founders of a joint-stock company
Founders of a joint-stock company may be one or more natural or legal persons. Persons declared in bankruptcy may not be founders. For the subscribed shares shareholders may participate with monetary and non-monetary contributions.
А share is a security which certifies that its owner participates in the capital with the nominal value indicated on it. A joint-stock company may not issue shares of a different nominal value. The issue price is the value at which the shares are purchased by the founders and it may not be lower than the nominal value. Shares are indivisible and when a share belongs to several persons they exercise their rights in it jointly by designating a proxy.
Shares may be bearer or registered shares. A joint-stock company may also issue preferred shares and book-entry shares under a procedure established by a law. The owners of registered shares are recorded in a shareholders’ book which is kept by the company. A share entitles its owner to one vote in the General Meeting of shareholders, to a share in the property in case of liquidation and to a dividend in proportion to the nominal value of the share. А company may issue shares with special rights. Preferred shares may provide a guaranteed or additional dividend or share in the company's property in case of liquidation, as well as other rights. Preferred shares may have no voting rights. Shares with equal rights form a separate class. Bearer shares are transferred and pledged by delivery and registered shares - by endorsement and entry in the registered shareholders’ book.
A joint-stock company may also issue debentures. Debentures may be in the form of debenture certificates and debenture stocks. The issuance, transfer and pledge of debentures are carried out under the rules referring to the shares.
V. Increase and decrease of capital of a joint-stock company
The capital of a joint-stock company may be increased by issuing of new shares, by increasing the nominal value of already issued shares or by converting debentures into shares. The capital may be decreased by reduction of the nominal value of shares and by invalidation of shares. The capital may be simultaneously decreased and increased in such way that the reduction takes effect only if the projected increase of the capital is made.
VI. Bodies of a joint-stock company
Bodies of a joint-stock company are the General Meeting of shareholders and the Board of Directors (one-tier system) or the Supervisory Board and the Managing Board (two-tier system).
А. General Meeting of shareholders
The General Meeting consists of the voting shareholders that participate in the General Meeting either personally or by proxy. Shareholders holding privileged shares with no voting rights and the members of the Board of Directors or of the Supervisory Board and Managing Board, when these members are not shareholders, participate in the General Meeting proceedings without the right to vote.
The General Meeting decides on the following issues: amend the Articles of Association of the company; increase and decrease the capital; transform and terminate the company; elect and dismiss the members of the Board of Directors and of the Supervisory Board; relieve of responsibility the members of the Supervisory Board and Managing Board and of the Board of Directors; approve the annual financial statement; resolve on profit distribution; resolve on issuing of debentures; appoint liquidators upon termination of the company, except in the event of bankruptcy and others. As for a single owner joint-stock company, the sole owner of the capital decides on the issues within the competence of the General Meeting.
A General Meeting is held at least once per year at the headquarters of the company, unless its Articles of Association provides another location on the territory of Bulgaria. The General Meeting is convened by the Board of Directors or by the Managing Board. It may also be convened by the Supervisory Board, as well as on the request of the shareholders which have held, for more than three months, shares representing at least 5 per cent of the capital. The General Meeting is convened by notice announced in the Commercial Register and if no bearer shares are issued, the Articles of Association may provide that the General Meeting shall be convened only by invitations in writing.
The Articles of Association may provide for a quorum of the capital. For deciding on amending and supplementing the Articles of Association of the company, for increasing and decreasing of the capital and for transformation and termination of the company the law provides for a mandatory quorum - at least half of the shares. The Statute may provide for a larger quorum. In the absence of such quorum a new meeting date may be set and the General Meeting is valid regardless of the represented capital. Voting right occurs upon payment of the contribution by a shareholder, unless otherwise provided in the Articles of Association. When a proposed decision affects the rights of shareholders of one class, the votes are taken class by class. In these cases, the requirements for a quorum and majority apply separately for each class. General Meeting’s decisions are passed by majority vote of the represented shares, unless the law or the Statute provides otherwise. For deciding on amending and supplementing the Articles of Association of the company, for increasing and decreasing of the capital and for termination of the company the law provides for a mandatory majority of the General Meeting - 2/3 of the represented shares. For these cases, the Statute may provide for another larger majority.
B. Board of Directors (one-tier system) / Supervisory Board and Managing Board (two-tier system)
A member of the Board of Directors, the Supervisory Board and the Managing Board may be a natural person possessing capacity. A legal person may also be a member if the Articles of Association provides it. In this case the legal entity designates a representative for performance of its duties on the board. The legal entity is jointly and severally liable with the other members of the board for the liabilities arising from acts of its representative. The members of the Board of Directors or of the Managing Board represent the company collectively, unless the Statute provides otherwise. The Board of Directors or the Managing Board with the approval of the Supervisory Board, may delegate authority to one or several of its members to represent the company. The authorization may be revoked at any time. Board members have equal rights and obligations, regardless of the internal distribution of functions among them and the provision of management and representation rights to any of them.
A company's Statute may provide for certain transactions to be concluded after obtaining a prior permission of the Supervisory Board, or upon an unanimous decision of the Board of Directors. The following deals may be concluded only upon a decision of the General Meeting of shareholders: transfer or granting of the use of the entire commercial enterprise; disposal with assets whose total value in the current year exceeds half of the value of the company's assets as per its most recent audited annual financial statements; assumption of liabilities or providing collaterals to one person or to related parties whose amount in the current year exceeds half of the value of the company's assets as per its most recent audited annual financial statements. A company’s Statute may expressly provide these transactions to be concluded upon a decision of the Board of Directors or the Management Board.
The boards may pass decisions if at least half of their members are present personally or are represented by another member of the board. Each present member may represent only one absent member. Decisions are passed by a simple majority, unless the Statute stipulates otherwise. Minutes are kept for the decisions of the Managing Board, the Supervisory Board and the Board of Directors.
In the two-tier system a joint-stock company is managed and represented by a Managing Board, which operates under the supervision of a Supervisory Board. The members of the Managing Board are appointed by the Supervisory Board, which determines their remuneration and is entitled to recall them at any moment. One person may not simultaneously be both a member of the Managing Board and the Supervisory Board of the company. The Supervisory Board may not participate in the management of the company. It represents the company only in its relations with the Managing Board and supervises the activities of the Managing Board.
In the one tier-system the company is managed and represented by a Board of Directors. The Board of Directors assigns the management of the company to one or several executive members elected from among its members.
VII. Annual Closing of Accounts
Annually the Board of Directors or the Managing Board draws up an annual financial statement and an annual activity report for the previous calendar year and submits them to the registered auditors elected by the General Meeting. The verified and adopted annual financial statement is submitted for announcement at the Commercial Register.
VIII. Termination of a joint-stock company
A joint-stock company is terminated: by a decision of the General Assembly; upon the expiration of the term for which it has been formed; upon declaring of bankruptcy; by a judgement of a court at the headquarters upon an action of a prosecutor, if the company pursues objectives prohibited by law; when the net value of the company’s property falls below the amount of the registered capital and if within a period of one year the General Assembly has not made a decision for decreasing the capital, transformation or termination of the company; if for a period of 6 months the number of members of a board of the company has been less than the minimum number provided by the law; upon occurrence of grounds provided for in the Statute. A single owner joint-stock company is not terminated upon the death or termination of the sole owner of its capital.