The Variable Capital Company (‘VCC’) is regulated by the new Articles 260a and the following of the Commercial Act and aims to address the necessity for ensuring better investment environment, in particular for start-ups.
This new legal organizational form is applicable only to companies with 1) not more than 50 employees and 2) turnover and/or assets not exceeding BGN 4 million. The VCC will combine features of a LLC and a JSC, with a more specific legal regime of the capital. It is divided into equity shares with a nominal value of not less than 1 BGN cent per share. The capital would not be entered in the Commercial Register.
Equity shares may be inherited and transferred freely in writing with notarial certification of signatures, unless the Articles of Association provide for a simple written form. The transfer of shares should be recorded in the book of shareholder kept by the company, but is not subject to registration in the Commercial Register.
Two alternative forms are foreseen for the management of the VCC. One may set up a collective management body - a Board of Directors, consisting of executive members (directors) and non-executive members, similar to the single-tier management system in a JSC. The other possible option is to be appointed a Managing Director identical to the structure in a LLC.
In order to preserve the interests of all shareholders, including minority shareholders (who often enter with a high contribution, but receive a smaller stake participation), a number of rights/options are provided for their benefit - right to additional dividend, additional liquidation quota, veto right, tag-along and drag-along options, right of first refusal, etc.
With a view to attracting and retaining highly qualified personnel, this type of entity allows persons employed by the company (irrespective of the nature of their legal relationship with the company - labour or other) to be granted rights to acquire company shares in an aggregate amount not exceeding 15% of the capital.
A brief comparative analysis between VCC, on the one hand, and the traditional LLC and JSC, you may find here.
