Register a limited partnership in Bulgaria
Register a Limited Partnership in Bulgaria
Limited partnership (LP) is a company formed by a contract between two or more persons to carry out business under a common firm, as one or more of the partners are jointly and fully liable for the obligations of the company, and the rest are only responsible to the extent of the payment agreed.
The trade name of the limited partnership shall contain the words “limited partnership” or the abbreviation “LP”. Тhe name of at least one full liability partner and should be of a national exclusivity.The contract for the establishment of a limited partnership shall be made in writing with the notarized signatures of all members and must contain the requisites set out in the provisions of Article 102 of the Commercial Law.
Legal requirements for set up of Limited Partnership in Bulgaria
The establishment of a limited partnership does not require any initial capital.The entry of a LP in the Commercial Register is based on an application form. It can be requested by any of the full liability partners or by a lawyer with an explicit written power of attorney. The limited partnership has got two categories of members – full liability and limited liability partners. The management and representation of the company supposed to be made by the full liability partners. The full liability partners do not make any financial or material contributions to the company. On the other side, limited liability partners are required to make a financial or material contribution in the company but they have no right to manage.
The limited partnership is the second form of partnerships regulated in the Bulgarian Commercial Act. It differs from the general one in respect of the partners’ participation. There are two different types of partners to the limited partnerships – ones that bear unlimited liability (general partners) and ones that are only limitedly liable (limited partners). According to Article 99 of the Commercial Act, the limited partnership consists of at least one general and one limited partner.
The partnership is founded on the basis of a partnership contract. The trade name of the formation must contain the name of at least one of the limited partners. According to Article 101 (2) of the Commercial Act, a limited partner is deemed to bear unlimited liability, if his/her name is included in the trade name of a limited partnership. To found a Limited partnership, a registration in the Commercial Register is necessary.
The internal relationship between the limited partners is similar to the relationship between the partners of the general partnership, except for the rights and obligations. The general partners are obligated to deposit a contribution. This contribution determines their share in the future profits and their liquidations quotas. Also, limited partners are subject to the obligation of loyalty – without the consent of the other partners, one partner may not have got a rival commercial activity.
With regards to the external relationships of the company, the limited partners do not have got an important role. Mainly, they do not participate in the management unless they are expressly nominated to.
According to Article 112 of the Commercial Act, limited partners bear unlimited liability for legal transactions that have been conducted in the name of the partnership before or after its foundation, whenever the creditor did not know that he was contracting with a limited partner. Otherwise, limited partners bear liability toward the partnership’s creditors to the extent of the contribution made, even if it has not been paid completely. This provision also applies regarding losses of the partnership. In General partners bear personal, unlimited, joint and several liability.