Legal Status Change from a Sole Proprietor to a Company
The Challenge
In the beginning of the transition period to a market economy, many entrepreneurs started their own business as sole proprietors (ET) because there was no requirement for them to pay in the then high statutory capital. However, a sole proprietor is liable for debts with his or her personal property as well.
Cooperative farms and consumer cooperatives were registered as far back as the socialist times in Bulgaria and that practice persisted during the transition period again because of the lack of any requirement for statutory capital to be paid in. The problem with cooperatives lies in the fact that every cooperative member is entitled to one vote at the general meeting even if he or she has paid in 90% of its capital.
Over the years, many sole proprietors developed their business and accumulated considerable personal wealth that is now exposed to a huge risk of loss in case of a business failure. At the same time, many cooperatives expanded without any protection of the capital of the largest cooperative members.
At present, many sole proprietors and cooperatives are willing to change the legal status to limited liability companies. However, the fear of considerable tax effects or the lack of knowledge on how the transformation could be implemented keeps many of them at risk and in a state of discomfort.
The Solution
Our service ensures a smooth transition of a sole proprietor or a cooperative to a company in which the liability is limited (EOOD, OOD or AD) without any negative tax effects and loss of rights, licenses, and all other legal relationships.
For this purpose, we make an in-depth analysis of all assets and liabilities of the relevant sole proprietors or cooperatives and of their organization, structure and other features, as a result of which the most appropriate reorganization strategy and technology can be chosen.
After the strategy and technology are selected, we make arrangements for all activities to be carried out and all documents to be drafted for the completion of the transition process, including the prior settlement of all relationships in the newly established company and the recording of all incorporations, deletions and changes in the relevant registers (Commercial Register, Properties Register, Traffic Police Register, etc.).
Key Benefits
The change from a sole proprietor or a cooperative to a company is a complicated and risky operation which requires integrated knowledge of and experience in law, finance, taxation and accounting for its smooth completion without any negative tax effects.
We have years-long track record with dozens of successful changes of business structures - from a sole proprietor or a cooperative to a company precisely because we have cohesive teams with all the relevant experienced experts.
Responsible team
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Velichka Almisheva
Managing partner Legal servicesVelichka Almisheva graduated from Sofia University “St. Kliment Ohridski” with a master’s degree in Law. In 2016 she became a member of the Sofia Bar Association. In 2017 she won an international contract law competition for young professionals organized by the European Lawyers’ Association. She also won the Young Lawyer of the Year award.
She is a Managing Partner of Kreston BulMar’s Legal Services department since 2022.
She is experienced in trade, contract, labour, insurance, and property law.
She works with Bulgarian and English.