Bulgarian General Partnership Regulations

Published on April 24, 2026 and written by Cyril Jarnias

The legal structure of general partnerships in Bulgaria holds significant importance in the country’s entrepreneurial landscape, as it offers flexibility and simplicity highly valued by entrepreneurs and small businesses. Understanding the nuances of the regulations governing them is essential for effectively navigating the Bulgarian legal framework and leveraging the benefits they provide. With specific obligations regarding partner liability, internal management of these entities, and their registration, general partnerships stand out for their transparency and local proximity that appeal to many investors.

Understanding General Partnerships in Bulgaria

Overview of General Partnerships in Bulgaria

The general partnership (GP) in Bulgaria, known as “SD” (Sadrujie), is a legal business form characterized by the association of two or more persons who conduct commercial activities under a common business name. This legal structure is governed by the Bulgarian Commercial Code and is distinguished by the unlimited and joint liability of its partners.

Key Characteristics

• Number of partners: A minimum of two partners is required to form a GP in Bulgaria. There is no maximum limit on the number of partners.

• Liability: Partners are personally and jointly liable for the company’s debts with their entire personal assets. This unlimited liability extends to obligations contracted by the company with third parties.

• Share capital: Bulgarian law does not set a minimum share capital requirement for establishing a GP.

• Management: All partners participate in the management of the business, unless otherwise stipulated in the partnership agreement.

Formation and Dissolution Procedures

To create a GP in Bulgaria, the following steps are necessary:

1. Choose a unique name for the company 2. Draft and sign the partnership agreement 3. Open a bank account for capital deposit (if applicable) 4. Register with the Bulgarian Commercial Register

Dissolution of a GP may occur in the following cases: – Unanimous decision of the partners – Expiration of the term set in the articles of association – Bankruptcy of the company or a partner – Death or incapacity of a partner (unless otherwise stipulated in the articles)

Accounting and Tax Obligations

GPs in Bulgaria are subject to the following obligations:

• Maintaining accounting records compliant with Bulgarian standards • Producing annual financial statements • Payment of corporate tax at the rate of 10% • Monthly VAT declarations (if applicable)

Advantages and Disadvantages

Advantages: – Simplicity of formation and operation – No minimum share capital required – Flexibility in profit distribution

Disadvantages: – Unlimited liability of partners – Difficulty attracting external investors – Risk of conflicts between partners

Recent Legislation

Effective January 1, 2025, the mandatory VAT registration threshold for all company forms, including GPs, will increase to 166,000 BGN (approximately 85,000 euros). This change aims to harmonize Bulgarian legislation with European standards and may affect the financial management of GPs.

Partner Liability in General Partnerships

General Partnerships in Bulgaria: Structure and Partner Liability

The general partnership (GP) in Bulgaria, known as “Събирателно дружество” (SD), is a legal business form characterized by a simple structure and extensive partner liability. This commercial entity requires at least two partners, who may be natural or legal persons, Bulgarian or foreign.

Nature of Partner Liability

In a Bulgarian GP, partner liability is unlimited, joint, and several. This means each partner is personally liable for all debts and obligations of the company, not only up to their contributions but with their entire personal assets. This characteristic clearly distinguishes GPs from limited liability forms like OOD (equivalent to LLC) or AD (equivalent to joint-stock company).

Financial Obligations and Joint Liability

Partners of a Bulgarian GP are jointly and severally liable for the company’s debts. In practice, this means creditors can pursue any partner for the entirety of the company’s debts, regardless of their share in the share capital. This liability also extends to debts contracted before a new partner joins the company.

Implications in Case of Bankruptcy or Dissolution

In case of bankruptcy or dissolution of the GP, creditors can seize partners’ personal assets to recover their claims if the company’s assets are insufficient. This liability persists even after a partner leaves for debts contracted during their partnership period, for a duration of five years after their withdrawal.

Practical Application of Liability

A concrete example of this liability application in Bulgaria could be a GP operating in the construction sector that accumulates significant debts to its suppliers. If the company is unable to repay these debts, creditors can individually pursue the partners, seizing their personal assets such as residences or bank accounts to recover the amounts due.

Protections for Partners

Although unlimited liability is an inherent characteristic of GPs, partners can negotiate internal agreements to distribute risks. These agreements do not affect external liability towards creditors but can define how partners compensate each other in case of legal actions. Additionally, partners can subscribe to professional insurance to mitigate personal risks.

Impact on Decision-Making

The nature of liability in a Bulgarian GP significantly influences partner decision-making. Partners are generally more cautious in their financial commitments and business strategies, knowing their personal assets are at stake. This structure encourages more conservative management and close monitoring of business operations by all partners.

Legal and Regulatory Framework

Partner liability in a Bulgarian GP is primarily governed by the Commercial Law, particularly Articles 76 to 98. These provisions define partners’ rights and obligations, company management modalities, and dissolution procedures. It is important to note that Bulgarian legislation places great importance on creditor protection within GPs, thereby reinforcing partner liability.

Absence of Minimum Capital for Establishing a General Partnership

No Minimum Capital for General Partnerships in Bulgaria

Bulgaria stands out for its entrepreneurship-friendly policy by not requiring any minimum capital for establishing a general partnership. This approach paves the way for numerous opportunities for small businesses and individual entrepreneurs wishing to enter the business world.

The absence of minimum capital constitutes a major attraction for potential investors, particularly those with limited financial resources. This flexibility allows more entrepreneurs to realize their projects without being hindered by high initial financial requirements. Consequently, this policy stimulates local economic development by promoting business creation and innovation.

Liability Implications

Although the absence of minimum capital facilitates business creation, it is crucial to understand the liability implications for partners. In a Bulgarian general partnership, partners are unlimitedly and jointly liable for the company’s debts. This means their personal assets can be used to cover the company’s debts if it cannot meet its obligations.

This unlimited liability underscores the importance for entrepreneurs to properly assess risks and carefully plan their activities, even in the absence of minimum capital requirements.

Comparative Perspective

Bulgaria’s policy regarding minimum capital for general partnerships is not unique, but it stands out in the European context. For example, Germany requires a minimum capital of 25,000 euros for a limited liability company (GmbH), while the United Kingdom imposes no minimum capital for its limited companies.

In the United States, requirements vary by state, but many states do not impose minimum capital for LLCs (Limited Liability Companies), offering similar flexibility to Bulgaria.

This Bulgarian approach aligns with a global trend aimed at facilitating business creation and stimulating entrepreneurship. However, it stands out for its unique combination of no minimum capital and unlimited partner liability, creating a business environment that is both accessible and demanding in terms of risk management.