Any partner in a Bulgarian limited liability company has the legal right to withdraw from the company voluntarily. This process is governed by Article 125, paragraphs 2 and 3, of the Commercial Act. Given the concise nature of the legal provisions, we will outline the most important steps and specific features of the withdrawal process, based on the law, our practical experience, and established judicial practice.
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Written Notice To withdraw, a partner must submit a written notice addressed to the company’s manager. The standard notice period is three months before the announced withdrawal date, unless the company’s articles of association specify a different period. The notice must clearly express the partner’s intention to terminate their membership. It is advisable to have the document served by a notary to provide a reliable date of receipt, from which the notice period begins. Upon expiry of this period, the partner’s membership terminates automatically and no general meeting resolution is required.
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Right to the Monetary Value of Held Company Shares and Valuation After the notice period expires, the partnership relationship with the company is considered terminated, and the withdrawing partner has the right to receive the monetary value of their company shares. However, this right does not arise automatically. The payment of the monetary value of the shares must be explicitly requested by the former partner (or their heirs) within a five-year limitation period, calculated from the date of termination of membership. The valuation of the company share is assigned to and carried out by a licensed appraiser, who determines its value based on an interim financial statement prepared at the end of the month in which the membership was terminated. The valuation is based on the historical cost of the assets (the original acquisition cost) and does not include the market value, as would be the case in a company liquidation. If the company’s balance sheet is negative, the partner receives nothing for their share.
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Payment of Shares The law does not specify a specific deadline for paying the withdrawing partner’s share, but this can be agreed upon in the company’s articles of association. If no deadline is specified there either, the withdrawing partner’s claim becomes due upon expiry of the notice period. If the company refuses to settle the matter voluntarily, and if the partner does not agree with the valuation of their share, they can file a claim in court with the competent court (considering the value of the claim). The limitation period for filing such a claim is 5 years.
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Registration in the Commercial Register The withdrawal of a partner is a matter that must be registered in the Commercial Register and the register of non-profit legal entities. The registration has a notificatory effect – this means that the membership is considered terminated upon expiry of the notice period, but from the date of registration, the registered facts are considered known to third parties in good faith. When registering the new circumstances, the company’s decision-making body must adopt a decision on what will happen to the shares of the withdrawing partner. The options are to reduce the capital accordingly or to transfer the “free” shares to the remaining partners. Depending on the decision, the documents required by law are deposited with the commercial register. In practice, disputes often arise as to whether the withdrawing partner can themselves apply for the registration of their withdrawal if the company is inactive. The current judicial practice is inconsistent on this issue.
The procedure for withdrawing from a Bulgarian LLC requires advance planning and the precise execution of a series of legal actions, which we recommend be coordinated and carried out with the assistance of experienced professionals to prevent future disputes and ensure a smooth settlement of financial relations with the company.
