The concept of selling a company means transferring the whole business from one person to another. The sale of a company is achieved by transferring different elements from the company. There are two options for selling to a company:
• Sale of the capital of the company;
• Transfer of a commercial enterprise.
Sale of a company by sale of its capital
The sale of a company such as Ltd. means the transfer of the shares of the capital to a third party. The capital of a company is divided into shares that can be transferred. When transferring all the shares to someone, they become the new owner and the deal to sell the company is concluded. When only part of the shares of the capital are transferred the company does not have a sole owner of the capital, but partners.
Selling company (Ltd.) through the sale of capital is not particularly complicated as a procedure. A contract for the sale of shares is concluded, which must be notarized, between the old and the new owner. An important requirement is that the company does not have obligations related to employment relations. Before the sale of a company itself, the old owner declares this with declarations by a model in the Registry Agency. In addition to the purchase and sale contract and the declarations, other documents shall be prepared:
- Protocol for transferring the capital of the company;
- Contract for the purchase and sale of shares;
- Declarations according to a model for lack payroll and social security obligations and obligations concerning employment;
- Protocol from the new owner of the company;
- New Founding Act of the company, which reflects changes in ownership of capital;
- Declaration of authenticity of the circumstances.
When it comes to selling a company, there’s another important moment. With the change of owner, the manager does not change automatically. A decision to dismiss the old and appoint a new manager must be taken by the old or new owner of the company. After changing the manager, an additional notary certification is needed.
Sale of a company by transferring a commercial enterprise
When we sell a company by transferring a commercial enterprise, there are some specifics. In this case, the company’s assets, including its rights and obligations, are transferred to another person/company. A commercial enterprise means the totality of the company’s rights and obligations, property rights, contractual rights, monetary obligations, etc.
In this option, the procedure for selling to a company is more complicated than selling the capital of a company. This is because the law places limits for the company’s creditors. The need for these limits comes because the company to which the enterprise is transferred has its own enterprise. It has a set of rights and obligations. When the debts are more, this is to the detriment of the old firm’s creditors. There is an important condition here when selling a company. The company receiving the enterprise to manage it separately from its own enterprise for a period of 6 months. The transfer is made by concluding a contract for purchase and sale, which is notarized.
Which company sales option to choose?
When we talk about selling a company in Bulgaria, the most common is the sale of capital. The main reason for this is that this procedure is faster and easier and is carried out with an entry in the commercial register. When selling a company through the sale of the capital, a simple change is made. Its entry in the Commercial Register takes about 5 working days. It is also cheaper in terms of state and notary fees. There are of course disadvantages to selling a company through the sale of capital. This is the fact that the old firm under this option persists. This means that in practice you will have two separate companies. Unlike when selling a company by transferring the commercial enterprise, everything is concentrated in a single company.
The transfer of a commercial enterprise requires much more documents. The process of selling a company is also much longer. In cases where the company owns real estate, the transaction must also be entered in the Property Register.
Fees for selling a company
When we sell a company, the state fee for registering the change is BGN 15 for submission of documents with electronic signature and BGN 30 when submitting documents on the spot. Notary fees are also due for certification, which is difficult to determine in advance. They depend on the price of the shares, the parties to the transaction and the need for certification of a protocol-decision of the Board meeting. On average, between BGN 40 and BGN 160 are prepared for a notary.
We at T&G Consulting will provide you with the necessary assistance when selling a company. Contact us.