Converting an OOD to DPK in Bulgaria — Procedure & Benefits (2026)

Introduction

The variable capital company (DPK — Druzhestvo s Promenliv Kapital) is a relatively new corporate form in Bulgarian commercial law, introduced through amendments to the Commerce Act (CA) and regulated in Art. 260a et seq. This structure combines advantages of both partnership and capital companies, offering significant flexibility in capital structure management. For companies currently operating as an OOD (Druzhestvo s Ogranichena Otgovornost — limited liability company) that wish to take advantage of these benefits, the law provides a procedure for conversion through change of legal form, governed by Art. 264 CA.

This article provides a detailed guide for foreign investors and entrepreneurs on converting an OOD to a DPK — covering the legal framework, required documents, timelines, and practical considerations.

Legal Framework

Applicable Legislation

The conversion of commercial companies in Bulgaria is regulated in Part Four of the Commerce Act (Art. 261–265). The specifically applicable provisions include:

• Art. 264 CA — conversion through change of legal form, setting out the main requirements and procedural steps
• Art. 260a et seq. CA — the legal regime of the variable capital company (DPK)
• Art. 77 of the Tax and Social Insurance Procedure Code (DOPK) — mandatory notification to the National Revenue Agency (NRA)
• Ordinance No. 1 of 14.02.2007 — on the maintenance of the Commercial Register

What Is a Conversion Through Change of Legal Form?

In a conversion through change of legal form, the company retains its identity as a legal entity — it transitions from one corporate form to another without dissolution and without liquidation proceedings. All rights and obligations of the converting OOD pass to the newly formed DPK through universal succession.

Despite universal succession, the new DPK is assigned a new Unified Identification Code (UIC) in the Commercial Register. This is an important practical detail that necessitates updating all registrations, contracts, and documents containing the old UIC.

Why Convert? Benefits of the DPK

Flexible Capital Structure

The primary advantage of the DPK is its variable capital. Unlike the OOD, where any change to the registered capital requires amending the articles of association and filing with the Commercial Register, the DPK’s capital can be increased or decreased without a formal amendment procedure. This is particularly valuable for startups raising investment at various stages.

Multiple Classes of Shares

The DPK permits the issuance of different classes of shares with different rights — for example, shares with preferential dividend rights, non-voting shares, or shares with different liquidation preferences. This capability is essential when structuring investment deals and attracting venture capital.

Vesting Arrangements

The DPK legal framework explicitly allows vesting arrangements — mechanisms through which partners gradually acquire full rights over their shares, typically linked to their tenure in the company or the achievement of specific milestones. This mechanism is widely used in the startup ecosystem and, prior to the introduction of the DPK, had no explicit legal basis in Bulgarian law.

Simplified Governance

The DPK offers greater freedom in defining internal governance rules. The articles of association may contain more flexible provisions regarding decision-making, representation, and the distribution of powers between management bodies.

Tax Neutrality

The conversion from OOD to DPK is tax-neutral, meaning the change of legal form itself does not trigger any tax obligations. The company continues to be taxed at the standard rate — 10% corporate tax under the Corporate Income Tax Act (CITA).

Step-by-Step Conversion Procedure

Step 1: NRA Notification (Art. 77 DOPK)

Before drafting the transformation plan, you must notify the National Revenue Agency (NRA) of the intended conversion. The notification is filed with the competent territorial directorate of the NRA.

The NRA issues a certificate confirming that the company has no outstanding tax liabilities or that existing liabilities are adequately secured. This certificate is a prerequisite for registering the conversion with the Commercial Register.

In practice, obtaining the NRA certificate may take anywhere from a few days to several weeks, depending on the workload of the relevant territorial directorate. Without this certificate, the Registry Agency will refuse registration.

Step 2: Drafting the Transformation Plan

The transformation plan is the central document of the procedure. It must contain the minimum legally required content, including:

• the legal form, name, registered office, and management address of the converting company (OOD)
• the legal form, name, registered office, and management address of the new company (DPK)
• the share exchange ratio
• description of the rights granted to partners by the new company
• conditions and procedure for distributing shares in the new DPK
• the effective date of the conversion
• any special advantages granted to managers or auditors

The plan is prepared by the manager(s) of the OOD and must be notarially certified (signatures). Notarial certification is a mandatory validity requirement.

The draft articles of association for the new DPK must also be prepared as an integral part of the transformation plan.

Step 3: Publication in the Commercial Register

The transformation plan is published in the Commercial Register by filing application form G1. Publication ensures transparency and informs creditors and third parties of the impending conversion.

A minimum of 14 days must elapse between the publication date and the general meeting that will decide on the conversion. This period is mandatory and protects the interests of partners, giving them time to review the plan.

Step 4: Independent Auditor Review

The transformation plan is subject to review by an independent auditor appointed by the Registry Agency. The auditor prepares a report addressing:

• the fairness of the share exchange ratio
• the methods used to determine the value of the company’s assets
• the adequacy and reasonableness of these methods

In certain cases, where all partners consent, the audit may be waived. However, this should be exercised with caution to avoid subsequent challenges to the conversion.

Step 5: General Meeting — 3/4 Majority Vote

The general meeting of the OOD’s partners adopts the conversion resolution with a majority of at least three-quarters (3/4) of the capital. This is a qualified majority, higher than that required for most general meeting decisions.

The general meeting approves:

• the transformation plan
• the auditor’s report (if prepared)
• the articles of association of the new DPK
• the appointment of the DPK’s management body

The minutes of the general meeting must be notarially certified.

Step 6: Registration with the Commercial Register

Following the general meeting, the conversion is registered with the Commercial Register by filing:

• Form B21 — for registering the conversion
• Form A19 — for registering the new DPK

The required attachments include:

• notarially certified minutes of the general meeting
• notarially certified transformation plan
• auditor’s report
• articles of association of the DPK
• NRA certificate (Art. 77 DOPK)
• statutory declarations
• proof of payment of the state fee

The state fee for electronic filing is EUR 46.02.

Upon registration, the OOD ceases to exist and the DPK comes into being with a new UIC.

Practical Considerations for Foreign Investors

Change of UIC

The assignment of a new UIC requires:

• updating VAT registration (if applicable)
• notifying banks and changing bank account details
• updating employment contracts and notifying employees
• notifying counterparties and updating existing contracts
• changing invoices, stamps, and company letterheads
• updating electronic signatures and powers of attorney

Employment Law Implications

Under the principle of universal succession, employment relationships transfer to the new DPK without the need for new employment contracts. The provisions of Art. 123 of the Labour Code, which regulate the preservation of employment relationships upon a change of employer, apply.

Contractual Relationships

All contracts concluded by the OOD remain in force and bind the new DPK. However, it is advisable to review existing contracts for change-of-control clauses that might grant counterparties a right of termination.

Licences and Permits

If the converting OOD holds special licences, permits, or registrations, verify whether these transfer automatically or require re-issuance by the relevant regulatory authority.

Accounting and Tax Aspects

Despite tax neutrality, the following steps are necessary:

• preparation of an interim balance sheet as of the conversion date
• notification of the NRA regarding the new UIC
• filing of a tax return for the period up to the conversion (if within the tax year)
• VAT re-registration (if applicable)

Timeline and Costs

Item	Approximate Timeline / Cost
NRA notification	7–14 days for certificate
Drafting the transformation plan	5–10 business days
Notarial certification	1 day
Publication in Commercial Register	3–5 business days for processing
Minimum period before general meeting	14 days from publication
Independent auditor review	7–14 days
General meeting	1 day
Registration in Commercial Register	3–7 business days
State fee (electronic)	EUR 46.02
Notarial fees	EUR 50–150 (depending on volume)
Legal fees	By agreement

The total duration of the procedure is approximately 2–3 months.

When Is Conversion Appropriate?

Converting from OOD to DPK is advisable in the following scenarios:

• Startups planning to raise investment at multiple stages and needing flexible capital structures
• Technology companies wishing to offer key employees equity participation through vesting mechanisms
• Companies with multiple investors requiring differentiation of rights among different classes of partners
• Businesses with dynamically changing capital where frequent capital increases and decreases would generate significant administrative costs under the OOD form

If your business is stable, with constant capital and a limited number of partners, maintaining the OOD form may be more appropriate.

Common Mistakes to Avoid

1. Failing to observe the 14-day period between publication of the plan and the general meeting — this renders the resolution void.
2. Incomplete transformation plan — missing mandatory elements may result in a refusal of registration.
3. Omitting the NRA notification — without the Art. 77 DOPK certificate, registration is impossible.
4. Failing to update contracts and registrations after registration — creates legal uncertainty and operational issues.
5. Not notifying counterparties — may trigger change-of-control clauses in existing contracts.

Alternatives to Conversion

If conversion through change of legal form is not suitable for your situation, alternative approaches include:

• Dissolving the OOD and incorporating a new DPK — this approach requires liquidation, which is significantly longer and more costly
• Retaining the OOD and creating a DPK as a subsidiary — allows gradual transfer of operations
• Retaining the OOD form — with appropriate structuring of the articles of association, some of the DPK’s flexibility may be achieved

Frequently Asked Questions

Conclusion

Converting an OOD to a DPK is a strategic decision that can provide significant advantages, particularly for startups and companies attracting investment. The procedure requires careful planning and strict compliance with legal requirements — from the NRA notification, through drafting and publishing the transformation plan, to obtaining a qualified 3/4 majority vote and registering with the Commercial Register.

While the procedure is relatively clearly regulated by law, practical challenges — the change of UIC, updating contracts and registrations, notifying counterparties — should not be underestimated. Engaging an experienced legal advisor can save considerable time and prevent potential complications.

This article is for informational purposes only and does not constitute legal advice. For specific questions regarding the conversion of commercial companies in Bulgaria, we recommend consulting a lawyer specializing in corporate law.