Manager’s Duties in a Bulgarian OOD (LLC) — Responsibilities & Risks (2026)

What you will learn in this article

• What powers the manager of an OOD holds under the Commercial Act and how the General Assembly’s decisions limit them
• What the four types of liability are and in which circumstances they arise
• The difference between a management and control agreement (DUK) and an employment contract, and why it matters
• What the non-compete prohibition under Art. 142 Commercial Act covers and when it can be waived
• What D&O insurance is and how it can protect the manager
• A practical checklist for a newly appointed manager

Powers of the Manager (Art. 141 Commercial Act)

Under Art. 141(1) of the Commercial Act, the manager organises and directs the company’s activities in accordance with the law and the decisions of the General Assembly. The manager is the body that carries out day-to-day management — entering into contracts, hiring and dismissing employees, and representing the company before public authorities and counterparties.

Power of representation. Under Art. 141(2) of the Commercial Act, the manager represents the company before third parties. Where a company has more than one manager, each may act independently unless the articles of association require joint representation. Importantly, even if the articles of association restrict the manager’s powers (for example, by requiring the General Assembly’s consent for certain transactions), these restrictions have no effect vis-à-vis third parties acting in good faith. The transaction remains valid for the third party, but the manager is liable for the resulting damages to the company.

Example. Under Art. 137(1)(7) of the Commercial Act, the General Assembly decides on the acquisition and disposal of immovable property. If the manager sells company property without such a decision, the sale is valid for the buyer (Interpretive Decision 3/2013 of the OSGTK of the Supreme Court of Cassation), but the manager bears property liability to the company under Art. 145.

Registration requirements. Upon taking office, the manager files a notarially certified consent and specimen signature with the Commercial Register (Art. 141(3) Commercial Act). The registration fee is EUR 10.23 (electronic filing) or EUR 20.45 (paper filing).

Disqualified persons. Under Art. 141(8) of the Commercial Act, persons who have been declared insolvent may not serve as managers. This restriction applies until the conclusion of the insolvency proceedings.

Relationship with the company. The relationship between the manager and the company is governed by a management and control agreement (DUK), concluded in writing (Art. 141(7) Commercial Act). The DUK is not an employment contract — it has the nature of a mandate contract and is governed by the Commercial Act and the Obligations and Contracts Act, not the Labour Code.

Four Types of Manager Liability

1. Property Liability (Art. 145 Commercial Act)

The manager is liable for damages caused to the company. This is civil liability — the company (or the partners on its behalf) may bring a claim for compensation. The decision to bring such a claim is taken by the General Assembly (Art. 137(1)(8) Commercial Act).

Property liability covers:

• Damages from poor management — e.g., entering into unfavourable contracts, missing deadlines, or failing to perform obligations
• Damages from exceeding authority — transactions carried out without the required GA resolution
• Damages from non-compliance with the law — failure to file annual financial statements, tax returns, AML violations
• Damages from conflicts of interest — transactions from which the manager derives personal benefit at the company’s expense

To establish liability, the company must prove three elements: (1) an act or omission by the manager in breach of duty; (2) damage suffered by the company; and (3) a causal link. The limitation period is 5 years from the date of the harmful act.

2. Tax Liability (Art. 19 DOPK)

Art. 19(1) DOPK provides that a manager who conceals facts and circumstances that they were legally obliged to disclose to the revenue authority, and as a result tax or mandatory social security obligations cannot be collected, is personally liable with all of their assets for the outstanding obligation.

Art. 19(2) DOPK extends this liability — a manager who acts in bad faith by making payments constituting hidden profit distribution or disposal of assets at prices significantly below market value, is liable for the outstanding tax and social security obligations.

Practical examples:

• Transferring company real estate to a related party at a price significantly below market value while the company has outstanding NRA liabilities
• Paying unjustifiably high “consultancy” fees to related parties, depleting the company’s assets
• Failing to file a VAT return and the company does not remit the VAT due

3. Criminal Liability (Art. 227b and Art. 313 of the Penal Code)

Art. 227b(2) of the Penal Code — if, within 30 days of the suspension of payments, the manager fails to file a petition to open insolvency proceedings, they face criminal liability — imprisonment of up to 3 years or a fine of up to approximately EUR 2,556.

Art. 313 of the Penal Code — affirming an untruth or concealing the truth in a written declaration submitted to an authority. A false declaration may lead to criminal prosecution.

Art. 255 of the Penal Code — evasion of tax obligations on a large scale. Managers are frequently the subject of criminal proceedings under this provision.

4. Non-Compete Liability (Art. 142 Commercial Act)

The non-compete prohibition under Art. 142 of the Commercial Act is a separate type of liability. If breached, the company may claim compensation for damages or step into the rights under transactions concluded by the manager in violation of the prohibition.

Management Agreement (DUK) vs Employment Contract — Comparison

Minimum insurable income for managers (2026): approximately EUR 550.86.

Practical considerations: A DUK gives the company greater flexibility — the GA may dismiss the manager at any time without notice and without compensation (unless otherwise agreed). The manager does not benefit from labour-law protection.

Non-Compete Prohibition (Art. 142 Commercial Act)

Art. 142 of the Commercial Act introduces a non-compete prohibition covering three scenarios:

1. Conducting commercial transactions on one’s own or another’s behalf — the manager may not enter into transactions falling within the company’s scope of business
2. Participating in other companies — participation as a partner in a competing OOD or as a member of the governing body of a competing company is prohibited
3. Holding a management position in a competing company — serving as manager, procurator, or in any other management capacity in a competing business

When can the prohibition be waived? The General Assembly may, by express resolution, authorise the manager to engage in competing activities.

Consequences of a breach. The company may bring a claim for damages or may step into the rights and obligations under the transactions concluded in breach of the prohibition.

How to Protect Yourself — D&O Insurance

D&O insurance (Directors and Officers Liability Insurance) covers the property liability of managers for damages caused in the performance of their duties.

What D&O insurance covers:

• Legal defence costs — attorney fees, court expenses
• Compensation awarded in favour of the company, partners, or third parties
• Costs of investigations by regulatory authorities
• Compensation in claims by employees (e.g. discrimination, wrongful dismissal)

What it typically does NOT cover:

• Intentional breaches and fraud
• Criminal fines and sanctions
• Claims brought by the manager themselves
• Breaches committed before the start of the insurance period

Annual premium: approximately EUR 500 to EUR 5,000 per year for small and medium-sized enterprises.

Practical Checklist for a New Manager

Before registration

• Ensure the General Assembly has resolved to appoint you with the required majority
• Prepare a notarially certified consent and specimen signature (Art. 141(3) CA)
• Prepare declarations under Art. 141(8) CA and Art. 142 CA
• Prepare declaration under Art. 13(4) of the Commercial Register Act
• File application A4 with the Commercial Register, fee EUR 10.23 (electronic)

Immediately after registration

• Conclude a DUK with the company in writing
• Review the articles of association and GA resolutions
• Check whether the company has filed annual financial statements for prior years
• Check for outstanding tax liabilities
• Verify compliance with the Anti-Money Laundering Act

Ongoing obligations

• Convene the General Assembly at least once a year (Art. 137(1)(3) CA)
• File annual financial statements by 30 September (Art. 38 Accountancy Act)
• Maintain a minutes book (Art. 143 CA)
• File annual tax returns and VAT returns on time
• Ensure AML compliance (internal rules, client identification)

Frequently Asked Questions

Conclusion

The position of OOD manager carries broad powers but also four types of liability that can affect the manager’s personal assets. Properly structuring the relationship through a DUK, observing the non-compete prohibition, and proactively managing risks (D&O insurance, documenting decisions, regular legal consultations) are essential.

If you are taking office as a manager, preparing a DUK, or have questions about your liability — contact Innovires Legal for a consultation.

This article is for informational purposes only and does not constitute legal advice. For questions specific to your situation, please consult a qualified lawyer. The information is current as of 26 March 2026.