Exclusion of a Partner from an OOD in Bulgaria — Legal Procedure (2026)

What you will learn in this article

• What the five grounds for exclusion under Art. 126(3) of the Commercial Act are and how the courts interpret them
• What the correct step-by-step procedure is — from the warning to the registration
• What the requirements are for the form and content of the written warning
• How the vote at the General Assembly is conducted and what majority is required
• How the cash equivalent of the excluded partner’s interest is determined
• How the excluded partner may challenge the decision under Art. 74 of the Commercial Act
• What Interpretive Decision 1/2020 of the Supreme Court of Cassation held regarding exclusion of a partner who is also a manager

Grounds for exclusion (Art. 126(3) Commercial Act — 5 scenarios)

Exclusion of a partner is an extreme measure, permitted only on grounds expressly provided by law. Art. 126(3) of the Commercial Act sets out five scenarios.

Scenario 1: Failure to assist in the company’s activities

Under Art. 124(2) of the Commercial Act, the partner is obliged to assist in the company’s activities. Failure to do so is a ground for exclusion. In practice, this scenario covers the “disengaged” partner — a person who does not attend General Assembly meetings, does not respond to communications, and does not cooperate in adopting decisions requiring a special majority.

Scenario 2: Failure to implement General Assembly decisions

Under Art. 124(3) of the Commercial Act, the partner is obliged to implement General Assembly decisions. If a partner refuses to implement a valid General Assembly decision that is binding on them personally, this constitutes a ground for exclusion.

Scenario 3: Acting against the company’s interests

This is the broadest ground and covers a variety of actions that harm the company: disclosure of trade secrets, conducting competing activities (in breach of the prohibition under Art. 142 Commercial Act), diverting clients, damaging the company’s reputation, and similar conduct.

Important clarification from Interpretive Decision 1/2020: A partner may be excluded for actions performed in their capacity as manager of the company. Where an individual simultaneously holds the positions of partner and manager, it is immaterial in which capacity the company’s interests were harmed.

Scenario 4: Failure to make an additional monetary contribution

If the General Assembly has adopted a decision on additional monetary contributions under Art. 134 of the Commercial Act and the partner fails to make the contribution within the specified deadline, the partner may be excluded.

Scenario 5: Failure to make the capital contribution

Although formally regulated in separate paragraphs of Art. 126 (paragraphs 1 and 2), failure to make the capital contribution upon incorporation or upon a capital increase is also a ground for exclusion. Where the contribution is not made within the prescribed period, the manager issues a written warning granting an additional one-month period. If the contribution remains outstanding after this period, the partner is deemed automatically excluded.

Step-by-step procedure

The procedure for excluding a partner from an OOD involves four mandatory stages. Omitting any of them renders the exclusion unlawful and susceptible to annulment by a court.

Stage 1: Written warning

Before the vote on exclusion, the partner must receive a written warning that they will be excluded if they do not cease the breach. The warning is an absolute procedural prerequisite — without it, the exclusion is unlawful.

Stage 2: Convening the General Assembly

After a reasonable period has elapsed from the warning (case law accepts a minimum of 7 days), a General Assembly is convened with an agenda item for the exclusion of the partner. The invitation is sent to all partners, including the partner whose exclusion is proposed.

Stage 3: General Assembly decision

The General Assembly adopts the exclusion decision with a majority of 3/4 of the capital (Art. 137(3) Commercial Act). The partner being excluded does not participate in the vote — their interests are not taken into account when determining the quorum and majority.

Stage 4: Registration with the Commercial Register

The exclusion decision is registered with the Commercial Register. The exclusion takes effect from registration (Art. 140(4) Commercial Act). The registration fee is EUR 10.23 for electronic filing.

Stage 5: Settlement of interests

Following exclusion, the company is obliged to pay the excluded partner the cash equivalent of their interest.

Written warning — form and content

The written warning is a key element of the procedure. Its absence or material defects in its content render the exclusion unlawful.

Who may issue it? According to Decision 293/10.06.1994 of the Supreme Court of Cassation, the warning may be issued by the manager of the company without a prior General Assembly decision.

Form. The warning must be in written form and must be served on the partner in a manner that can be proven — by return receipt, through a notary, or with a delivery report.

Content. The warning must contain:

• A description of the specific breach — what obligation the partner has violated, when, and how
• The legal basis — a reference to Art. 126(3) of the Commercial Act and the specific paragraph
• A demand to cease the breach — what the partner must do to avoid exclusion
• A statement that failure to comply will result in convening of the General Assembly for exclusion
• A reasonable period for compliance

May the warning be sent together with the General Assembly invitation? Yes, case law permits the warning to be included in the General Assembly invitation, provided that there is sufficient time between receipt of the invitation and the meeting (at least 7 days) for the partner to cease the breach.

General Assembly decision — majority and voting

Majority

The exclusion decision requires a majority of 3/4 of the capital (Art. 137(3) Commercial Act). This is a qualified majority, higher than the simple majority required for most General Assembly decisions.

Voting by the partner being excluded

The partner being excluded does not participate in the vote on their own exclusion. Their interests are not taken into account when determining the quorum and the 3/4 majority.

Example. An OOD with three partners: A (40%), B (35%), C (25%). If the General Assembly votes to exclude C, the 3/4 majority is calculated from 75% (40% + 35%). The votes required for exclusion are 56.25% of the total capital. If A and B both vote “in favour”, the decision is adopted.

Minutes with notarial certification

Under Art. 137(4) of the Commercial Act, the minutes of the General Assembly adopting an exclusion decision require notarial certification of the signatures and content. This rule may be derogated — if the articles of association provide that ordinary written form is sufficient.

Settlement of the excluded partner’s interest

Following exclusion, the company is obliged to pay the excluded partner the cash equivalent of their interests. The value is determined on the basis of the balance sheet as at the end of the month in which the termination of participation occurred (i.e. the registration in the Commercial Register).

How is the value determined? The cash equivalent is calculated on the basis of the net asset value of the company (assets minus liabilities), proportional to the excluded partner’s interest. This is a book value, which may differ significantly from the market value of the business.

Deadline for payment. The law does not specify a particular deadline. In practice, the articles of association may provide for a payment deadline (typically 3 to 6 months). If no deadline is agreed, the obligation is immediately due and the excluded partner may bring a claim for its collection.

What happens to the interests? Upon exclusion, the interests of the excluded partner are not automatically transferred to the remaining partners. The company has several options:

• Reduction of the capital by the amount of the excluded partner’s interests
• Distribution of the interests among the remaining partners proportionally
• Sale of the interests to a new partner

Challenging the decision (Art. 74 Commercial Act)

The excluded partner has the right to challenge the General Assembly decision under Art. 74 of the Commercial Act before the district court at the company’s registered seat.

Deadline. 14 days from learning of the decision, but no later than 3 months from the date of the General Assembly. The deadline is preclusive.

Grounds for challenge:

• Procedural violations — absence of a written warning or irregular service; convening without invitation; failure to observe the minimum period; voting without the required majority; absence of notarial certification
• Substantive unlawfulness — exclusion on grounds outside the scenarios of Art. 126(3); an unproven breach; disproportionality of the measure
• Violation of the articles of association — if the articles of association provide for additional conditions not observed

Court fee: EUR 40.90.

Effect of the claim. Filing a claim under Art. 74 does not automatically stay the execution of the exclusion decision. The claimant may request an interim measure — a stay of execution.

Interpretive Decision 1/2020 of the Supreme Court of Cassation

On 31 May 2023, the General Assembly of the Commercial Division of the Supreme Court of Cassation adopted Interpretive Decision 1/2020, resolving a long-standing dispute in the case law.

Question: May a partner be excluded under Art. 126(3)(3) of the Commercial Act (acting against the company’s interests) for actions performed in their capacity as manager?

Answer: Yes. Where an individual simultaneously holds the positions of partner and manager, it is immaterial in which capacity the company’s interests were harmed. Actions by the manager that damage the company also constitute actions against the company’s interests within the meaning of Art. 126(3)(3).

Practical significance. Prior to this interpretive decision, some panels held that actions by the manager could not constitute grounds for exclusion as a partner. This interpretation created “immunity” for partner-managers who harmed the company in their capacity as managers. The interpretive decision eliminates this anomaly.

OOD with two partners. Where the company has only two partners, excluding one is particularly sensitive. If one partner is also the manager, the other partner may adopt the exclusion decision alone. Following the exclusion, the company continues as an EOOD (single-member company).

Frequently asked questions

Conclusion

Exclusion of a partner from an OOD is an extreme measure permissible only when the procedure under Art. 126 of the Commercial Act is strictly followed. Any omission — from the absence of a written warning to irregular convening of the General Assembly — may result in annulment of the decision under Art. 74.

If you are in a situation where you need to exclude a partner or have been excluded and wish to challenge the decision — contact Innovires Legal for a consultation. Timely legal assistance is of decisive importance given the short preclusive deadlines.

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 the date of publication (26 March 2026) and may be subject to change following legislative amendments.