The transition to the euro as a complex process
The introduction of the euro is not limited to replacing the currency in prices and contracts. It affects the entire internal structure of a business, including its capital, the shareholding of partners or shareholders, and its accounting records.
Any change in the amount of capital, the nominal value of the shares that make it up, or their number, has a direct impact both on the public registers and on the company’s accounting books.
Capital as a connecting element
The capital of a commercial company is, among other things, both a legal and an accounting category. It is registered with the Commercial Register under the company’s file, but at the same time it is present as a core element of the company’s accounting balance sheet.
1. Context of the change
Because the official exchange rate is a fractional number, the conversion process will produce differences between a company’s existing capital in BGN and the amount determined automatically by the Registry Agency in euro. The main cause of these differences lies in the nominal value of the shares. Before the adoption of the single currency, the law required the nominal value of each share to be a whole number that is a multiple of one — BGN 1, BGN 5, BGN 10, and so on. In this connection, amendments were adopted to the Commercial Act, allowing company shares to be no smaller than 1 euro cent.
2. A legislative contradiction
Despite this, the legislator did not amend the provision requiring that the value of each share forming the capital of a limited liability company be a multiple of 1. This created a degree of contradiction between the provisions of the law, since on the one hand the law now allows a nominal value of 1 euro cent, while at the same time requiring the value of each share to be a multiple of one — which, mathematically, means that dividing the value of a share by the number 1 must produce a whole number, not a fraction.
3. Outcome and solution
This legislative contradiction, together with the fact that the official exchange rate is not a whole number, will inevitably lead, in most cases, to differences between the capital automatically converted by the Registry Agency and the amount stated in the company’s documents. These differences must be accounted for not only formally, through amendment of the company’s documents, but also through the corresponding accounting entries, so as to preserve consistency between the circumstances entered in the Commercial Register and those stated in the company’s accounting books.
Need professional assistance?
We can prepare the full set of documents for converting your capital, in line with the requirements of the Commercial Act.
Why timely preparation matters
Early preparation makes it possible to identify the legal and accounting implications of the conversion in good time. This allows the process to be managed consistently, without the need for urgent corrections under the pressure of statutory deadlines.
The goal is for the business to transition to the euro with a stable, logically sound structure that remains valid after the transition period ends.