Preparing Documents for Capital Conversion

The importance of company documents and internal acts when introducing the euro

Converting the capital of a commercial company from Bulgarian leva to euro is not simply an accounting operation. It is a legal change that requires strict compliance with the provisions of the Commercial Act and the Act on the Introduction of the Euro in the Republic of Bulgaria.

Every stage of this process must be documented in a way that safeguards the rights and interests of the company, its partners or shareholders, and third parties (creditors, clients, business partners).

What are the key documents?

The type and volume of the documents required depend on the company’s legal form (EOOD, OOD, EAD, AD). The main documents that need to be prepared and/or amended include:

• Articles of association / Memorandum of association / Statutes: This is the core document that needs to be amended. It must reflect the new amount of capital in euro, as well as the nominal value of the shares, calculated in accordance with the official fixed exchange rate and in compliance with the rules set out in the Act on the Introduction of the Euro in the Republic of Bulgaria, the Commercial Act, and other applicable legislation.
• Decision of the sole owner of the capital / Minutes of the General Meeting: The document by which the decision to convert the capital is taken and the amendments to the articles of association, memorandum, or statutes are adopted. It must contain specific references to the applicable statutory provisions and clearly and precisely formulated decisions on the new values and on how any differences between the capital converted by the Registry Agency and its new amount are to be treated.
• Register of shareholders or partners / Interim certificates / Shares: Joint-stock companies and companies with variable capital are required to maintain a register of partners or shareholders, which likewise requires amendment. The same applies to the interim certificates or share certificates issued by the company to each partner or shareholder, which must accurately and specifically reflect that partner’s or shareholder’s share, including the number of shares held and their value.

Specifics of the conversion

When preparing the documents, it is crucial to take into account the specific rules for conversion:

The new values must be calculated using the full exchange rate, applying the rounding rules to the second decimal place. The documents must clearly set out how any differences arising from rounding are allocated or accounted for, in order to avoid future disputes and discrepancies.

The role of professional assistance

Preparing these documents without professional assistance carries the risk of errors that could lead to the Commercial Register refusing entry, or to the decisions taken being challenged by a partner or shareholder claiming that their rights have been infringed. Expert legal assistance provides:

• Compliance with the law: Assurance that all documents meet current statutory requirements.
• Precision in calculations: Correct application of the conversion and rounding rules.
• An individual approach: Taking into account the specifics of the particular company and its structure.
• Legal certainty: Minimising the risk of future legal disputes and administrative issues.

Conclusion

Preparing the documents for capital conversion is a stage in preparing a business for the euro. It is not a formality, but a process that requires legal and financial expertise.