I. The Bulgarian legislation does not explicitly regulate a legal entity or a commercial company called Branch organization (by Branch organization we mean organization(union) of independent companies operating in the same sector (branch) for e.g. food industry, production of cars, trade of specific goods, ect). The registration of a Branch Organization may be carried out in the form of a non-profit legal entity (association) within the meaning and provisions of the Non-Profit Legal Entities Act. The Association (Branch Organization) arises with its entry in the Register of Non-Profit Legal Entities, maintained by the Registry Agency under the Minister of Justice.
II.Information required for establishment and registration of a Branch Organization:
- Who are the founders of a branch organization, ie. the persons involved in its establishment?
A branch organization may be established by three or more persons – natural or legal, who unite to carry out non-profit activities.
- What will be the name of the Branch Organization?
The name should include a clear indication of the type of organization; it should not be misleading or harmful to the good morals.
Example: “Association of traders in children’s goods”
The name should be written in Bulgarian and can be additionally written in a foreign language.
- Where will be the registered office and the address of management?
What will be the subject of activity of the Branch Organization?
Example: The subject of activity of the Association is coordination and joint work between the members for solving the problems in the branch and protection of their interests in carrying out thier economic activity in the field of trade in children’s goods.
- What will be the goals of the Branch Organization?
- Protection of the common interests of the branch and the rights of the members of the Association before state bodies and institutions, as well as before other similar organizations in the country and abroad;
- To defend the interests of its members related to the development of trade in children’s goods, improving public confidence in the branch.
- Creation of professional standards among the members of the Association for ethics and increase of the security of the branch;
- Increasing the economic efficiency of the activities of its members;
- Establishment of fair trade and business relations in the conditions of free and transparent competition;
- Guaranteeing consumers’ rights.
- Development of relations with international and other national organizations working in the field of trade in children’s goods, etc.
- What are the means to achieve them?
- Conducting regular meetings of the members of the Association for discussions and debates on topics and issues related to the problems in the sector;
- Selection and dissemination of statistical and other information useful to its members;
- Building and maintaining loyalty in the relations between the members;
- Assisting the members of the Association and representing them before the judicial and other institutions of the Republic of Bulgaria in cases of need to protect their interests in resolving specific issues;
- Giving opinions on draft laws and other regulations that are relevant to the goals of the Association;
- Establishing, maintaining and updating contacts with other local and international and exchange of experience with them;
- Organizing meetings, symposia, seminars, and others to achieve their goals.
- Payment of possible donation funds to support the activities of the association, periodically reporting to its members and donors according to their requirements, etc .;
- The term the Association is established or is it established without a term?
Example: An association is established for an indefinite period.
- Will the Association carry out additional economic(commercial) activity?
Additional economic activity may be carried out only if it is related to the subject of the main activity for which the Branch Organization is registered, and the revenues from it are used to achieve the goals of the Branch Organization defined in the Articles of Association.
The performance of economic activity is subject to the conditions and by the order, determined by the laws, regulating the respective type of economic activity. A separate accounting is kept for it.
NB! A branch organization does not distribute profit.
- What specific requirements do the founders set for the members of the organization? Criteria for admission of new members? – determined by the founders.
- What and who will be the governing bodies of a branch organization, the names of the members of the managing body, the names and positions of the persons representing the organization?
The main bodies are:
A) The General Assembly – consists of all members of the Association / branch organization, unless otherwise provided in the statute.
B) Management Board – consists of at least three persons – members of the Association. Legal entities that are members of the Association may nominate as members of the Management Board and persons who are not members of the Association.
The members of the Management board are elected for a term of up to five years.
The Management Board shall elect a chairman from among its members.
By decision of the General Meeting, the functions of the Management Board may be performed by one person – Manager.
- What will be the total amount of the initial financial installments of the founders, if any?
- Termination – the law provides for termination in 3 cases:
- upon the expiration of the term for which the Branch Organization has been established;
- by decision of its supreme body – the General Assembly;
- by a decision of the district court in the region of the registered seat of the Branch organization;
- Will there be a branches of the Association? – what is the seat and their address of management, the names and the position of the person appointed as a representative, as well as possible limitations of his powers and representative power.
- What are the identification data for the beneficial owners and the data for the legal entities-founders, through which control is directly or indirectly exercised, according to the requirements of the Law on Measures against Money Laundering – the information should be indicated upon the registration of a branch organization.
NB! The founders need to specify the specific requirements, if any, that require the establishment of the Branch Organization, in order to be taken into account in the preparation of documents and its registration.
In order to register the established association / branch organization, the persons designated as representing the Association should submit the following documents to the Register of Non-Profit Organizations at the Registry Agency:
- application for initial registration according to Form A15, accompanied by the following documents:
- minutes of the constituent assembly of the Association (accompanied by a second copy with deleted personal data, if any in the minutes);
- the Articles of Association adopted by the founders (accompanied by a second copy with deleted personal data, if any in the Articles of Association);
- sample signature of the representative (s);
- declaration by the applicant for the truthfulness of the circumstances requested for entry and the acceptance of the acts submitted for announcement (according to a sample);
- document for paid state fee;
- When the application is submitted by an applicant lawyer, he should also submit a copy of his explicit written power of attorney.
The fee for entry of a Branch Organization in the Register of Non-Profit Legal Entities is BGN 25, when the documents are submitted electronically with a qualified electronic signature.
- In conclusion:
Here are the steps needed to establish a branch organization:
- Specifying the persons who will establish the organization. They can be given the so-called. Membership identification card in order to gather complete and accurate information to be used in the preparation of documents.
- These persons shall decide on all matters 1 to 13 in II referred to above.
- On the basis of the decisions taken, the attorney-at-law prepares the Articles of Association.
- Holding a Constituent Assembly, at which the founders decide on the establishment of the Branch Organization, adopt and sign the Statute, decide other issues related to the establishment and registration. A Code of Ethics for the activities of members may be adopted.
- Registration of the Branch Organization in the Register of Non-Profit Organizations by submitting the documents specified in III.