Branches according to the Bulgarian commercial law
In Article 17 (1), the Bulgarian Commercial Code provides that each merchant may open a branch outside the community where his seat is located. This may be done by a decision of the all members of the general meeting or the sole owner of the capital. The conditions for opening a branch are the following:
- The branch must be outside the community where the seat is located.
- The branch must be registered into the commercial register.
The trade name must display the extension “branch”.
The branch may have the same or a different business object compared to the main merchant.
The branch keeps its account books as an independent merchant, without preparing a separate balance sheet. The seat’s legal entity is also the legal entity of the branch.
Regarding their legal status, the branch is subordinate to the merchant. Both pursue the same enterprise policy but externally, the branch acts like an independent legal entity without being one. If the initial merchant as a business is sold, the branch is transferred to the new owner with it. The same does not apply in reverse: the branch may be transferred independently from the merchant. The same applies regarding insolvency.
The merchant’s insolvency implicates the branch’s insolvency.
The branch serves the merchant regarding the performance of the operating activities, though it is no independent legal entity.
Foreign registered entities that may carry business in their home country may as well open branches in Bulgaria and record them into the commercial register. They have to act under the trade name of their home country (e.g. “XY Inc. – Branch Bulgaria”)