The limited partnership according to Bulgarian commercial law
The limited partnership (Bulg.: Командитно дружество, short: КД) is the second form of partnerships regulated in the Bulgarian Commercial Act. The limited partnership differs from the general partnership in respect of the participation of the partners. There are two different types of partners to the limited partnerships – ones that bear unlimited liability (general partners) and ones that are only limitedly liable (limited partners). According to Article 99 of the Commercial Act, the limited partnership consists of at least one general and one limited partner.
The partnership is founded on the basis of a partnership contract. The trade name of the partnership must contain the name of at least one of the limited partners. According to Article 101 (2) of the Commercial Act, a limited partner is deemed to bear unlimited liability if his name is included in the trade name of a limited partnership. To found a limited partnership a registration in the commercial register is necessary.
The internal relationship between the limited partners is similar to the relationship between the partners of the general partnership, except for the rights and obligations of the general partners. The general partners are obligated to deposit a contribution. This contribution determines their share in the future profits and their liquidation quotas. Limited partners as well are subject to the obligation of loyalty – without the consent of the other partners one partner may not have a rival commercial activity.
With regards to the external relationships of the company the limited partners do not have an important role. Principally, they do not participate in the management unless they are expressly nominated to. According to Article 112 of the Commercial Act, limited partners bear unlimited liability for legal transactions that have been conducted in the name of the partnership before or after its foundation whenever the creditor did not know that he was contracting with a limited partner. Otherwise, limited partners bear liability toward the partnership’s creditors to the extent of the contribution made, even if it has not been paid completely. This provision applies also regarding losses of the partnership. General partners in turn bear personal, unlimited, joint and several liability.
The formation of a limited partnership with a limited liability company (Bul.: OOD) as general partner, is possible with some restrictions.