19.05.2022

A COMPANY MAY ALSO BE ESTABLISHED UNDER THE LAW ON OBLIGATIONS AND CONTRACTS

What is the company under the Law of Obligations and Contracts? What regime does it obey and what are the rules for its creation?

When we say company, we usually think of it as a company, something that is registered under the Commercial Code, which is entered in the commercial register. Such are joint stock companies and limited partnerships, limited liability companies.

However, the Bulgarian law provides for another type of companies - those under the Law on Obligations and Contracts (LOAC). They can usually be seen recorded as DZZD. It is important to know that it is not a legal entity and is not an independent legal entity, which is the main difference with companies under the Commercial Code. The establishment is done by contract.

According to the LOAC, with the company contract two or more persons agree to unite their activities to achieve a common business goal. It is noted there that in order to achieve the common goal, the partners may also agree on contributions in cash or in other properties.

According to the rules for these companies, the imported money, substitutable items and items that are destroyed by use are the common property of the partners. Any other item is considered imported for common use, unless otherwise agreed.

Regarding the liability of the partner for defects of the imported property and for judicial removal, the rules of the lease agreement apply when the property is imported and the rules of the sale contract when the property is imported, the LOAC orders.

The law also stipulates that everything acquired for the company is the common property of the partners. Unless otherwise agreed, the shares of the partners are equal. The partner can claim his share of the common property only upon leaving the company or upon its termination.

Another basic rule is that decisions on the company's affairs are taken with the consent of all partners, unless the articles of association provide for this to be done by a majority of votes. Each partner has the right to one vote.

Unless otherwise agreed, each partner has the right to manage. However, in this case, each of the other partners may oppose the partner's action before it is committed. The majority of the partners decides on the disagreement.

Again, unless otherwise agreed, the profits and losses are distributed among the partners in proportion to their share. The agreement to exclude some of the partners from participation in losses or profits is invalid.

The partner may not transfer his right to participate in the company without the consent of the other partners.

The rules for when the company is terminated are also important. This is done by achieving the company's goal or if it has become impossible to achieve it. Termination also occurs with the expiration of the time for which the company was formed, as well as with the death or interdiction of one of the partners, unless otherwise agreed. DZZD is also terminated with a notice of one of the partners, made in good faith and at an appropriate time, when the company was formed for an indefinite period, unless it is agreed that the company will continue with the other partners. The last option for termination is by court decision, if there are good reasons for this, when the company is formed for a certain period.

The partner has the right to claim the expenses he has incurred, together with interest on them, and the damages he has suffered in connection with the conduct of the company's affairs.