The manager is one of the corporate bodies engaged with the management of the Bulgarian limited liability company (Bulgarian "Дружество с ограничена отговорност", in short: "ООД"). The manager is an individual body. He has to be a natural person. It is not necessary that one of the shareholders is appointed as a manager, so a third party can be appointed as a manager. In practice, however, often the shareholder with the largest share in the capital of the company is appointed as a manager. It is also possible that several managers are in charge with the management of the company. Where several managers have been appointed, each one of them may act independently, unless the company contract provides otherwise. Other restrictions of the representative authority of the manager shall not have effect in respect of third persons. No judges, prosecutors, lawyers, members of a supervisory board of a bank, etc. are allowed to be appointed as managers of a company.
According to Art. 141 Para. 8 of the Bulgarian Commerce Act “Cannot be a manager any person declared insolvent, a member of a management or control body of a company terminated due to insolvency during the last two years preceding the date of the decision for declaring insolvency if any unsatisfied creditors have remained. Cannot be a manager also a person, who has been a manager, member of a management or control body of a company, which in a valid penal decree has been found in breach of their obligations to create and maintain the prescribed reserve levels under the Act on Reserves of Crude Oil and Petroleum Products.” Another restriction regarding the competition activities is provided by Art. 142. It, however, is not compulsory and could be removed through a resolution of the General Assembly of the Shareholders. “Without the consent of the company the manager may not:
- effect commercial transactions in his own or in a third party's name;
- participate in general and limited partnerships, as well as in limited liability companies;
- hold positions in managing bodies of other companies.
The limitations under para. 1 shall apply when the activities carried out are similar to those of the company.”For violations of these obligations the manager shall owe compensation for the damages caused to the company”.
Appointment of the manager
The manager is appointed by a resolution of the General Assembly of the Shareholders. The resolution is adopted through a simple majority. The first manager is appointed upon the acceptance of the articles of incorporation. The appointment of the managing director as a company’s body also requires the manager’s consent according to Art. 141, para. 3 of the Commercial Code: “The name of the manager, who shall present a notary certified consent with a specimen of the signature, shall be entered in the commercial register.” The resolution for appointing a manager is constitutive and enters into force after its registration within the Commercial Register in Bulgaria. The relations between the company and the manager shall be settled by a contract for commissioning of the management. The contract shall be concluded in written form on behalf of the company through a person, authorised by the General Assembly of the Shareholders or by the sole owner of the share capital.
Rights and Obligations of the manager
According to Art. 141., para. 1 of the Commercial Code “The manager shall organize and direct the activities of the company in accordance with the law and the resolutions of the General Assembly of the Shareholders”
Rights and obligations of the manager within the internal company’s management:
- Convocation of regular and irregular meeting of the General Assembly of the Shareholders (Article 138 of the Commercial Act);
- Responsibility for the preparation of the meetings of the General Assembly of the Shareholders;
- Preparation of projects for the resolutions, which the manager provides to the General Assembly of the Shareholders for approval;
- Responsibility for the registration of resolutions, which shall be entered within the commercial register;
- Keeping of the company’s books and responsibility for their proper conduct;
- Acting as a liquidator if no other person gets appointed according to the articles of association of the company or throug a resolution of the General Assembly of the Shareholders;
External rights and obligation - representation of the company (execution of legal transactions and procedural acts). The manager is entitled to execute all kinds of transactions. There is only one limitation - when it comes to transactions, which subject is related to purchase or selling of a real estate, or a transaction with other property rights. According to Art. 137, para. 1, item 7 of the Commercial Act, the General Assembly of the Shareholders adopts a resolution for conducting of these transactions.
Protection against unlawful acts of the manager
The protection against unlawful acts of the manager could be achieved through a claim of one of the shareholders in the Ltd. for these transactions to be declared void. The plaintiff shall possess a legal interest (e.g. he is a shareholder in the LLC/ OOD and the concluding transaction violates his rights.). The legal transaction shall be declared void as a consequence of the initiated claim. The reasons therefore are provided by the law.
Liability of the Manager
According to Art. 145 “The manager shall be financially liable for damages caused to the company” The liability of the manager is contractual and includes the loss of profit, provided that it is a consequence of his unlawful acts and/or is to be expected upon their performance. In order for the manager to be held liable it is necessary that an act or omission of the manager, which constitutes a violation of his obligations to the company, be judicially determined. In order for this to be accomplished, the following elements have to be estimated:
- a damage caused to the company;
- a causal connection between the damage and the act of the manager;
- the manager’s guilt (intent or negligence);
The General Assembly of the Shareholders shall adopt a resolution for initiating of action against the manager (Article 137, Para. 1, item 8 of the Commercial Act). This right of the General Assembly of the Shareholders is within its exclusive competence and cannot be delegated. In the event that the manager is also a shareholder in the LLC, the case law assumes that he shall not vote for the initiation of action against him and for the actions regarding his liability before the company. This prohibition is intended to prevent a misuse of rights by the shareholder if his interests are in conflict with those of the company. In order to hold a former shareholder of the LLC liable, it is not necessary that the General Assembly of the Shareholders adopts a resolution in accordance with Art. 137, Para. 1, item 8 of the Commercial Act. In this event, the claim shall be brought by the current manager.
Termination of the representative power of the managing director
The reasons for the termination of the power of the manager are:
- a resolution of the General Assembly of the Shareholders adopted with a simple majority;
- by request of the manager for his deletion from the Commercial Register. This right is achieved through a written notification to the company. Within one month of its receipt, the company has to register this circumstance within the Commercial Register.