A variable capital company may be managed by one or more managers or by a Board of Directors (BoD). The Board of Directors, as a key corporate body, plays a central role in the company’s operation. In this article, we review the main aspects of the Board of Directors—what it is, who may participate in it, how it is elected, and what powers it has.

 

Board of Directors in a VCC

The Board of Directors is the body that manages and represents the variable capital company. It is a collective body responsible for the strategic leadership of the VCC. Pursuant to Article 260c of the Bulgarian Commerce Act, the number of its members is determined in the articles of association. The BoD may include both natural persons and legal entities. Where a BoD member is a legal entity, it is required to appoint its representative. The legal entity bears joint and unlimited liability together with the other BoD members for obligations arising from the actions of its representative.

 

Functions of the Board of Directors in a VCC

The main function of the Board of Directors is to carry out the management and representation of the VCC in accordance with the resolutions of the general meeting. Members of the Board of directors perform their duties with the diligence of a prudent businessperson, aligning the business risk with the expected income for the company. They are obliged to place the company’s interest above their personal interest and to avoid conflicts of interest between their personal interest and the interest of the VCC. Members of the Board of Directors are jointly liable for damages caused to the company.

 

Election of a Board of Directors

The members of the Board of Directors are elected by the general meeting of all shareholders in the VCC. The process includes nomination of candidates by the shareholders, voting on the nominations at the general meeting, and determining the number and term of office of the members. The law allows members to be re-elected without limitation. The members of the Board of Directors are registered with the Bulgarian Commercial Register, where each of them submits notarised consent and a specimen signature.

 

Members of the Board of Directors

A member of the Board of Directors may be a legally capable natural person or a legal entity through its representative. Under the law, a BoD member may not be a person who has been:

  • a member of a management or supervisory body of a company terminated due to insolvency within the last two years preceding the date of the decision declaring insolvency, where there are unsatisfied creditors; and
  • a manager or a member of a management or supervisory body of a company in respect of which a final penalty decree has established a failure to fulfil obligations related to the creation and maintenance of the required stock levels under the Bulgarian Act on Oil and Petroleum Products Reserves.

Any member of the Board of Directors may request to be removed from the Bulgarian Commercial Register by giving written notice to the company. Within 1 month of receiving the notice, the company must file for registration of the member’s removal. If the company fails to do so, the interested person may personally file for registration of their removal. The removal is registered regardless of whether another person has been elected.

 

CEO (Chief Executive Officer)

The Board of Directors entrusts the management and representation of the company to one or more CEOs (Chief Executive Officers) elected from among its members. The BoD also determines the remuneration of the CEOs. Executive directors must be fewer than the remaining members of the Board of Directors in a VCC. Their authorisation may be revoked at any time.