Why the DPC Is the Best Company Form for Startups in Bulgaria

Introduction

Bulgaria introduced a new corporate legal form in 2023 that does not exist in most other EU member states: the Дружество с Променлив Капитал — the Variable Capital Company, referred to in Bulgarian corporate practice as the DPC (or DPK in Bulgarian transliteration). It was designed with a specific and intentional purpose: to give Bulgarian-registered technology startups, venture-backed companies, and internationally co-founded businesses a corporate structure that matches how modern startups actually operate.

The OOD — Bulgaria’s standard limited liability company — is an excellent structure for the vast majority of businesses. But it was not designed for companies that need to raise multiple rounds of investment from multiple investors, issue equity to employees through vesting programmes, grant convertible instruments to early backers, and change their cap table frequently as the company grows. Each of these operations in an OOD requires a notarial act and a Commercial Register filing — time-consuming, costly, and operationally disruptive for a fast-moving startup.

The DPC eliminates most of this friction. Its variable capital mechanism means that new shares can be issued to investors or employees without a formal capital increase procedure. Its built-in support for ESOP (Employee Stock Ownership Plans), convertible instruments, and multiple share classes brings Bulgarian startup law into alignment with the frameworks that US and Western European venture investors expect. Its lack of a minimum capital requirement removes one more barrier to formation.

With Bulgaria’s adoption of the euro in January 2026, the DPC’s advantages have compounded further: international investors no longer face currency risk, euro-denominated investment rounds are straightforward, and Bulgarian startups are now fully comparable in financial terms to their counterparts in Germany, France, or the Netherlands. This guide explains what the DPC is, how it works, why it outperforms the OOD for startup use cases, and who should register one.

What Is the DPC (Дружество с Променлив Капитал)?

The DPC is a limited liability company with variable share capital — a corporate structure created by Bulgarian law specifically to serve the needs of startups, technology companies, and venture-backed businesses. It was introduced through amendments to the Bulgarian Commercial Act that entered into force in 2023.

The “variable capital” feature is the defining characteristic. In a standard OOD, the share capital is a fixed amount registered in the Commercial Register. Any change to the share capital — whether increasing it by issuing new shares to an investor or decreasing it through a buyback — requires a formal amendment to the company’s Articles of Association, a notarial act, and a Commercial Register filing. This process takes time and costs money. In a DPC, the share capital fluctuates within defined boundaries (a minimum and maximum set in the Articles) without requiring a new registry filing for each change. New shares can be issued quickly and cleanly.

The DPC is modelled on corporate structures widely used in international venture capital: the Delaware C-Corporation in the United States, the UK’s limited company with multiple share classes, and the Estonian OÜ with its streamlined equity management tools. The Bulgarian legislature, working in consultation with the startup community and the Startup Factory ecosystem, designed the DPC to make Bulgaria a viable incorporation destination for internationally minded tech founders who previously saw no compelling reason to choose Bulgaria over Estonia, Delaware, or the Netherlands.

Why the Traditional OOD Is Not Always Right for Startups

The OOD is a well-designed and commercially flexible corporate structure. For the vast majority of Bulgarian businesses — trading companies, service providers, consultancies, BPO operations, real estate investors — it is entirely appropriate. The DPC was not created because the OOD is bad; it was created because the OOD was not designed for the specific operational requirements of a venture-backed technology company.

To understand why, consider what a startup actually needs to do in its first three to five years:

Frequent Cap Table Changes

A typical startup journey involves multiple rounds of capital raising: a pre-seed round from the founders, a seed round from angels or a micro-VC, a Series A from an institutional fund, and along the way, equity grants to early employees and advisors. Each of these events changes the company’s ownership structure. In an OOD, every such change requires: a notarised amendment to the Articles of Association, a commercial registry filing, and waiting for the registry to process and publish the change. This is manageable once or twice, but becomes a serious operational burden across multiple rounds.

Employee Equity Programmes

Modern technology companies attract and retain talent partly through equity. A talented developer choosing between a company that offers a salary and a company that offers a salary plus meaningful equity will often choose the latter. Implementing this in an OOD requires complex workarounds: phantom equity schemes, virtual stock options, or contractual arrangements that approximate equity without actually granting it. These work but add legal complexity and create employee relations challenges when it comes to enforcement. The DPC was explicitly designed to support real equity grants, vesting schedules, and option pools within a clean legal framework.

Investor Expectations

International investors — particularly venture capital funds from the US, the UK, and Western Europe — have standard expectations about what a startup’s corporate structure should look like. They want to see: a cap table with clear ownership percentages; multiple share classes (typically ordinary shares for founders and preference shares for investors); a defined option pool for employee equity; anti-dilution provisions; and information rights. Creating all of these in an OOD is possible but requires custom contractual architecture that is less familiar and less trusted by international investors than a purpose-built startup structure.

No Minimum Share Capital — What This Means in Practice

One of the DPC’s most practically significant features is the absence of a minimum share capital requirement. An OOD requires a minimum of BGN 2 (~€1) in registered capital, and while this amount is trivially small, it still requires a bank certificate confirming the deposit before registration. More importantly, every subsequent change to the OOD’s registered capital requires a formal capital increase or decrease procedure.

The DPC operates differently. Instead of a fixed registered capital amount, the DPC’s Articles of Association set a minimum and maximum capital range within which the company may operate. New shares can be issued and existing shares can be repurchased within this range without triggering a capital increase procedure — the change simply moves the actual capital to a different point within the defined range. Only if the company wishes to move outside the range entirely does a formal Articles amendment become necessary.

This has several practical consequences:

• • Registration is simpler: no bank account for capital deposit needs to be opened before registration (a practical complication for foreign founders who do not yet have a Bulgarian bank account)
• • Early-stage capital raising is cleaner: a pre-seed round can be issued as shares without a formal capital increase procedure, reducing time and legal cost
• • Flexibility for bootstrapped founders: a founder who contributes no initial capital beyond their sweat equity is not penalised or required to manufacture a nominal capital contribution
• • Cleaner equity splits: founder shares, investor shares, and employee option pool shares can all be structured without the constraints of a fixed registered capital amount

How the DPC Makes Foreign Investment Easier

The DPC was designed with international investor expectations explicitly in mind. When a venture capital fund, an angel investor, or a corporate strategic investor evaluates a Bulgarian startup, they want to see a corporate structure that matches their experience with portfolio companies in other markets. The DPC provides this.

The Investment Lifecycle in a DPC

At each stage of this journey, the DPC’s variable capital mechanism and multi-class share structure allow the company to accommodate new investors cleanly and quickly — without the administrative overhead that the OOD framework imposes.

What Investors See When They Look at a DPC

• • A cap table with clearly defined shares and ownership percentages — not a Bulgarian-specific “shares of participation” structure that requires explanation
• • Multiple share classes (preference shares for investors, ordinary shares for founders) — familiar from US and UK startup deal structures
• • A defined ESOP pool with clear parameters — not a contractual workaround
• • Clean convertible instrument documentation — notes or SAFEs structured within the DPC legal framework
• • A corporate structure that can be due diligenced efficiently by international legal counsel
• • An EU-domiciled, euro-denominated legal entity with the EU’s lowest corporate income tax

The DPC and Employee Equity — ESOP, Vesting, and Option Pools

Employee equity is one of the most powerful tools a startup has for attracting and retaining talent. In highly competitive markets for software developers, data scientists, product managers, and AI engineers, the difference between a compelling offer and a mediocre one is often the equity component. The DPC was explicitly designed to make this work within Bulgarian corporate law.

What ESOP Means for a Bulgarian Startup

An Employee Stock Ownership Plan (ESOP) is a programme through which employees receive equity in the company — either as outright grants or through options to purchase shares at a predetermined price. The equity is typically subject to a vesting schedule: the employee earns it over time (commonly over four years, with a one-year cliff), providing a retention incentive.

In a DPC, the founder(s) can reserve a defined option pool when the company is formed — typically 10–15% of the fully diluted share count. This pool is available to be granted to employees, advisors, and key contractors over the life of the company without requiring a new capital increase for each grant. The vesting terms can be embedded in the share grant agreement and are enforceable under Bulgarian contract law.

How the DPC Implements Equity Incentives

Why Employee Equity Matters for Recruiting in Bulgaria

Bulgaria’s IT sector is competitive. A senior developer in Sofia or Plovdiv receives multiple offers. Salary is table stakes; what differentiates a startup from a corporate employer is the equity upside. A company that can offer 0.5–1% of the equity in a seed-stage startup with genuine growth potential, properly documented and legally enforceable, has a materially stronger recruiting proposition than one that offers only cash compensation.

The DPC makes this pitch credible and legally sound. An employee who receives an ESOP grant in a DPC receives a real legal interest — not a contractual promise that may be difficult to enforce. This matters both for recruiting and for the employee’s own confidence in the company.

The DPC for International Founders

The DPC is accessible to foreign founders on exactly the same terms as any other Bulgarian corporate form. Bulgarian company law places no restrictions on foreign ownership, no requirement for a Bulgarian co-founder, and no limitation on foreign national serving as director. A DPC can be 100% owned by a foreign individual, a foreign company, or a multinational group of founders from multiple countries.

Registration Process for a Foreign Founder

A foreign founder registers a DPC in Bulgaria through the same Power of Attorney mechanism used for OOD and EOOD registration. The process is entirely remote and typically takes 3–5 business days from receipt of the required documents.

• • Step 1: Preparation — Bulgaria For Business prepares the Articles of Association tailored to the company’s startup structure: share classes, option pool size, vesting framework, investor rights provisions
• • Step 2: Power of Attorney — the founder(s) sign a notarised and apostilled Power of Attorney in their country of residence authorising Bulgaria For Business to register the DPC on their behalf
• • Step 3: Commercial Register filing — the DPC is registered at the Bulgarian Commercial Register; confirmation typically within 3–5 business days
• • Step 4: Post-registration — NRA registration, VAT registration (if applicable), bank account opening, and accounting setup are coordinated by Bulgaria For Business

How Euro Adoption Has Strengthened the DPC’s Investment Appeal

The DPC was introduced in 2023. Bulgaria’s adoption of the euro on 1 January 2026 has materially strengthened its appeal to international investors and founders.

Before 2026, a Bulgarian DPC operated in Bulgarian lev (BGN), pegged to the euro at a fixed rate. While the peg eliminated currency volatility, international investors and their legal counsel still encountered the BGN as a non-euro currency in investment documentation, cap table calculations, and financial reporting. This created marginal friction — not a deal-breaker, but a complication.

From 2026, a Bulgarian DPC is a euro-denominated company. Investment rounds are priced in euros. Cap tables are denominated in euros. Financial statements are in euros. Dividends are distributed in euros. For a French VC investing in a Bulgarian startup alongside Dutch and German angels, the DPC now looks and feels indistinguishable from an investment in any other eurozone startup — except that the corporate income tax is 10% rather than 25–30%.

Limitations of the DPC — An Honest Assessment

The DPC is an excellent structure for early-stage and growth-stage technology companies. It is not universally superior to the OOD or AD. Understanding its limitations is essential for making the right choice.

Size Thresholds — The DPC Is for Small and Medium Enterprises

The DPC is available only to companies that qualify as small or medium enterprises under Bulgarian accounting law. Specifically, a DPC must not exceed two of the following three thresholds in any financial year:

• • Average number of employees: fewer than 50
• • Annual net turnover: not exceeding BGN 4,000,000 (~€2.05 million)
• • Total assets: not exceeding BGN 4,000,000 (~€2.05 million)

If a DPC exceeds two of these three thresholds in a financial year, it must convert to an OOD or an AD. This conversion is a legal procedure that requires a Commercial Register filing and potentially revised corporate documentation.

For most early-stage startups, these thresholds are not a constraint — a pre-revenue or early-revenue startup will not approach €2 million in turnover in the first years. But a startup on a rapid growth trajectory should plan for the conversion to OOD or AD as part of its 3–5 year planning, rather than encountering the requirement reactively.

The DPC Is New — Legal Precedent Is Still Being Established

The DPC was introduced in 2023. While the legal framework is clear, there is less Bulgarian court precedent, less notarial practice, and less investor due diligence familiarity than there is for the OOD, which has existed for decades. This is not a disqualifying factor — it is the natural state of any new legal instrument — but it means that professional legal support is more important for a DPC than for a standard OOD.

Bulgaria For Business has been working with DPC registrations since their introduction and has developed detailed Articles of Association templates, investment documentation, and ESOP plan structures specifically tailored to the DPC framework.

Not Suitable for Every Business Type

The DPC’s advantages are specifically relevant to companies that will raise external investment, implement employee equity programmes, or change their cap table frequently. For a consulting firm, a trading company, a logistics operation, or a real estate investment vehicle, the DPC’s startup-specific features provide no benefit — and the size threshold creates an unnecessary constraint. These businesses are better served by the OOD.

Which Startups Should Use a DPC?

DPC vs. OOD — Which Should a Startup Choose?

The choice between DPC and OOD is not a question of one being universally better than the other. It is a question of which structure fits the specific business model and growth trajectory.