The DPK (Variable Capital Company): Bulgaria's Entity for Startups

For years, tech companies in Bulgaria struggled with the friction of the standard OOD structure regarding share vesting. No longer. Welcome to the DPK.

1. What is a DPK (Variable Capital Company)?

Introduced in mid-2024, the "Дружество с променлив капитал" (DPK) or Variable Capital Company is a revolutionary legal entity specifically engineered for fast-growing startups in Bulgaria. It bridges the gap between the simplicity of an OOD and the complex capital flexibility of an AD (Joint-Stock Company).

2. Key Benefits for Tech Startups

With a DPK, you can issue shares at fractional cents without depositing capital upfront in a bank account. Furthermore, unlike the OOD, transferring shares does not require an expensive visit to the local notary, drastically improving investor relations.

3. Easy ESOP (Vesting) Implementation

Employee Stock Ownership Plans (ESOPs) and standard founder vesting structures are natively supported. You can issue special rights and tracking mechanisms without complex workarounds, keeping top talent incentivized legally. The identity of shareholders is also kept private from the public commercial register.

4. Legal Requirements & Limitations

To maintain DPK status, the company must retain fewer than 50 employees and generate less than €2,000,000 annually. Once these thresholds are exceeded, the DPK must naturally graduate into an OOD or AD.

5. Why the OOD Fails Tech Startups

Before the DPK was introduced, foreign venture capitalists (VCs) frequently refused to invest directly into Bulgarian OODs, forcing founders to set up costly holding companies in the UK/US/Estonia to accept funds. The reasons were purely statutory:

• Notary Bottlenecks: If a VC wanted to buy a 10% slice of an OOD, the founder and the investor literally had to fly to a Public Notary in Bulgaria, or navigate weeks of Apostilled Power of Attorneys via embassies.
• Lack of Employee Options (ESOPs): OODs do not support conditional future shares or vesting schedules—the shares must be explicitly registered and fully owned right now.
• Lack of Share Classes: OODs grant voting power strictly equivalent to capital. You cannot easily issue "Preferred Shares" that grant a VC veto rights without giving up massive equity.

6. The DPK Solution: Vesting & ESOPs

The DPK was explicitly engineered to solve these problems by adopting the mechanisms of Western corporate law.

In a DPK, the company can issue "Options" to early employees, granting them the right to purchase shares at a heavily discounted fixed price after a 4-year vesting period. When the employee exercises that option, the company simply updates an internal digital shareholder ledger—no public notary required, and no waiting months for commercial register updates.

7. Privacy & Anonymity advantages

In a standard Bulgarian OOD, anyone in the world can query the public Commercial Register and see your exact name, address, and the precise percentage of the company you own. This public transparency is heavily unfavorable to high-net-worth investors acting as silent angels.

A DPK keeps its shareholder register entirely private. Only the managing directors and the total authorized capital are visible to the public. The exact breakdown of who owns what percentage is maintained privately in the company's internal Employee/Shareholder book.

8. Conversion Trajectory: The "Grow Up" Clause

The Bulgarian government explicitly designated the DPK as an incubator structure, effectively defining a "startup". Consequently, there is a legal ceiling built into the framework.

• The employee limit: You must maintain fewer than 50 full-time equivalent employees.
• The revenue limit: You must maintain an annual turnover and/or total balance sheet value below €2,000,000.

If your startup is highly successful and breaches these limits, the law requires you to formally convert the DPK into a standard Joint-Stock Company (AD) or an LLC (OOD) by the end of the following financial year. This is a "good problem to have," as a company generating over €2M annually possesses the resources to handle AD-level corporate compliance.