In Bulgarian case law it is settled that, upon the death of a shareholder in an LLC, their heirs do not automatically acquire shareholder status. They inherit the deceased shareholder’s equity interest as property, but not the membership. In order to become shareholders, the statutory requirements for the admission of a new shareholder under the Commercial Act must be satisfied.
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In Bulgarian case law it is settled that, upon the death of a shareholder in an LLC, their heirs do not automatically acquire shareholder status. They inherit the deceased shareholder’s equity interest as property, but not the membership. In order to become shareholders, the statutory requirements for the admission of a new shareholder under the Commercial Act must be satisfied. The heir is considered a third party to the company and, pursuant to Art. 129, Para 1 of the Commerce Act, may acquire a share only in compliance with the applicable statutory requirements. They must submit an explicit application to the company, which must then convene and hold a General Meeting at which a majority exceeding three-quarters of the share capital approves the admission. The absence of these statutory requirements constitutes an absolute impediment to a person becoming a shareholder, together with all legal consequences arising therefrom.
An interesting nuance of the relationships discussed above arises where the Articles of Association themselves provide for the possibility that the heirs of a shareholder may be admitted to the company upon their application, without the need to convene a General Meeting.
The Supreme Court of Cassation explicitly confirmed with Decision No. 270 of 15 September 2025 in commercial case No. 1681/2023 of, that the resolution of the General Meeting for the admission of a new shareholder, an heir of a deceased shareholder, may be replaced by an explicit clause in the Articles of Association. Considering the specifics of the LLC as a company with a relatively strong personal element, the Supreme Court of Cassation states that the resolution of the General Meeting may also be adopted in advance and made conditional upon a positive condition – namely, the occurrence of succession. There is no obstacle for such a resolution to be incorporated into the Articles of Association, insofar as such a legal possibility is not excluded by law …
Although the above reasoning may appear sound, in practice such an approach may prove to be overly risky. From a practical standpoint, at the time of concluding the Articles of Association, the shareholders would not be expected to have full clarity as to the circle of their potential heirs. People may marry and divorce throughout their lives, and their heirs represent a variable factor. Even if, at a given point in time, the shareholders have trust in the closest persons of each of the other shareholders (e.g. spouse and children), at some point these persons may turn out to be different, or such trust may be irreversibly lost.
In the light of the above, the Resolution to include such a clause for automatic admission of a new shareholder in the Articles of Association, although in favour of the heirs, may give rise to significant obstacles for the shareholders. The amendment of the Articles of Association may be adopted by a majority of more than three-quarters of the capital, pursuant to Art. 137, Para 1, item 1 in conjunction with Para. 3. If such a majority cannot be formed at the relevant time (when the heir has requested to be registered as a shareholder), the new shareholder may turn out to be “imposed” on the existing ones, which could raise substantial disagreements and difficulties in the business activities.
In view of the above, the more companies put this kind of clause in their Articles of Association, the more disputes could be expected. The likelihood of spreading this practice among many entities does not seem high though, insofar as the case considered by the court is isolated and exceptional.
On the other hand, however, it is conceivable that some companies may attempt to include certain conditions in such a clause – for example, that the membership relationship may be inherited only by those persons who, at a given time, qualify as heirs (i.e. the current spouse and children of the shareholder). Such provisions of the Articles of Association, however, are highly sensitive and may, in certain cases, lead to their nullity on the grounds of being contrary to good morals.
In any event, the founders of an LLC should exercise caution, particularly if, in violation of best practices, template Articles of Association are used, to avoid the approval of such a clause being included by mistake.
Just as people do not marry with divorce in mind, so too partnerships are not established with a view to the disputes that may arise from a lack of unanimity. In practice such disputes are both frequent and varied, which is why proper preparation and a clear understanding of the parties’ rights and obligations are of decisive importance.
