There are certain risks involved while using services of nominee directors /nominee owners in a Bulgarian company. Persons who wish to hide assets or conceal participation in a company registered in Bulgaria, need to consider the applicable Bulgarian law.
Unlike offshore jurisdictions, the Bulgarian law does not recognize a legal arrangement of the relationship between the Ultimate Beneficial Owners (UBOs) and a Nominee Director /Nominee Shareholder that will have an effect to the public or third parties.
The main thing to be understood is that according to the Bulgarian law, the appointed director/shareholder whose name is on public records, has a a full independent control over the company. The company director may /according to the law/ buy and sell assets, operate company bank accounts even against the will of the UBO and these actions will be absolutely legal and irreversible. The nominee owner of the company shares can at any time dismiss the company director and appoint another person. The relationship Nominee - UBO is only internal, it remains hidden from public.
At the same time, the company director bears responsibility for all contractual and administrative relationships the company enters. These duties includes bookkeeping, filing tax reports, providing company funds for social insurance and tax payments. If the UBO instructs against meeting these obligations, the company may face fines or enter bankruptcy. The appointed director will be also facing serious negative consequences which may include criminal charges /for example in case of an intentional bankruptcy /.
This "conflict of interests" arises between a UBO and a nominee in the frequent occasions of “hiring” the services of a not known person, offered by certain lawyers and "nominee" agencies in Bulgaria. It is quite often the “nominees” roles are assigned to persons of a low social status, who has nothing to lose due to being heavily in debt himself.
It is advisable the relationship between the hidden UBO and the nominee in a Bulgarian company is based on mutual trust rather than contractual obligations so the "trust issue" or "conflict of interest" is minimized..
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