We help founders define the organisation’s purposes and governance, prepare the relevant founding documents and coordinate the registration file.
A prospective NGO client came to ARG with information about setting up an NGO, foundation or association, but was unsure how to proceed. ARG brought the resolutions, powers of attorney, declarations and registration steps into one coordinated process, so the client could track the outstanding items and understand why each document and next step was required.
That practical organisation matters because the legal form affects who controls the entity, how it is governed and what must be proved at registration. An association is built around members, while a foundation is created by dedicating property to a non profit purpose. Public benefit status adds further governance, reporting and asset distribution obligations that should be considered before the documents are signed.
ARG can help when you need to
Choose an association for a membership organisation or a foundation for property committed to a purpose. Define the real decision-making structure before signing.
An association needs at least three persons; public benefit requires at least seven capable individuals or three legal entities. Foreign founders are permitted.
Describe a non-profit purpose and any related supplementary business precisely. Income serves that purpose; profits cannot be distributed to founders or members.
Public-benefit designation is irrevocable after registration and brings collective governance, annual reporting and restrictions on connected transactions and residual assets.
A Bulgarian non-governmental organisation normally takes one of two legal forms under the Non-Profit Legal Entities Act (ЗЮЛНЦ): an association, built around membership, or a foundation, built around property dedicated to a non-profit purpose. Bulgarian and foreign individuals with legal capacity and legal entities may be founders under Article 5. The organisation becomes a legal person on entry in the Registry Agency’s register, not when the founders first agree the project. Decide who should govern, who should benefit and how activities will be funded before drafting.
An association requires at least three persons. A public-benefit association requires at least seven legally capable individuals or three legal entities under Article 19. Members participate through the general meeting; management is entrusted to the body established under the statute and governing law. Membership is voluntary. Members owe contributions prescribed by the bylaws, but do not personally owe the association’s liabilities merely because they are members. This distinction matters when agreeing subscriptions, project funding and commitments to a landlord. The association should contract through its authorised representative, with its own financial record.
A foundation is not formed by members. It is created by a unilateral founding act, either during life or upon death, by which property is granted without consideration for a non-profit purpose. If the foundation is created during life, the act must bear notarised signatures. If real property is transferred, the act is entered by the registration judge at the district court where the property is located. That makes the foundation form more appropriate where the founder wants to tie a dedicated asset pool to a purpose and does not need a membership base. The practical difference from an association is therefore structural. An association is organised around persons. A foundation is organised around property. Ministry of Justice, ЗЮЛНЦ
The form determines how decisions continue after the initial founders leave. In an association, admission, resignation, voting and member contributions need workable rules. In a foundation, the act should identify the dedicated property, the bodies administering it and any rights reserved to the founder. A founder’s influence is exercised through those lawful governance arrangements; the assets do not remain a private savings account. ARG works through these choices with the founders, including who appoints replacement managers and what happens if a decision-maker becomes unavailable.
A useful way to think about it is this.
Choose the governing structure around the people who will make decisions and the resources committed to the purpose.
For clients, this is the point where a setup project either becomes straightforward or starts producing avoidable corrections. A form chosen for the wrong governance model can create later friction in control, filings and internal approvals, even if the social or charitable purpose itself is clear.
Public benefit is a statutory status recorded in the founding documents and register. Article 38 identifies recognised purposes including education, healthcare, culture, support for vulnerable communities, human rights and environmental protection. Define the actual beneficiaries and activities, rather than relying on the word “charity”. Under Article 2(2), public-benefit designation becomes irrevocable after registration. Choosing it therefore commits the organisation to the associated governance and accountability rules; it cannot later switch to private benefit simply because those duties become inconvenient. Articles 2 and 38–42.
For an association, public-benefit status requires at least seven capable natural persons or three legal persons. That is a real threshold, not a drafting preference. It means the founders must be able to show that the organisation starts with the broader public-benefit structure the law expects. By contrast, a private-benefit association can be founded by at least three persons. For a client, the immediate question is whether the intended founder group is large enough and correctly composed before any documents are signed.
An association already has a collective supreme body, its general meeting, whether it serves private or public benefit. Public-benefit foundations also require a collective supreme body and a management body under Article 39. Public-benefit entities keep minute books documenting decisions of their collective bodies. Specify meeting arrangements, quorum, voting, appointment and representation in the founding documents, and distinguish approval of spending from the representative’s authority to sign a contract. Otherwise a project can have funding but no properly authorised decision to use it.
Public-benefit entities must prepare a yearly activity report and publish both that report and the financial statements by 30 September of the following year. That deadline is separate from the setup filing. It matters because the organisation must plan not only for registration, but for continuing public accountability after registration. For founders, this is often the key commercial choice. If the organisation expects grant funding, donor scrutiny or public-facing charitable activity, the public-benefit model may fit better. If it does not want those continuing obligations, the private-benefit model may be more practical. Ministry of Justice, ЗЮЛНЦ
Article 41 gives practical rules for transactions involving insiders. Certain gratuitous expenditure benefiting listed connected persons requires a reasoned decision of the supreme body supported by two thirds of all its members. Transactions with the specified office-holders and connected entities are restricted unless obviously beneficial to the organisation or made on publicly announced general terms. Record the relationship, legal basis, approval and terms before committing funds. A founder’s proposal to rent their own premises to the organisation should therefore be examined as a connected transaction, not treated as automatically acceptable because the rent supports the project.
Public-benefit status also shapes the exit. Article 42 prohibits conversion into a private-benefit non-profit, while Articles 43–44 restrict allocation of remaining assets and exclude the listed founders, members, office-holders and connected persons. When property is donated, founders should understand that it is committed to the organisation’s lawful purposes and does not become freely withdrawable on closure. The governing documents and donor conditions should make the intended use and permitted destination of assets clear.
ARG’s role at this stage is to test the intended purpose against the founder group, the planned governance model and the expected reporting burden, so the client does not choose a status that is harder to maintain than to create.
Non-profit does not mean that every service must be free. Article 3 allows supplementary business activity only where it relates to the registered main activity and the revenue serves the stated purposes. It must be described in the governing document, and profits cannot be distributed. For an educational association, paid training or publications may support the educational purpose; an unrelated trading venture needs a different structure. Identify grants, donations, subscriptions and trading revenue separately in the budget and accounting arrangements. The legal form alone does not exempt trading, employment or property transactions from their applicable taxes and regulatory requirements.
Tell us where you live, how your business works and what you want to change. We will help you identify the questions to resolve and the next steps to consider.
Prepare the governing document around the project’s actual decisions: its purpose, beneficiaries, resources, governing bodies and representative powers. An association files with application A15 and a foundation with A16. Both need coherent documents showing that the founders validly established the chosen form and appointed its initial governance. ARG coordinates the constitution, resolutions, representation evidence and registration application so a clause authorising one person does not conflict with a resolution appointing another.
For an association, the bylaws must set out the name, seat, purposes, the type of activity under the Act, any supplementary business activity, governing bodies, powers, representation, membership rules, term, contribution rules, and the distribution of remaining assets after creditors are paid. For a foundation, the founding act must state the name, seat, purposes, type of activity, granted property, bodies, branches, powers, representation rules, and term. Those are not drafting decorations. They are the registration points the registrar checks because they define whether the entity exists in a legally usable form. Ministry of Justice, ЗЮЛНЦ
A common practical mistake is to write the supplementary business activity too broadly. The Registry Agency’s own guidance says that wording such as “any lawful activity” is too uncertain for the filing context. That matters because the agency is looking for specificity, not a blank cheque. If the organisation will carry out paid ancillary activity, the document should describe it in a way that links it to the non-profit purpose and avoids open-ended language. Registry Agency guidance
Before signature, work through an ordinary operating decision: who approves the annual programme, who signs a grant agreement, and who can authorise a payment outside the budget? Then address changes in members or office-holders. A clear purpose statement alone will not resolve these questions. The governing rules should allow the organisation to function when a founder is abroad, a board term expires or members disagree, while preserving the mandatory powers and voting rules under the Act.
For an association, the membership provisions and the contribution rules also need to be consistent. If members are not supposed to contribute property, the bylaws should not accidentally suggest that they must. If they are supposed to contribute, the rule needs to be precise enough to be enforceable. The same logic applies to representation. The registrar must be able to see who can bind the organisation and on what basis. Ministry of Justice, ЗЮЛНЦ
A clean setup file usually needs the following to line up before ARG files it.
Article 33 requires an inter vivos foundation act to bear notarised signatures, and an act transferring rights in real estate must also be entered through the registration judge where the property lies. Identify the property, the founder’s title and the intended transfer before signature. Article 34(2) gives particular legal significance to the purpose and property provisions; it does not remove the need to complete the governance and registration file. Where money is dedicated, retain the corresponding funding evidence and distinguish it from later operating donations.
For foreign founders, establish identity or current legal existence and the representative’s authority. A corporate founder may need an internal decision authorising participation, together with documents showing who may sign it. Arrange the applicable authentication and certified Bulgarian translation before filing. Prepare publishable versions that omit personal data the law does not require to be public while retaining the facts necessary to establish the decisions. Registry publication makes document design a continuing privacy and governance issue.
The registration deadline depends on which legal rule applies to the filing step, and the service should be planned around the stricter setup timetable, not around a loose internal target. Under the Bulgarian Non-Profit Legal Entities Act (ЗЮЛНЦ), the registered circumstances and documents must be filed with the Registry Agency within one month from the event or change. Separately, the Registry Agency law contains a general seven-day rule for filings, but the special one-month rule in the non-profit statute controls for these register filings. Ministry of Justice, ЗЮЛНЦ Registry Agency law
For a new NGO setup, the relevant trigger is usually the adoption of the founding decision and the signing of the constitutive documents. From that point, the file has to be prepared and submitted within the statutory filing period. That is why ARG normally sequences the process so that the resolutions, powers of attorney, declarations and final documents are ready together, instead of asking the founders to sign piecemeal and then waiting for missing items. The client benefits because the filing can go in as one complete package, with fewer chances for contradiction between the papers.
Under Article 19(2) of the Register Act, the registrar rules immediately after three working days have elapsed from receipt, unless a special rule applies. Distinguish that review period from the founder’s one-month filing duty under Article 18(5) of the Non-Profit Act. If documents are missing or a fee is unpaid, Article 22(5) instructions and their filing-related deadline require prompt action. Monitor the application from submission rather than assuming a new full period begins whenever an email is opened.
Appoint the person who will monitor the electronic file and obtain any corrective signatures promptly. Instructions should be answered through the designated supplementary-document application linked to the pending filing, with every affected document checked for consistency. Where the deficiency concerns the legal substance of the founding decision, supplying an explanatory letter may not cure it. ARG distinguishes an omitted attachment from an invalid resolution so the response addresses the actual obstacle.
A useful way to manage the timeline is this.
ARG’s practical value here is coordination. The legal deadline is one thing, but the real challenge is getting founders, signatories and supporting documents aligned in the right order so the file is ready when the statutory clock starts running. That reduces the risk of a rejected setup and avoids the commercial cost of waiting on a fresh filing cycle.
A reasoned refusal can be appealed through the Registry Agency to the competent district court within seven days of service under Article 25. Alternatively, Article 26 allows a corrected new application; identified documents from the earlier file can be reused, but the new declaration required by Article 13(4) must accompany it. Select the route according to the defect and the project’s timetable. A refusal based on an unlawful clause calls for a different response from disagreement over an otherwise valid document. Refusal, appeal and repeat filing.
The first step is to read the refusal against the filed documents and identify whether the issue is factual, structural or purely drafting-related. A factual issue may be missing evidence of a founder, a representative or a property contribution. A structural issue may be that the organisation chose the wrong legal form for the intended governance model. A drafting issue may be that one clause is too vague or internally inconsistent. The remedy is different in each case, so the refusal should be treated as a diagnostic tool, not just an obstacle.
If the organisation later changes, the filing obligation does not disappear after registration. The non-profit statute requires registered circumstances and documents to be filed within one month from the change. That means changes to the seat, representation, governing bodies, purposes, branches, termination or other registered facts must be handled as formal register updates, not as informal internal resolutions kept in a drawer. Ministry of Justice, ЗЮЛНЦ
For public-benefit entities, the annual activity report under Article 40 describes significant activities, spending and results, property received without consideration, fundraising, donations and financial performance. Both that report and the financial statements are submitted for publication by 30 September of the following year. Keep grant agreements, donor restrictions, expenditure evidence and minutes during the year, then schedule approval before the filing date. Accounting, tax, statistical and employer obligations remain separate tasks; the published annual activity report does not discharge them.
If the organisation later winds up, the residual assets are not free for private allocation. Public-benefit entities cannot be transformed into private-benefit non-profit entities, and the remaining property must be distributed under the statutory anti-private-benefit rules. It may not go to founders, current or former members, governing persons, staff, liquidators and close relatives in the prohibited cases. That rule affects how founders should think about asset planning from the very beginning, especially if the organisation will hold grants, donations or valuable property. Ministry of Justice, ЗЮЛНЦ
After registration, organise the bank mandate, accounting responsibilities, donation documentation and control records. Non-profit status does not remove beneficial-owner duties: Article 63(7) of the Anti-Money Laundering Measures Act addresses entities in the non-profit register. Examine the individuals who exercise ultimate control through the governing documents and appointment rights; do not invent ownership percentages where the organisation has no shares. ARG connects the registration record with those operational documents, subsequent changes and the organisation’s eventual succession or closure.
Compare the related procedures in this category, including their requirements and the stage at which you need them.
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