FAQ – Establishing a company in Hungary
Companies in Hungary are legal persons, i.e. they have legal capacity, the shall be entitled to have rights and obligations. Their legal capacity covers all rights and obligations that do not inherently pertain solely to individual human beings (e.g.: religious beliefs), consequently the provision ont he protection of personality rights shall also apply to the inherent rights of legal persons as well. Legal persons may be established only in a form defined by law. A business association may operate in the form of a general partnership (kkt.), limited partnership (bt.), private limited-liability company (kft.) or limited company(rt.). The corporate name of a business association shall contain the designation of the corporate form or the abbreviation. Their activity can not be prohibited by law. One of the most significant things regarding to the legal persons is the liability. In principle, legal persons shall be liable for their own debts with their own assets, members and founders of the legal person shall not be held liable for the legal person’s debts, however, there are some exceptions though. We recommend to establish a private limited liability company (kft.).
- Founding a company
Legal person shall have its own name and seat, shall have assets separate from its members and founder, and shall have a management and representative body. Their names are various according to the various types of companies.
Legal persons can be established by an instrument of construction (mostly by a contract between the founding parties). Organizational structure and operational arrangements are in this document regulated as well. The instrument of construction has to be signed by the founders. There are two ways, how a signature of a foreign client can be approved in Hungary.
- The first option is travelling to Hungary and to sign the founding documents in front of one of our attorneys who countersigns the documents.
- An alternative of this is to sign the documents in the origin country. In this case an Apostille certification of a notary or of the Hungarian consulate is required.
- Duration of the procedure
After the necessary document have been signed, the court of registry must be noticed by the attorney, because legal persons shall enter into existence upon registration by the court based on the instrument of constitution made out for the type of legal person in question. Applications for registration (amendment notification) shall be submitted by the company’s representative through a legal representative. Companies shall satisfy all obligations of notification to the court of registry by way of electronic means. The court of registry registers the company in 30 days after the required documents are delivered, de facto the registration occurs quicker, generally it takes between 8 and 20 days.
- Practical obligations after the company has been founded
After the company registration ensued, the managing director or the owners must open a bank account. Apart from this, the company is obligated to register its employees at the tax authority and at the public health authority. It is recommended for newly founded companies to assign an accountant for these administrative steps, who can fulfil these administrative obligations towards the tax authority and the public health authority.
- Organizational structure of legal persons
- Supreme body: The principal duty of the supreme body of a business association is to adopt decisions on fundamental business and personnel issues. The responsibilities of the supreme body shall include the approval of the annual account, („financial report”), and decisions on the distribution of profits
- Management of legal persons – executive officer: Decisions that are related to the governance of a legal person and are beyond the competence of the members or founders, shall be adopted by one or more executive officers. The maximum number of the executive officers is not limited, the only requirement is, that it must be a private person, either Hungarian, or foreign.
- Representation of the company, power of representation
Companies are represented by their executive officers and other duly authorized employees in writing. Executive officers can manage the company independently/autonomy or in a contribution with another person. In this case the entitled persons can only act, if the other person the decision approves.
- Delivery agent
A delivery agent must be named if the managing director or one of the owners of the company a non-Hungarian private person or legal entity who do not command an address in Hungary. Attorney can be also assigned as delivery agents.
- Minimum captial
It depends on the type of the company (Kft. 3.000.000,- HUF). The amount shall not deem as an escrow or deposit, it can be used for paying bills, employees, buying equipment, etc.
- Registered seat
Every company shall have a registered seat in Hungary. The registered office of a company functions as the company’s headquarters. The registered office also functions as the company’s mailing address, where all business and official documents are received, filed, safeguarded and archived, and where the obligations set out in specific other legislation for corporate headquarters are satisfied. Corporate headquarters are to be marked by a company sign. If you need, we can recommend a professional registered seat provider in Budapest.
EU Tax Number: Will be granted when we incorporate the company.
Dobos István attorney at law (ügyvéd; Budapest)/ Kőhidi Ákos attorney at law (ügyvéd; Győr) / Szandra Reim