The Hungarian Company Act sets the frame for all commercial activities, the process of setting up a company all the aspects related to the operations of the entity on Hungarian ground. In Hungary, the most preferred legal forms to set up a company are the limited liability company (KFT) and the company limited by shares (NYRT or ZRT).
Regardless of the type of company, there are rules applicable to all types of business associations. First, a new company must prepare the Articles of Association signed by all members and notarized.
The Deed of Foundation must contain the name of the company and the registered office and address, the activity object, the registered capital and the method of contributions (cash or in-kind). It should also include the authorities for signing on behalf of the company, the name and address of the supervisory board members and the auditor.
The joint stock company in Hungary requires a minimum capital of HUF 5 million if it is private, and HUF 20 million if it is public. The limited liability company needs a minimum of HUF 500 thousand. The members of the companies have limited liability and these types of businesses are legal entities. In case of limited and unlimited partnerships, other forms of Hungarian businesses, there is no minimum capital required, they are non-legal entities and the members have unlimited liability. The companies founded by a single member must have the minimum capital paid up prior to the application for the Court of Registration.
The management of the company is operated by a director or a board of directors. In case of a joint stock company, there must be a supervisory board made of non-executive directors. The supervisory board can elect and remove executive directors and fulfill other duties in the Articles of Association assigns so.
In case of equity less than the minimum capital required for the specific type of business for two years in a raw, the entrepreneurial association shall register as a different form of business. There is the option that the members of the company provide the necessary equity within three months after approval of the annual report for the second year. The new entity would be a type that meets the minimum registered capital or the company act doesn’t state one.
In not more than 30 day from the countersignature of the Deed of Foundation the company must apply for registration at the Company Registrar.
For more details on this matter or personalized consultancy for your business please feel free to contact our company formation specialists in Hungary. If you need to open a company in other countries, such as Iran, our company formation specialists can help you get in touch with a local agent.