The Company Act of July 2006 determines six different corporate forms that may serve for investors as a basis to carry out business activity in Hungary. All of these forms can exclusively be established and operated by foreign owners and management: Unlimited Partnership (Kkt.), Limited Partnership (Bt.), Limited Liability Company (Kft.), Company Limited by Shares (Rt.) which may be privately founded (Zrt.) or publicly founded (Nyrt.), Association (egyesülés).
The Limited Liability Company is very popular with small or medium sized businesses in Europe. The Hungarian Kft. form is very close to the German and Austrian GmbH (Gesellschaft mit beschränkter Haftung) and similar to the British Ltd (private company limited by shares). With this type of company, it is possible to establish a single-member Kft. The Kft is the most common company form for wholly owned subsidiaries.
Companies registered under Hungarian law may undertake obligations and acquire rights in their own name (i.e. they have the right to acquire property, may conclude contracts, file lawsuits or be subject to actions brought against them). Even a single person can found a joint-stock company (JSC, or Rt. in Hungarian) or a limited liability company (LLC, or Kft. in Hungarian).
A Company name must necessarily end in “Kft.” or Korlátolt Felelősségű Társaság and must be approved by the Court of Registry.
MEMORANDUM & ARTICLES OF ASSOCIATION
To register a Company, Articles of Association must be prepared by a licensed law practitioner and signed by all members (or their authorized representatives holding a power of attorney). An attorney or notary public must countersign this document. The Articles of Association specifies the activities in which the Company may engage, the name and registered address of the company, contribution of the founders and other matters required by the Companies Act for the different forms of business associations.
Shareholders may be of any nationality and may reside anywhere. Only one shareholder is required. This can be the same person as the director. There is no limit to the number of shareholders. The shareholder can be a natural person or a body corporate.
The capital of the company is comprised of the capital contributions of the individual members, which can be funded in cash and in kind. The amount of initial capital may not be less than HUF 3.000.000. At least 50% of the subscription amount must be deposited in a bank account and a certificate of deposit is issued in order to be used in the incorporation process. Each shareholder has an identified percentage share of the total capital and a single share may be owned by more than one person. For Kft.s, a share cannot be less than HUF 100,000.
DIRECTORS AND SECRETARY
A director can be either a physical person or a corporate body. The name of physical person who represents a corporate director will be disclosed to public records. There are no restrictions regarding nationality, meaning that foreign investors can become company directors. Directors are elected by the Members’ Meeting (General Assembly) for a limited or unlimited term. Officers may be re-elected or recalled at any time by the General Assembly. Legal entities cannot be appointed as directors.
There is no law requirements to appoint a local secretary.
Every Company must have a registered office and address in Hungary which should be notified at the Court of Registry.
The supreme body of a company is the members’ meeting. Members’ meetings shall be convened at least once every year. The members’ meeting has quorum if at least half of the initial capital or the majority of the eligible votes are represented. The articles of association may stipulate a higher rate of participation.
Normally from 2 to 3 working days
RECURRING MAINTENANCE FEES AS FROM 2ND YEAR
- Chamber of Commerce annual registration fee
- Registered office and mail forwarding fee per annum
- Minimum Accounting fee