Dear Partner,

We would like to take the opportunity and draw your attention to the proximity of the deadlines set for the capital top-up of Hungarian limited liability companies (korlátolt felelősségű társaság in Hungarian).

On 15 March 2014 a new Civil Code, Act V of 2013 (Civil Code) entered into force, that brought several new changes to the regulation of business associations.

Under Act CLXXVII of 2013 on the transitional and authorizing provisions related to the entry into force of the New Civil Code (Transition Act) companies registered and being under registration in the company register are to decide on their further operation in accordance with the Civil Code simultaneously with the first amendment of their deed of foundation following the effective date of the Civil Code, and to submit the resolution of the supreme body to the Court of Registration.

The deadline set by the Transition Act was 15 March 2015 in case of general partnerships (közkereseti társaság in Hungarian) and limited partnerships (betéti társaság in Hungarian), and 15 March 2016 for limited liability companies (korlátolt felelősségű társaság in Hungarian) and companies limited by shares (részvénytársaság in Hungarian).

The above deadline was changed by Act I of 2016 with the effective date of 10 March 2016 as follows.

Possibly the provision of the new Civil Code having the biggest impact is that it sets the minimum capital of limited liability companies in HUF 3,000,000 instead of HUF 500,000. Limited liability companies, the registered capital of which does not reach three million forints, shall decide on the increase of their registered capital or to transform into a business association they can meet the statutory criteria of until 15 March 2017 instead of 15 March 2016 at latest, and at the same time they shall decide on their further operation in compliance with the provisions of the Civil Code. Until the adoption of the relevant resolution the company shall operate under the provisions of Act IV of 2006 on Business Associations.

For those companies which have met the requirement of the capital minimum, the deadline remained unchanged, therefore they had to / still have to decide on their further operation in compliance with the provisions of the Civil Code until the 15 March 2016, and from that date their deed of foundation may not contain any provision not complying with the provisions of the Civil Code.

The request for registration of changes may be submitted to the Court of Registry without payment of stamp duty and publication fee, provided that the deed of foundation attached only includes amendments that serve the adjustment to the new Civil Code, and application of rules of the new Civil Code that allow deviation. This discount may not be utilized if other changes are also made in the company data.

Should you have any questions in connection with the statutory amendment obligation, or should your company not meet the requirements set out in statutory provisions, please do not hesitate to contact us – we will be happy to be at your service in reaching compliance and other legal services as required.

 

András Moldován
Senior partner
Moldován & Co Attorneys at Law
H1051 Budapest
Dorottya utca 1.
Gerbeaud House