Corporate Law at Hungary
Corporate law in Hungary governs the formation, operation, and dissolution of business entities. It's largely shaped by EU regulations, Hungarian national laws, and international treaties. Here's a concise overview of the key elements:
🔷 1. Legal Framework
Hungarian corporate law is primarily regulated by:
Act V of 2013 on the Civil Code – Governs business associations and contracts.
Act V of 2006 on Public Company Information, Company Registration, and Winding-up Proceedings – Regulates company registration.
Act CXX of 2001 on the Capital Market – Relevant for public companies.
EU corporate directives and regulations – As Hungary is an EU member state.
🔷 2. Types of Business Entities
| Entity Type | Hungarian Term | Key Features |
|---|---|---|
| Sole Proprietor | Egyéni vállalkozó | Simple, full personal liability |
| General Partnership | Kkt. | Partners jointly liable |
| Limited Partnership | Bt. | At least one general (liable) and one limited partner |
| Limited Liability Company | Kft. | Most common, limited liability, minimum capital: HUF 3 million |
| Private Company Limited by Shares | Zrt. | Share-based, not listed |
| Public Company Limited by Shares | Nyrt. | Listed on the stock exchange |
🔷 3. Company Formation
Registration with the Hungarian Court of Registration is mandatory.
Formation must include:
Articles of Association
Proof of capital deposit
Founders’ details
Legal address
Timeline: Often completed within 1-2 weeks if documents are in order.
🔷 4. Corporate Governance
Kft.: Managed by a managing director or board. No supervisory board required unless specific conditions apply.
Zrt./Nyrt.: Must have a board of directors and supervisory board.
Shareholder meetings are mandatory for key decisions.
🔷 5. Accounting and Taxation
Corporations must prepare annual financial statements.
Audit is mandatory for larger entities.
Corporate tax rate: 9%, one of the lowest in the EU.
Additional taxes may apply (e.g., local business tax, sector-specific levies).
🔷 6. Compliance and Reporting
Companies must maintain up-to-date records with the Court of Registration.
Changes in ownership, capital, or structure must be reported.
Non-compliance can lead to fines or dissolution.
🔷 7. Winding-Up and Insolvency
Voluntary and court-ordered liquidation possible.
Creditors’ rights are protected under the Act XLIX of 1991 on Bankruptcy and Liquidation Proceedings.
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