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HOW TO PROVIDE THE CAPITAL CONTRIBUTION IN A HUNGARIAN LLC?
11 May 2023
The „start-up capital” of the limited liability company (LLC) is the initial capital which is the totality of the capital contributions provided by the shareholders. In this article we will examine the rules on the capital contribution.
1. Capital contribution in a LLC
The capital contribution is the members’ financial contribution and the total amount of capital contributions is the initial capital, which may not be less than HUF 3 000 000 (~ EUR 8.000).
The amount of the members’ capital contributions may be different, but the amount of individual capital contributions may not be less than HUF 100 000. A member may only have one capital contribution, but two or more owners may have one capital contribution based on the rules of joint ownership.
The capital contribution of the members may be provided in the form of
- in cash contribution, or as
- in-kind contribution.
There is no requirement regarding the rate of the cash contribution, a company may be formed with 100% in-kind contribution.
2. In-kind contribution
In kind contribution may be a thing of any kind that presents value
- tangible assets (real estate, car, hardware. etc.)
- intellectual property rights (trademark, software etc.)
- business share in other company
- any other right having pecuniary value, including receivables (the claim shall be recognized by the debtor or based on a binding court decision.
Valuation: there is no mandatory valuation by law, however the articles of associations may provide the official valuation of in-kind contribution by forensic expert (real estate, etc.).
Liability: the shareholder is responsible for the value of the in-kind contribution towards the company within 5 years. The other shareholders who knew or should have known the misvaluation shall bear joint and several liability.
3. Capital contribution - timing
The timing of providing the capital contributions is very flexible and only the below restrictions apply:
|
Cash contribution |
In-kind contribution |
|
Long deadline (2 years and 3 months), but until the full cash contribution is paid:
|
If the amount of the in-kind contribution exceeds the half of the initial capital of the company, then the whole in-kind contribution shall be provided by the shareholder at company formation In other cases, the deadline for the provision cannot be longer than 3 years (stipulated in the articles of association) |
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