Blog » HOW TO FORM A LIMITED LIABILITY COMPANY IN HUNGARY?
HOW TO FORM A LIMITED LIABILITY COMPANY IN HUNGARY?
25 April 2023
In this article we summarise the key points of forming a limited liability company (LLC) in Hungary. We present the steps and costs of the formation procedure. If the necessary documents are available, the company formation will not take more than a few days.
1. Choosing company name, company name reservation
When planning to establish a company in Hungary, the corporate name is always a crucial question. Company names have to differ from each other to avoid confusion.
Company name reservation is optional, but strongly recommended in the company formation procedure. The reserved company name is valid for 60 days. No other application for registration with the same name shall be admissible during the sixty-day period.
2. Formation, capital contribution
LLC may be founded by a single-member or by more members as shareholders. Save the exceptions set forth in the Civil Code, members shall not be liable for the debts of the company.
LLC are founded with a capital contribution of at least HUF 3.000.000 (~EUR 8.000). The capital contribution of the members may be provided in the form of in cash contribution or as in-kind contribution.
According to the new Civil Code, members do not have to provide all of their cash contribution at company formation, but in that case
- the LLC cannot pay any dividend to members, and
- the members will be liable for the company’s debts up to the unpaid part of their cash contribution,
until the full cash contribution is paid.
An in-kind contribution can be a thing of any kind with pecuniary value, rights pertaining to intellectual properties or any other right having pecuniary value, including any claim recognized by the debtor or based on a binding court decision. If the amount of the in-kind contribution exceeds the half of the capital contribution, then the whole in-kind contribution shall be provided by the member at company formation.
3. Company formation procedure
After the founders signed the articles of association and the other company documents, the documents shall be countersigned by an attorney, who represents the Company in the registration procedure. Foreign documents (e.g. company extract of the founder) shall be translated to Hungarian by a sworn translator.
When all documents are signed, the attorney files the application through electronic channels to the court of registration. When the court receives the application, it sends a return receipt with the tax number of the company, so the Company can start the operation as a pre-company (sign contracts).
4. Opening bank account
After the successful registration, the company must open a bank account in 8 days after the company registration. Each bank has different rules but usually they require the personal attendance of the managing director.
CAN YOU BE A CONTROLLER EVEN IF YOU DON’T PROCESS PERSONAL DATA?
I often hear from clients when we are discussing their role in relation to personal data processing that “we cannot be controllers, we do not hold and process the data, but an agent does”. This idea may seem logical at first sight, but is this indeed the case? Let’s find out from a recent judgement of the Court of Justice of the European Union, which addresses the issues of controller and joint controller status.Read more »
MEDICAL UNFITNESS – WHO SHALL TERMINATE THE EMPLOYMENT IN HUNGARY?
It is a common labour law problem in Hungary that in case the employee, due to medical reasons, becomes permanently unfit for the job he previously fulfilled, the employer does not amend or terminate the employment (the latter of which would entail an obligation to pay severance pay), but keeps the employee on “idle time” without giving him tasks and salary. In our article, we examine this issue in light of the recent decision of the Hungarian Supreme Court.Read more »
STATUTORY OPT-IN MEMBERSHIP IN THE HUNGARIAN CHAMBER OF AGRICULTURE FROM JANUARY 2024
In early January 2024, many managing directors in Hungary of companies with any agriculture-related activity could be surprised to receive a letter of the Hungarian Chamber of Agriculture stating that the company has become a member of the Chamber by law from 1st January. What does this chamber do, and what are the main consequences of the membership? Why it is worth to consider an opt-out from the Chamber? In this article, we address these issues.Read more »