16 May 2023

From 1st July 2023, a new law on the registry of legal persons, including companies and civil law organisations (“Registration Act”) will enter into force in Hungary. What are the key features of the new law? Will it be possible to register a company within 1 hour in Hungary from July 2023? This article highlights the major changes that the Registration Act will introduce.

1. Unified register of legal persons

Currently the different kinds of legal persons are registered in more registers in Hungary. For example the company register is maintained by the company courts, the register of civil organisations is run by the civil court, while certain type of entities are not registered in a public register at all.

The new unified register of legal persons will include 1) companies, 2) civil and other organisations, moreover, 3) condominiums.

2. New approach - automated registrations

The new Registration Act allows automated registrations without human intervention in most cases (e.g., LLC formation or company modification procedures), which will simplify court work and reduce the case load.

In these cases, if the company’s request has no formal defects that can be detected by the automatic machine, the registration will be made within one hour.

Consequently, the control function of the courts will be focused rather on the ex-post control and judicial review procedures.

In the context of above automated registrations, only the most important documents shall be submitted to the court, i.e., in the future, in registration procedures, there will (again) be documents that are not directly examined by the court but kept by the legal representative.

We note that according to the Registration Act, if an annex is attached to the request in a foreign language, at least a simple Hungarian translation shall be attached to the request, unless otherwise provided by law.

3. Deadlines in the registration procedures

Regarding the deadlines, the new Registration Act maintains the 30-day rule for the submission of the request for company registration.

However, the 30-day deadline for submitting the request for company modification is reduced to 15 days, except for public limited liability companies and religious communities with legal personality covered by the new Act.

4. Business premises / branch

Furthermore, the current Company Procedure Act distinguishes between a company's establishment in the same area as its registered office (Business premises) and an establishment a different area from its registered office but located in Hungary. (Branch)

Under the new Registration Act, a company’s establishments in Hungary will be classified uniformly as "Business premises", regardless of whether they are in the same or different municipalities as its registered seat. According to the new Act, Branch will be considered only a foreign establishment of a Hungarian company.

5. Special power of attorney

To avoid fraudulent conduct, in case of a request submitted for a change of member or for the registration or deletion of a right in respect of a shareholder's share based on a contractual agreement (e.g.: share purchase agreement), the new Registration Act will require that all parties concerned shall give the power of attorney to the acting legal representative.

6. Contractual rights registered on the shares

In case of general partnerships, limited partnerships and limited liability companies, the new Registration Act allows the registration of certain contractual rights (right of purchase, right of repurchase, option right, etc.) attached to shares in the register.

7. Service Agent

An important difference compared to the current provisions of Company Procedure Act is that according to the Registration Act, the service agent shall have an electronic contact in accordance with the provisions of the E-Administration Act.

A further difference is that the new Registration Act sets the presumption of knowledge of the foreign person at the fifth working day after service to the agent, instead of the current 15 days.

8. Activities subject to authorisation or notification

The new Registration Act maintains the possibility for a legal person to indicate among its activities an activity subject to authorisation or notification for which it has not yet obtained the authorisation or not made notification.

However, if the legal person fails to obtain the authorisation or make the notification within six months of the registration of the activity, the court shall delete the registered activity for which the legal person has not obtained authorisation or not made the notification.

9. Further regulations

Finally, we draw attention to the fact that many questions, which are now covered by the current Company Procedure Act (e.g.: procedures regarding the termination of the legal persons, the documents to be attached to the request etc.) will be not regulated by the Registration Act, but specific Acts or Decrees.


This article was originally published on CEE Legal Matters on 20/03/2023