In Hungary, the types of business associations and other entities used for business operations are regulated in statutes and one may only choose from the regulated entities when considering investment in Hungary.
The following company forms are the most common in the business sector:
The members of the general partnership and the general partners of the limited partnership have unlimited liability for the obligations of the company. The shareholders of limited liability companies and companies limited by shares may not be held liable for the obligations of the company.
Foreign companies may also establish a Hungarian branch office or a commercial representative office. Neither of these entities possess separate legal personality but they are considered units of the foreign company (“Head Office”). The branch office may perform the same business activities as companies registered in Hungary, while the representative office is limited in its operations. The representative office may only be engaged, in the name and on behalf of the Head Office, in the mediation, preparation and conclusion of contracts, provision of information to clients and partners and other related client service activities.
The most common company form for investment in Hungary is the limited liability company, however, a private company limited by shares may be established in case the issue of shares by the company is necessary for any reasons. Establishing a branch office is also a favoured option for smaller operations or when the business presence in Hungary is necessary for a limited time only.
|Limited liability company (Kft.)||Private company limited by shares (Zrt.)||Hungarian Branch Office|
|Minimum share capital||HUF 3,000,000||HUF 5,000,000||No minimum exists but the funds for the operation of the Branch Office shall be provided by the Head Office|
|Form of capital contribution||cash and/or in-kind||only cash or cash and in-kind||cash|
|Can it be established by a sole shareholder?||Yes||Yes||Yes|
The company is represented by one or more executives (either natural or legal persons) who may have individual or joint representation rights. A supervisory board may, or in some case shall be established at the company, tasked with reviewing and approving the decisions of the management. The companies may, or in some cases are obliged, to appoint an auditor for the annual review and audit of their financial statements.The above is a non-exhaustive description of the relevant Hungarian legal provisions. The above summary should not be considered as legal advice and should not be relied upon when making business decisions. Before resolving on investment in Hungary, we recommend that you contact our law firm for detailed, tailor-made legal advice.