Voluntary liquidation is a procedure when the shareholders decide to dissolve the company for any reason. Under the laws of Hungary, the following two options are available to dissolve a company voluntarily, provided that the assets of the company exceed its debts and it is able to meet its liabilities
A company may opt for a simplified voluntary liquidation, if
In case of a simplified voluntary liquidation procedure, one of the managing directors of the company shall be appointed to act as the liquidator of the company, and it is not possible to appoint any another person for such position. Once the decision of the shareholders on starting the liquidation is passed, the procedure is commenced by reporting the decision to the Tax Authority. The Tax Authority automatically informs the Court of Registration on the same and a notice is published for creditors. If no creditors’ claims are received within a 40-day time limit, the shareholders may resolve on the dissolution of the company and submit such decision along with the additional ancillary documents both to the Tax Authority and the Court of Registration. The procedure is free of any court fees.
The procedure shall be completed within 150 days. Failure to meet such time limit, the simplified voluntary liquidation turns into an ordinary voluntary liquidation.
Due to the high volume of the assets, debts and liabilities of the company or failure to meet the requirements of the simplified voluntary liquidation set forth above, there is an opt for an ordinary voluntary liquidation.
In case of an ordinary voluntary liquidation procedure, a liquidator shall be appointed, who will replace the managing director during the liquidation. The liquidator can be the same person as the managing director was or a third person may be appointed instead. Once the decision of the shareholders on starting the liquidation is passed, the procedure is commenced by submitting the resolution to the Court of Registration and a notice is published for creditors. Separate filings are needed with the Tax Authority. If no creditors’ claims are received within 40-day time limit, the shareholders may resolve on the dissolution of the company and submit such decision along with the additional ancillary documents to the Court of Registration.
This procedure shall be completed within 3 years from the commencement of the voluntary liquidation, but generally can be finished within 1 year. Failing to complete the procedure within 3 years, the ordinary voluntary liquidation turns into a compulsory strike-off.
Both procedures require two full sets of financial statements, one at the beginning and one at the end of the process. It is also worth noting that contrary to an ordinary voluntary liquidation procedure, the attorney’s role representing the company is somewhat decreased while the tasks of the accountant of the company are increased in the course of a simplified voluntary liquidation. Consequently, significant accounting fees are to be expected in case of either of the options.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.