Company Registration in Hungary - Business Starting & Setup

Hungary is a civil law jurisdiction. The main sources of law are the Constitution, the acts of Parliament, and the governmental, ministerial and municipal decrees. Since Hungary’s accession to the European Union on 1 May 2004, European laws also form part of the Hungarian legal system.

The principal forms of business organization in Hungary are:

• sole trader
• unlimited partnership (Kkt.)
• limited partnership (Bt.)
• limited liability company (Kft.)
• company limited by shares (Rt.)
• association (egyesülés)

The most common structure is the limited liability company.

There is a range of requirements to the company name in Hungary:

• a company name shall not be identical or similar to the name of an existing company;
• it must comprise the abbreviation “KFT” (Korlatolt Felelossegu Tarsasag) to reflect its legal form;
• it must be in Roman letters;
• it should not contain the following words: ‘Hungarian’, ‘Budapest’ ‘national’, ‘state’, etc;
• it must reflect at its end if the company is: 1) still under registration – indication ‘bejegyzés alatt’ or ‘b.a.; 2) in liquidation – indication ‘felszámolás alatt’ or ‘f.a.’; 3) in process of voluntary dissolution – indication ‘végelszámolás alatt’ or ‘v.a.’.

The following steps are required to incorporate a Limited liability company in Hungary:

1. <b>Hire a lawyer who will represent the company; create the company deed and prepare any other necessary legal document – 1 day </b>: The company must be represented by a lawyer during the registration process.
2. Apply for registration at the Registration Court (simplified electronic registration) – 2 days: With the effect of 1st March 2012 a tax registration process has been introduced. The Tax Authority examines if the request for company’s registration was submitted to the Court of Registration and whether or not one of the statutory obstacles of the issue of a tax number exists. The Tax Authority refuse to issue a tax number if a hindrance (e.g. tax debt exceeding HUF 15 million) exists regarding a managing director; an owner entitled to represent the company; an owner/shareholder of a limited liability company, etc. The Tax Authority also examines these circumstances and hindrances in case there is any change in the above enlisted persons. The Registry Court receives the application for registration, and after a certificate is issued with the company’s name, address, temporary tax and statistical number and the number of reference of the registration. If the National Customs and Tax Authority consider that the founder or the managing director falls under suspicion according to the above detailed statutory obstacles, Tax Authority does not duly send the tax number of the company to the Registry Court within one working day and the registration process will be suspended for the period of the pending investigation. Companies can be incorporated in 2 ways: 1) By simplified electronic filing - the registration fee: HUF 50,000 and HUF 5,000 for publication fee; incorporation: 2 business days (up to 8 business days). In the simplified electronic filing, the companies must use a standardized template for the articles of association. The companies have to fill in the application form and file certain corporate documents specified by the provisions of law. The simplified electronic registration shall take 1 working hour after the receipt of the tax number from the Tax Authority. If the court does not decide within the 1 hour, the chairman of the registration court must make a decision within 1 business day. 2) By standard electronic filing - the registration fee: HUF 100,000 + publication fee: HUF 5,000; incorporation: 15 business days. If the court does not decide within the aforementioned periods, the chairman of the registration court must take measures to reach a decision within 3 business days regarding the incorporation or the refusal of such application. The company may choose to meet publication requirements by publishing the required information on its website instead of the Company Gazette (Cégközlöny). In the latter case, no publication fees are payable. Simultaneously with the submission of the registration application, the court registers companies with the State Tax Authority (for VAT and income tax purposes) and with the Statistical Office through an online system.
3. Register for social security – 1 day: The company needs to register with the Hungarian Social Security office.

The formation of a new company in Hungary takes from 2 to 15 days.

As a rule, a Hungarian Limited Liability Company must have a registered office in Hungary. Register of shares, minutes of meetings and accounts should be kept at the registered office.

There are no statutory requirements for a company in Hungary to have a seal.

The redomiciliation of companies to or from Hungary is permitted.

A Hungarian limited liability company should at least have one director. Directors can be either natural persons or corporate bodies. There are no requirements to the nationality of directors.

Directors’ meetings should be held at least once a year to approve the annual report of the company.

The names of directors appear in public records.

Hungarian limited liability companies are not required to appoint a company secretary.

Each Hungarian company must have at least one shareholder. There is no restriction on the nationality or residency of the shareholders. The shareholders can be individuals and/or legal persons.

Shareholders’ meetings must be held at least once a year, there are no requirements as to place of holding of the meeting.

The names of shareholders appear on public records.

The law introducing the Beneficiary Registry came into force in Hungary in June 2017. The deadline for its entry into force was set as January 1, 2019. However, 20 months later, the registry has still not appeared, and no separate website has been created for it. The Hungarian government claims that there is currently no definite date for the entry into force of the register of beneficiaries and it is impossible to predict that date at this time.

However, there is a list of necessary information about the beneficiary that must be included in the registry in the future: Full name, date and place of birth, citizenship, postal address, the basis for recognizing the person as the beneficiary, indicating his share in the company, the affiliation of the beneficiary to politically exposed persons.

It is worth noting that access to information from the register of beneficiaries on a par with the tax authorities will also have anti-terrorist organizations and state security services.

Minimal amount of the authorized share capital of a Hungarian limited company is HUF 3,000,000. Within the incorporation procedure each member must deposit his contribution – 50% of monetary assets. The other 50% of monetary assets must be paid within 1 year from the date of incorporation of the company. If there is only one founder in the company, min. HUF 100,000 must be paid within the incorporation procedure.

Shares are not issued. Share of each member is recorded in the deed of foundation or articles of association. Standard par value of shares is 10000 HUF.

Third parties can request the following information on Hungarian companies:

• corporate registration number,
• registered seat,
• address ofbranch (if any),
• date of registration,
• principal business activities,
• amount of subscribed capital,
• details of auditor (if any),
• statistical and tax numbers,
• name and address of Bank in Hungary and account number,
• members, managers and executive officers data (physical person - name, address and mother's maiden name; legal entity - company’s name, company’ registered seat, company’s registration number, name and location of Court of Registration, etc.)

All documents filed to the Registrar including deed of foundation or articles of association are available to public inspection.