Basic information about how to set up a company

Types of company

In Hungary, the structure of a newly established company has to follow the forms prescribed by the law, in Article 3:89 of the Hungarian Civil Code. No company can be set up in a way different from that determined by the law. Recognized business types:

• Limited partnership
• General partnership
• Limited liability company - the most popular type
• Company limited by shares, with two subtypes:
  • Private company limited by shares
  • Public company limited by shares

Each business can be set up with different contribution of assets. The member shall receive a share in proportion to the amount of his or her contribution, and as a rule, also according to that shall he or she have the right to vote and receive a part of the dividend. The founders may agree otherwise in the articles of association, but it is forbidden to completely withdraw the voting right of any member or deprive someone of their right to dividends.

Capital requirement of businesses

The amount of assets required by a company when it is established depends on the type of that specific business. The denomination of the capital made available to the company also depends on the type of the business. However, in this document we will refer to it everywhere as capital.
Capital can be provided in a monetary form (this is the most typical) and/or as a contribution, that is with the transfer of some kind of asset to the company. Only a limited liability company can be established exclusively with asset contribution, but in this case, special rules apply to the evaluation of assets and to responsibility.

Capital requirements:

Relative anonymity

The Hungarian company register is only accessible after identification and its data are only limitedly accessible to those who are interested. Most company information is only available for a fee and in the official register there is no option for searching by business owners.

The following information is available free of charge and after identification in the company register: company name, registered office, company registration number, if applies its European Unique Identifier (EUID), main activity, data of the persons authorized to represent the company (executives), furthermore information whether the company is under winding-up, liquidation or forced cancellation. Other information, such as the owners’ data are only be available for a charge or not available at all.

The owners’ liability

As a general rule, the members/shareholders of Limited Liability Companies or of Companies limited by shares are only liable for the company's activities and losses to the extent of their own contribution of assets. In case of a Limited partnership, the liability of the general partner is unlimited, while that of the limited partner is limited, also to the extent of their financial contribution. In case of a General partnership, the liability of the partners is unlimited.

An important additional information is that in case of wilfully causing damage, the partner with limited liability will be liable to the extent of their full assets. In addition, if it is authorised by the articles of association for the general assembly to oblige the members to make additional contributions for the covering of losses, the maximum amount of the member’s payment obligation and the frequency with which the additional payment may be called upon shall be specified. This may increase the liability of the members.

More information about company establishment

• A company governed by Hungarian law may only be established with a registered office in Hungary.
• Branch offices may be located abroad.
• The owners and the executive must have a Hungarian address or authorize a delivery agent with a Hungarian address.

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