The Hungarian company law is largely adapted to Western European law, mainly adapted to the German legal system. There is a difference between the two legal orders, mainly because of the tax assessment of the economic companies. In Hungary, all companies, legal entities and partnerships, are subject to corporation tax (see chapter Taxation).
1. Types of Business Associations
Other Forms of Enterprise
Hungarian branch office of a foreign enterprise
The organisational unit of a foreign enterprise that pursues its activities independently but does not have legal personality. It is registered in the Hungarian registry of companies as a separate type of business association as the Hungarian branch office of a foreign enterprise.
The foreign enterprise is entitled to pursue business activities in Hungary through its branch office; in relation to the activities of the branch office, the branch office proceeds before the authorities and in legal relationships with third persons.
European Company
According to the regulation of the European Council and the relevant Hungarian law, a European Company may be established by a founder whose registered seat is in Hungary.
2. Process of Founding Business Associations
Business associations may be founded by non-resident and resident natural persons, legal persons and business associations without legal personality for the purpose of jointly engaging in business operations, and such persons may join these business associations as a member, or acquire participation (shares) therein.
With the exception of private limited liability companies and public limited companies, at least two members are required for the foundation of a business association.
Companies may be established to engage in joint business operations for objectives other than for making a profit (non-profit companies). This is governed by a separate Act, rather than by the Civil Code.
A business association may be established subject to the conclusion of a articles of association, which is to be signed by all members (founders). The articles of association is to be drawn up in an authentic instrument prepared by a notary public, or in a private document countersigned by a lawyer.
Several other instruments must be signed and countersigned by a lawyer (e.g. declaration of acceptance of the managing director, declaration of the managing director on not being subject to a ban etc.).
The mandatory instruments specified by law must be submitted in 30 days to the court of registration, which decides on the registration within 15 days of the submission.
There is also a simplified procedure for founding a business association, which requires the template specified in the Annex attached to the law to be used as memorandum of association. In such cases registration of the business association is generally performed in one day.