The Share Capital in Hungary
The Share Capital in HungaryUpdated on Thursday 27th August 2015
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Types of companies in Hungary
Hungary has numerous types of companies which can be incorporated by local and foreign investors. The share capital in Hungary is different for each company type and investors need to observe the requirements concerning this initial amount.
According to the Hungarian Commercial Code, the following types of companies require a minimum share capital:
- the limited liability companies;
- companies limited by shares: private or public.
Partnerships in Hungary do not require a minimum share capital.
Share capital requirements in Hungary
The limited liability company (Kft) requires the smallest minimum share capital: 3 million HUF (nearly 10,000 EUR). This amount was increased in 2014 through a change in the Hungarian corporate law of the new Civil Code, after being previously set at only 500,000 HUF. The liability of the company’s shareholders is limited to the share capital invested in the company and, if any mentions are made in the company’s Articles of Association, the shareholders may be held accountable for other contributions also. A shareholder’s rights are represented by quotas in the company. The share capital of a private limited liability company in Hungary can be paid in cash or kind. One of the advantages of registering a company in Hungary is that the share capital needs not be deposited in a bank account and can be spent right after the incorporation. The limited liability company is very popular for small and medium sized businesses.
The share capital for a private company limited by shares (Zrt.) is 5 million HUF (almost 16,000 EUR). The share contribution for a private company in Hungary can be made in cash or kind. The board must be comprised of three to fifteen members just like the public company limited by shares and the shareholders will be held liable to the extent of the nominal or issue value of their shares. According to the company law, this type of company can have its share capital made up of only in-kind contributions.
The minimum share capital for a public company limited by shares (Nyrt. or just Rt.) is 20 million HUF (nearly 64,000 EUR). This is the largest amount to be paid as capital contribution in Hungary. The shareholders of a Rt in Hungary will be held liable for the company’s debts and obligation within the nominal or issued value of their shares in the company. The board of a public limited company must have at least three members which must be natural persons. The Hungarian public Rt may only issue registered shares.
Other requirements for Hungarian companies
Any increase or reduction in the minimum share capital for these types of companies is made by a decision of the General Meeting. The share capital can be increased by issuing new shares or through other methods, such as issuing employees’ shares or by converting bonds. The share capital may be reduced by stamping the shares, by exchanging the shares or by reducing the number of shares.
The team of experts at our Hungarian law firm can give you more details about how a Hungarian company can set forth the requirements for the share capital in its Articles of Association.
You can contact our Hungarian lawyers for details about the new provisions of the Commercial Code. If you want to set up a company and need business consulting services our law firm in Hungary will be able to provide you with tailored solutions based on your needs.