Registering, changing the legal form of or closing a business

The registration of companies is carried out by the court of company registration. The company registration procedure and the procedure amending a registration are procedures for entering a company’s information in the commercial register of companies.

Kulcsszavak: company registration, registration amendment, conversion, merger, division, setting up, voluntary winding up, company court, court of company registration, commercial register, business

Companies must register with a court of company registration (company court). They register according to the region they are based in. The regional company courts enter their information in a central register of companies. Companies must submit an application for the registration to the regional court with jurisdiction over the place where they have their registered office. To set up a company and amend company information, you need legal representation; a legal representative (lawyer, in-house legal counsel, notary) will check your application in terms of legality, so the company court has a narrower scope of review.

The application must be submitted electronically to the company court by the legal representative. The company court only registers companies, of which there are 20 legal forms in total. Other types of entities (e.g. sole traders, law firms) are entered in different registers. Most companies are businesses, such as:

After a memorandum of association is signed, companies may operate with a limited scope as ‘companies under registration’.

Companies (businesses, cooperatives, etc.) are officially established once they are entered in the business register (company registration).

Any amendment to the registered information (including any amendment of the memorandum and articles of association), change to the legal form (conversion) or closing (request for striking off the register) must be notified through a procedure amending a registration (hereinafter collectively referred to as ‘company registration procedures’) to the company court responsible for registering their information.

When setting up a company, there are two types of applications for registering the business. In accordance with the general rules, the company court carries out the formal review of the application within 3 working days of receipt and will reject it if there are serious deficiencies.

If the application is deficient or incomplete, the company court will issue a notice for any deficiencies to be corrected within 30 days. Otherwise, the company will be registered within a maximum of 15 working days, although in practice the registration process takes 5 working days on average.

During the company registration procedure, the company court will immediately assign the business a company registration number and will also obtain a tax number and a statistical code for it. Before assigning a tax number, the tax authority conducts a tax registration procedure to examine whether the shareholders and the company’s executive officer have accumulated any tax arrears in the course of their previous business activities. Based on the tax background check, the tax authority may even refuse to assign a tax number.

 

Simplified company registration procedure:

Under the business registration procedure, a ‘simplified company registration procedure’ is also possible if the memorandum of association was prepared on the basis of a standardized template for contract. In this procedure, the court of company registration will make a decision within 1 working day.

Both general and simplified procedures for registering limited liability companies, general partnerships and limited partnerships are free of charge.

The fee for registering private companies limited by shares is HUF 100 000 under the general procedure and HUF 50 000 under the simplified procedure.

 

Different rules for registration amendment:

  1. For registration amendment applications, as a general rule, the deadline for submitting the application is within 30 days of the amendment to the company’s information.
  2. The application review process is the same as the company registration process, with no simplified procedure available for registering an amendment.

In procedures amending a registration, the company court fee is HUF 15 000.

 

Changing the legal form or closing a business (conversion, merger, division), voluntary winding up

 

Conversions

In order for a business to operate under different organisational arrangements, it must be converted (e.g. from a limited liability company to a company limited by shares) and this conversion must be registered in the business register by a company court.

In this case, the business being converted ceases to exist and its rights and obligations are transferred in full to the business established through the conversion (as a general legal successor).

A decision on conversion may be taken by the decision-making body (supreme body) of a company, acting on a proposal from the management. Usually, two meetings are required for the decision-making body to make a decision on conversion.

 

If the company being converted is required to carry out an audit under the Accounting Act, the draft balance sheets and draft asset inventories must also be audited; however, this audit may not be performed by the company’s permanent auditor. If the company being converted has a supervisory board, it must also be involved in the conversion.

Upon receipt of the conversion plan, individual shareholders may decide that they do not want to become shareholders in the successor company. Employee representative bodies must be notified after the final decision on conversion has been taken.

If executive officers prepare the documents required for conversion, shareholders may also decide that the decision-making body should make a decision on conversion at one meeting.

In order to protect the company's creditors, following the final decision on conversion, the company must publish a notice of the conversion in the Company Gazette. This notice must be published in two consecutive issues.

Under certain conditions, the creditors of the company being converted may require the company to provide collateral for the conversion. Until adequate collateral is provided, the company court will not register the conversion in the business register. Further detailed rules on conversion may be provided by the legal representative.

 

Mergers

Two or more business entities may merge through consolidation or merger by absorption. In consolidation, the merging businesses will cease to exist and a new business will be created through general legal succession. In merger by absorption, the absorbed company will terminate, and its general legal successor shall be the other company participating in the merger. The merger of businesses is governed partly by the rules applicable to conversion; further detailed rules on this can be provided by the legal representative.

 

Division of companies

A business may be divided into several companies through complete division or partial division. In complete division, the existing company is dissolved and its assets are transferred to the new companies created by the division, as its legal successors. In partial division, the main company will continue to exist and part of its assets will be transferred to another company created by the division as a legal successor. The division is governed in part by the rules applicable to conversion; further detailed rules on this can be provided by the legal representative.

 

Voluntary winding up

If a company wants to cease its operations, its shareholders may decide to dissolve the business without a legal successor. In this case, the company is wound up. Voluntary winding up may be opened if the company is solvent. There are two types of voluntary winding up, general and simplified.

The voluntary winding-up procedure is the stage in the life of a company where the aim is to cease operations, and it may also involve court proceedings.

During the general procedure, the company's decision-making body decides to start the voluntary winding-up procedure and appoints an administrator. The term of office of the company’s executive officer comes to an end on the start date of the voluntary winding up; from then on, the administrator will be considered to be the company’s administrator.

The administrator must notify the company court of the start of the voluntary winding-up procedure in a registration amendment application, where legal representation is required. The company court will issue an order initiating the voluntary winding-up procedure, which is published in the Company Gazette. It also contains a notice to creditors. Creditors have 40 days to lodge any claims to the administrator.

The job of the administrator is to assess the company’s assets, recover any receivables, settle any debts, sell off assets if necessary, and then, after paying the creditors, distribute the remaining assets among the shareholders and cease the company’s operations.

Voluntary winding up must be completed within 3 years from the date on which the process was started.

The administrator must ensure that business records are maintained.

The company’s decision-making body may decide at any time during the voluntary winding-up procedure to stop the procedure and to continue its business operations. In this case, the administrator’s mandate must be revoked and a new executive officer must be appointed.

Simplified voluntary winding up may take place if the company is not required to perform an audit under the accounting rules and voluntary winding up can be completed within 150 days. In the case of simplified voluntary winding up, no administrator is appointed; the responsibilities of an administrator will be carried out by the company’s executive officers. The company will notify the tax authority of the start of the simplified voluntary winding-up procedure and the tax authority will notify the company court, which will automatically arrange for the publication of a notice of the simplified voluntary winding up. The company is not required to involve a legal representative to notify the tax authority in this case.

If the 150-day time limit for completing the simplified voluntary liquidation procedure is not enough, the company has 60 days following the expiry of the time limit to switch to a voluntary liquidation procedure subject to the general rules. If it fails to do so, the commercial court will terminate the voluntary liquidation procedure on the 211th day from the starting date of the simplified voluntary liquidation procedure. The company may switch to the voluntary liquidation procedure, subject to the general rules, by submitting a change request.

More information on the procedure is provided in informational leaflet number 60, available on the National Tax and Customs Administration’s website.

 

https://nav.gov.hu/nav/inf_fuz/2021

 

1. Submission of a company registration or registration amendment application

The application must be drawn up by the legal representative. The application consists of a standard template form and annexes. The court of company registration will check that they meet the requirements. If there are serious deficiencies, the company court will reject (i.e. actually refuse) the application after a formal examination thereof. (Some of the documents that must be annexed to the application are deemed so essential by law that failure to include them will result in the company court rejecting the application without even beginning a substantive examination).

During the substantive examination of the application, the company court will, if necessary, issue a notice to remedy deficiencies aims the deficiencies to be corrected within 30 days by the applicant. Failure to correct deficiencies or insufficient correction of deficiencies will result in the company court rejecting the application.

 

2. Conversion, merger, division

In the case of a conversion, merger or division, the company must publish a notice in the official journal, i.e. the Company Gazette, so that the company’s creditors have the opportunity to request collateral (lodge their claims). Creditors may not request collateral from the company after the deadline for lodge their claims has passed.

 

3. Voluntary winding up or liquidation

Parties who suffer any injury (e.g. creditors) as a result of an act or omission of the administrator may submit an objection to the voluntary winding up.

If the business fails to complete the voluntary winding up in a general procedure within 3 years, the company court may order an involuntary de-registration procedure.

 

Company registration procedures

 

Deadlines applicable to clients:

 

Time limits applicable to tax and customs authorities:

 

Deadlines applicable to courts of company registration:

For general procedures

 

Simplified procedure for setting up a company:

 

Changing the legal form of or closing a business (conversions, merger, divisions), voluntary winding up

The legal representative must attach to the completed application form the documents precisely listed in the Companies Act and, if required, proof of payment of fees incurred in connection with the procedure.

 

Documents to be submitted to the Company Gazette:

http://ckk.cegkozlony.hu/

Two types of payment obligations may arise in company registration procedures. A fee must be paid for the company court procedures and there is a charge for the publication of amendments in the Company Gazette.

 

Company registration procedures

FEES:

1. No fee applies to company registration procedures (either general or simplified) for:

 

2. A fee applies to company registration procedures for:

 

3. The fee for company registration applications in simplified procedures is HUF 50 000 for private companies limited by shares.

 

4. The fee for applications for the registration of conversions, mergers or divisions is HUF 50 000.

 

5. The fee for registration amendment applications for the conversion of a private company limited by shares into a public company limited by shares is HUF 500 000.

 

6. The fee for other company court procedures not mentioned above (general court fee) is HUF 15 000.

 

PUBLICATION CHARGE:

1. Company registration: HUF 5 000 (no publication charge applies when setting up a business is free of charge)

2. Procedure amending a registration: HUF 3 000

 

PUBLISHING OF A NOTICE IN THE COMPANY GAZETTE DIRECTLY BY THE COMPANY (e.g. for conversion)

HUF 15 000 per notice (e.g. for conversion, the publication of two notices costs HUF 30 000)

The publication charge must be paid to the Ministry of Justice’s bank account: No 10032000-01810039-00000000.

The application for striking off the register a business submitted to the company court during the voluntary winding-up procedure is free of charge and the publication of the company court order on the cancellation in the Company Gazette involves no publication charge.

Company registration procedures are conducted by regional courts operating at county level. Regional courts act as company courts in company procedures. (Courts of company registration are not specialised courts; they operate as part of the regional courts.)

The relevant procedures are conducted by the company court of the regional court of the place where the registered office of the company is based.

Orders granting applications for company registration (registration amendment) are final, i.e. there is no possibility for appeal.

Appeals may be lodged against orders rejecting applications for company registration (registration amendment).

Legal representation is also mandatory for appeals.

1. The deadline for lodging an appeal is within 15 days of notification of the decision.

2. Appeals have a suspensory effect on the enforcement of decisions.

Appeals are considered by the Regional Court of Appeal in the place where the company has its registered office.

Appeals must be submitted to company courts in the first instance.

The appeal fee is: HUF 30 000

If the company court fails to take a decision on the application within 15 days in general business procedures or within 1 day in simplified business procedures and before the extended deadline (3 working days) set by the head of the company court, the content of the application (company information) is automatically entered in the business register by means of an electronic application.

https://ceginformaciosszolgalat.kormany.hu/e-mail-cimek

https://ceginformaciosszolgalat.kormany.hu/szerzodesmintak

https://www.e-cegjegyzek.hu/

https://ceginformaciosszolgalat.kormany.hu/elektronikus-cegeljaras

 

Date on which the description was drawn up: 21/04/2020

 

Have you found this information useful? Please tell us your opinion here.

Act V of 2006 on public company information, company registration procedures in courts

and winding up

Act CLXXVI of 2013 on the conversion, merger or division of certain legal entities

Act XCIII of 1990 on fees

Act CXXX of 2016 on the Code of Civil Procedure

Act CXVIII of 2017 on the rules applicable in non-contentious civil court proceedings, and certain non-contentious court proceedings

Decree No. 21/2006 (V.18.) of the Minister of Justice on certain aspects of the company registration procedure and the commercial register

Decree No. 22/2006 (V.18.) of the Minister of Justice on the publication of and charge for notices in the Company Gazette

Decree No. 24/2006 (V.18.) of the Minister of Justice on certain aspects of the electronic company registration procedure and commercial register

Decree No. 25/2006 (V.18.) of the Minister of Justice on the electronic payment of fees and publication charges in company procedures and other business matters

Government Decree No 72/2006 of 3 April 2006 on the Accounting Tasks of Voluntary Liquidation

CIKFO