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Welcome two new lawyers to the CLVPartners© team!

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CLVPartners© Law Firm is pleased to announce two new talented professional team members, Eszter Bohati and Anikó Hrebenku who have recently joined our team.

Eszter has more than 10 years of experience in the legal profession, 8 of which she spent in international law firms, advising on labor law, immigration, and data protection issues. She assists the law firm’s Clients in solving their everyday legal problems in  English and Hungarian and draws on her previous experience to provide personalized, high-quality solutions.

Anikó graduated from Eötvös Loránd University in 2017 and successfully admitted to the Budapest Bar Association in 2021. She gained remarkable experience at several law firms through the years in civil and labor law. She mainly supports our Clients in employment law, company law, and data protection issues in English, German, and Hungarian.

Please join us in welcoming Eszter and Anikó to our team. We are convinced that with their diverse backgrounds and exceptional skills, their arrival will further enhance our firm’s capabilities and performance to deliver excellent services to our Clients.

Our law firm retains Top-Tier Firm Rankings in The Legal 500 EMEA 2024 Edition

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We are delighted to announce that we have again been ranked as a top-tier firm in The Legal 500 EMEA 2024 edition. Our services have been ranked in Employment and Commercial, Corporate and M&A practice areas. The reviewers appreciated among others our multinational clientele in various sectors, a key area of strengths in assisting our clients with digital transformations, and our extensive expertise in cross-border transactions.

The Legal 500 EMEA guide provides researched coverage of over 80 countries and over 2,700 ranked law firms. Researchers are free to make ranking decisions on merit alone. Ranking is conducted annually, providing a detailed qualitative assessment of various factors including work conducted by law firms over the past 12 months and historically; experience and depth of teams; specialisms and ancillary services; and, importantly, opinions of law firms” clients,

It is a special honour to be part of this publication and we are thankful to our clients who provided these excellent feedback on our performance.

We are happy to share some of the Testimonial given by our Clients to Legal 500 EMEA team:

“The team is proactive, quick to respond and eager to find a business-satisfactory solution to all problems.”

„I have received the answer to our queries quickly and professionally, the problems were reviewed from a wide perspective and always a bigger picture was taken into account to find a satisfactory solution to the query or challenge.”

„Our direct contacts are Anna Katalin Papp and Barbara Seregély. They are always available for us, we can always count on their cooperative work, they are professionally well prepared. If there are some changes in the legislation, they always draw our attention to them.”

„Working for many years with CLV, we met young and experienced colleagues, and all gave their full expertise in their fast replies. CLV is capable of working on an international level in relation to multinational tasks, which is important for us.”

„They all speak a high level of English and are well prepared. In terms of timing of meetings, we always received flexibility according to our needs. In case of very specific questions, they have experts to provide the adequate explanation.”

„The relationship is really good, and open minded. The advisor is ready to think out of the box, and not tied strictly to the question, if they can help with their advice.”

As of 1 January 2024, the rules of Act V of 2006 on company registration, court proceedings and winding-up (Ctv.) will be amended and new provisions will be introduced.

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We describe below the most important changes.

1. Changes to the company registration procedure

As of 1 March 2024, the Court of Registry will provide the Articles of Association attached to the application with an electronic signature and electronic time stamp and will ensure that the Articles of Association is accessible through the registry. The searchability and quick access of the company documents is made possible by displaying a link in the company details section of the Articles of Association. This service will be available for applications registered on and after 1 March 2024 for the articles of association of incorporation (changes), i.e. in a staggered manner.

In the case of applications for company registration and registration of changes submitted on and after 1 January 2024 the procedure will be simplified, legal representatives will not be required to provide each document with a qualified electronic signature and a qualified time stamp but will only need to sign the application itself in this way.

2. Change in the details of a pledge on a quota of an Ltd.

As of 1 January 2024, in the case of a limited liability company, the registry will not only contain the fact of the pledgee, but also the amount of the claim secured by the pledge or the amount up to which the pledgee may seek satisfaction and, if stipulated, the prohibition of alienation and encumbrance or prohibition of alienation of the quota.

A novelty is that data on the secured pledge created by pledging a quota is also included in the business register. The quota pledge is registered or cancelled on the basis of a request for change registration by the member (pledgor) or the pledgee.

The Court of Registry only examines the contract of pledge whether the details of the company and its member in the contract of pledge match the details in the registry and whether the details requested for registration match the contents of the contract of pledge.

In the case of a quota pledge already registered before 1 January 2024, the new data must be requested in the next amendment to other data of the registry, submitted by 31 December 2024 at the latest, without payment of fees and publication costs. After the deadline, the submission has the general fee and publication costs.

3. Changes related to the new legal instrument of detachment

Prior to the amendment, a legal person could be divided into several legal entities by way of complete division or partial division under the Civil Code. In complete division, the legal person shall terminate and its assets shall pass to two or more legal persons created by the division as legal successors. In partial division, the legal person shall continue to operate and a part of its assets shall pass to another legal person created by the division as a legal successor

With the amendment, a new legal institution, detachment has been introduced as a sub-case of partial division. In the case of a detachment, the separating legal person survives and creates the successor legal person with part of its assets by becoming its sole member.

4. Data transfer

The data received (updated) through the Business Registers Interconnection System (BRIS) must be entered in the Hungarian registry by the Court of Registry. However, the data content received may not fully correspond to the data content required by the company register. According to the law effective as of 1 March 2024, the court will enter the information received via BRIS in the registry and, if it finds that not all the data required by the relevant act are included in the registry, it will simultaneously call on the company to report the missing data within 60 days.

Changing company law rules

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As of 1 January 2022, the Civil Code has been amended on several points. In this article, we have summarised the issues that affect our clients the most.

Regulations affecting the organisation

Changes affecting the supervisory board
Although at first glance it seems that the previous provision on the supervisory board, that not less than a majority of votes may be required, has been deleted, it is still valid under the general rules and it is important that the companies concerned continue to comply with this rule.
A clarification has been made in the legislation: where the supervisory board member is a legal person, a natural person must be appointed to effectively perform the duties.

Repeated meeting of the supreme body
The quorum of the decision-making body shall be constituted when more than half of the votes that may be cast are represented by a person entitled to vote. If the quorum is not present at the general meeting of members of the limited liability company (Kft.) or the general meeting of the private company limited by shares (Zrt.), a new meeting shall be held. In the past, the Civil Code provided for a mandatory minimum and maximum period of time between the initial and the reconvened meeting, which was not practical and made decision-making unnecessarily difficult.
To remedy this, as of 1 January, the statutory time limits are discretionary, i.e. a repeated general meeting may be called for a date other than the date set in the Civil Code.

Composition of the Board of Directors of a Zrt.
The chairman of the Board of Directors of the company has so far been elected by its members. However, as from the first day of the year, this power of decision is only conferred on the members of the Board of Directors if the General Meeting has not exercised it.

Changes concerning limited liability companies

Deferred cash contribution
Although the wording of the legislation changes significantly, it mainly clarifies an objective that has been achieved in practice so far: members may make a cash contribution out of their dividends. Thus, if a member has an outstanding cash contribution, the dividend will first “make up” for this and, if there is still a dividend fund after the settlement, the members may decide on the actual payment of the dividend. It is important to underline that the new rule will only apply to company proceedings commenced after 1 January 2022, so companies applying the previous, partially more favourable rules will not have to change their articles of association due to the amendment of the Civil Code.

One member – several shares
A change is that the Civil Code now states that a member can own more than one share (a so called quota) in a company. Another new rule is that splitting is possible at any time with the consent of the general meeting. The new provision may be of importance in cases where there is an encumbrance (e.g. pledge, other option) on each share, as it will now be possible to separate the obligations on the shares, even though they are concentrated in one company.

Undercapitalised status
One of the rules on undercapitalisation is that if a company’s equity capital falls below the subscribed capital defined for the company form for two consecutive financial years, the supreme body must decide on a capital replacement or, failing that, on a transformation, dissolution without legal success or merger. Such an undercapitalised situation typically occurs when a company has a high level of registered capital or has been making large losses for a long period of time. The clarified wording makes it clear that in all cases two full financial years covering twelve months must be taken into account to determine the undercapitalised status, so in case of so-called ‘split’ financial years, the first shorter financial year need not be examined in such context.

Additional payment
An additional payment is typically a legal instrument used to temporarily resolve a capital shortage situation. It allows the owners of a company to inject capital into the company specifically to restore solvency. Until now, the capital injection were regulated at the rules of limited liability companies, but from 1 January 2022, general and limited partnerships, and companies limited by shares will be able to use this option. The amended text stipulates that the supreme body may decide that the additional payments not necessary to make up for the loss do not have to be repaid to the members – in a decision which, in our view, can be taken or even modified even after the additional payment has been ordered. It is a reasonable new provision that in case of a one-person limited liability company, no amendment to the deed of foundation is required to make the decision to make a top-up payment.

Should you have any questions regarding the above, feel free to contact us.

 CLVPartners news

Certain Tax and Corporate Deadline and Processes

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During the state of emergency and the implemented partial curfew, the continuous decision-making of companies could easily become impossible. In order to prevent this, as of 11 April 2020 different rules apply to the decision-making process of the obstructed companies, and the mandate term of certain company officers is also extended for this period.

By definition, the decision-making rules do not apply to companies not obstructed by the exceptional circumstances, for example in the case sole member companies.

During the emergency and until the 90th day after its end, the term of managing directors, board members (e.g. supervisory board members) and auditor may not be terminated as a result of expiration or resignation and these officers shall continue to carry out their duties during this time. This provision also applies to unhindered companies, but of course it is also possible to elect new officers during the state of emergency.

A new rule to be applied to all taxpayers is that the deadline for preparing, disclosing, depositing, publishing and submitting financial statements of the Accounting Act due after 22 April 2020 is extended until 30 September 2020. In the case of the main types of tax (corporate and dividend tax, small business tax, local business tax, etc.), the tax assessment, declaration and payment obligations, as well as the tax advance assessment and declaration obligation to be fulfilled simultaneously with the annual tax returns can also be fulfilled by this extended deadline.

Changes of Companies Act effective as of 1 July 2018

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On 1 July 2018 entered into force the modification of Act V of 2006 on Companies Registration and Winding-up Proceedings amending the rules of winding-up, especially the simplified procedure, the statutory supervisory procedures and also makes possible to file with the court application for the registration of changes prior to the effective date.


Preliminary request for the registration of changes
The request for registration of a (future) change can be submitted in advance so even before the effective date of change. Nevertheless, the preliminary request for registration of future company change cannot be submitted within more than 30 days prior to the date of change.

Executives without right of representation
It is also mandatory to register those company executives who do not have right of representation for the company. This amendment concerns in particular companies where the management is constituted by a board of directors where not all directors have right of representation for the company.

Legal supervisory procedure
Any person claiming to have a legal interest in starting a legal supervisory procedure against a company may only start a legal supervisory procedure in its own name as applicant therefore no name application is not possible.

Winding-up, simplified winding-up procedure
Any company form (this including private limited companies (in Hungarian “Zrt”) and limited liability companies (in Hungarian “Kft.”) may choose to terminate itself by simplified winding-up procedure, provided that is not subject to mandatory audit. In the case of simplified winding-up, no administrator is required to be appointed, the administrator’s duties are performed by the company’s executives (i.e. managing directors). The simplified winding-up procedure shall be at first reported to the Hungary Tax Authority who shall automatically inform the company court that shall publish a notice thereof in the Company Gazette.

About the changes of seat services

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Regulation No. 7/2017 (1 June) of the Ministry of Justice about registered seat services entered into force on 1 July 2017 in connection with the amendment of the Companies Act which set out among others the following important regulations:
The agreement shall be in writing between the principal (company) and the agent who provides the seat service.

The agreement shall not be a fixed-term contract only if the company was established for a fixed period of time. The right to terminate shall not be exercised during the first year after the conclusion of the contract.

Only those properties may be used as the seat of a company which are exclusively owned by the agent who provides the seat service or for which the provider’s user rights have been registered at the Land Registry.

The agent shall ensure that the mails addressed to the company are taken over at the registered seat and shall also notify the company on that fact within one working day after the receipt of any mail.

The Regulation No. 9/2017. (VII. 18.) of the Ministry of Justice on the amendment of the above Regulation was published on 19 July 2017 and entered into force on the day following its publication in which the most important changes are the following:

The agent shall be entitled to provide seat service if the owner of the property gave prior written consent to providing seat and one of the following conditions is fulfilled:
a) the parties are affiliated companies or companies linked by virtue of participating interests under the Accounting Act,
b) the agent is registered in the Trade Registry as the company’s delivery agent, or
c) further from providing registered seat for the company there is a civil law relationship between the parties for providing long-term accounting services.

The parties shall harmonize their existing agreements for providing seat with the new regulations until 30 June 2018, the latest, and if there was not any written agreement between them, such contracts have to be put in writing.

The existing agreements for registered seat services shall be ineffective on the following day the above deadline (i.e. 30 June 2018) if the contract does not correspond to the aforementioned new regulations.

Modifications in corporate law

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In July 2017, modifications were carried out in acts of Public Company Information, Company Registration and Winding-up Proceedings.

According to the Act V of 2006 on Public Company Information, Company Registration and Winding-up Proceedings („Ctv.”) modification made in June 2017 the National System of Company Information and Company Registration (Company Information Service) will be responsible for providing access to the Business Registers Interconnection System (BRIS) by linking the national central registers, commercial registers and business registers.

By connecting the European countries’ company registers, certain data, the consolidated articles of associations, annual reports of the limited liability companies, corporations and European corporations will be available in BRIS which system is operated by the European Commission. The basic data can be accessed free of charge, in other cases the data can be obtained against payment of an administrative fee.