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The description of corporate structures and prices quoted below is serving as a general guide and may be subject to the most recent changes of the legislation in various jurisdictions. We invite you to contact us for the latest update and free quotation.

COUNTRY: Hungary

Hungarian Company  Legal form: Under the terms of the Companies Act, a company in Hungary may be established under a variety of legal forms. The most common for foreign investors are the company limited by shares (reszvenytarsasag - Rt) and the limited-liability company (korlatolt felelossegu tarsasag - Kft). These organisational forms correspond closely to the German AG (Aktiengesellschaft) and GmbH (Gesellschaft mit beschränkter Haftung). Foreign investment may take two other legal forms: the limited partnership (beteti tarsasag - Bt) and the general partnership (kozkereseti tarsasag - Kkt). These latter forms of organisation require unlimited legal liability. All members of a Kkt are jointly and severally liable; at least one member of a Bt must have unlimited liability. Owing to less stringent registration and operating procedures and to lower minimum capital requirements, most new private-sector firms incorporating in Hungary now choose the Kft form. Shareholders: A Kft may be formed by one owner. It is not permitted to solicit others publicly to become owners. Initial capital may not be increased until all quotas are fully paid. A Kft may not be filed for registration until at least half of each cash contribution (but at least Ft1m) has been paid and all in-kind contributions have been transferred. All outstanding cash contributions must be fully paid no later than one year from registration. For a single-owner Kft, all cash contributions must be paid before filing. There are no restrictions on the number of shareholders or founders, or on their nationality or residence. However, a single-member company may not be a single member of an Rt or Kft. The minimum share capital: Rt (reszvenytarsasag -company limited by shares): Minimum capital is Ft20m. The amount of the cash contribution at the time of formation may not be less than 30% of the share capital or Ft10m (whichever is higher). The share capital of the company must be secured completely by subscription. The amount of capital contributed in kind must be declared in writing and must be audited by certified auditors. Kft (korlatolt felelossegu tarsasag - limited-liability company): Minimum capital is Ft3m; cash contributions may not be less than 30% of the capital or Ft1m (whichever is higher). Type of shares: Rt: Bearer shares are freely transferable. The transfer of registered shares issued by a private Rt may be limited in the deed of foundation. Under the new Companies Act, since June 16th 1998 foreigners may acquire both types of shares. Preference shares may be distributed up to a value of 50% of the total share capital of the company. Kft: Quotas have a minimum par value of Ft100,000. The amount of capital contribution must be divisible by Ft10,000. Every quota holder has one quota, though several persons together may constitute a single quota holder. Supervisory board: An Rt must have a supervisory board of at least three members, elected by the shareholders. For Kft a supervisory board of at least three members must be established if the capital of the Kft exceeds Ft50m, or the annual average number of employees exceeds 200. For a single-member Kft, the supervisory board is compulsory only in the latter case. If the annual average number of full-time employees exceeds 200, then one-third of the members of the supervisory board must be elected by the employees. Directors of the company: A director of a company must be an individual. It is not possible for a company to be a director. Managing directors for a Kft; members of the board of directors for an Rt: The same person may be elected as an executive officer in three companies at most. The person elected must inform in writing those companies of which he or she is already an executive officer within 15 days of acceptance of a new position. There are strict regulations on conflicts of interest. Except when acquiring shares in a public Rt, an executive officer may not acquire interest in another business association pursuing identical activities. Furthermore, no person may be an executive officer in another company pursuing an identical activity unless specified in the company’s articles of association approved by the supreme body of the company. A company’s supreme body may confer the right of general representation upon an employee appointed by it, as a so-called company secretary. Rt: Management is conducted by the board of directors (igazgatosag), consisting of 3–11 members elected by the shareholders at the general meeting. The board is responsible for preparing financial statements and balance sheets of the company and for producing an annual report. No restrictions apply regarding nationality or residence of directors (except for banks, where at least two members of the board must be Hungarian residents for foreign-exchange purposes). Kft: Management can be conducted by one or several managing directors elected by the members for a definite term; alternatively, the articles of association may provide that all equity holders are entitled to manage the Kft as managing directors. The same duties and restrictions apply as for an Rt. Registered office: Every Hungarian company is required to have a registered office and address in Hungary. Basic Tax Principles: Resident companies are taxed on worldwide income; non-resident companies pay tax on Hungarian-source income only. Taxpayers are treated as resident for tax purposes if they are created under Hungarian law or (from January 1st 2005) if they are managed or controlled in Hungary. Tax is charged at a flat rate of 16%, and a special rate of 4% applied to the profits of Hungarian offshore companies was abolished on December 31st 2005. As of January 1st 2006, for up to HUF 5m taxable income, a lower tax rate of 10% was introduced. Audit and financial returns: A statutory auditor is required to be appointed by: - an Rt.; a Kft., if the registered capital exceeds 50 million HUF, or if there is only one registered owner; -  the total net revenue of the company exceeds 50 million HUF in two years average; - when any law requires (insurance companies, banks…). In order to be appointed as an auditor, the individual person or audit company must be registered in the list of registered accountants. The auditor must be named in the Articles of Association and can be appointed for a period not exceeding five years. The auditor can be re-appointed following the end of his term of office. Following closing of the books upon the end of the calendar year, companies are obliged to prepare a report based on the book- keeping records maintained in accordance with the law, representing the company s operations, assets, financial and profit situation. Meetings: Annual board meetings and shareholders meetings should be held at least once a year. The place of the meeting must be in Hungary, unless arranged otherwise. Time needed for formation: Usually it is 10-15 working days. In order to proceed with the formation of the Hungarian company please visit our how do I start  page and then proceed to  filling in our application form Our costs and fees for the formation of Hungarian Private Limited Company       Formation cost :   - Name check and approval   - Drafting of Deed of Foundation,  Articles of Association and by-laws   - Filing with official register and certificate of paid capital (authorized capital HUF 3 mil)   - Payment of various government fees   - Notary fees, publication fees and  tax registration   - Local nominee shareholder, directors and secretary for one year   - One set of originals of all standard corporate documents   - Provision of registered office   - Courier fees   - Rubber stamp        Please contact us for  a free quotation, we shall respond immediately !   Optional services (to be chosen by the client) - Bank account opening in one of the banks in Hungary   - General Power of Attorney  with Apostille   - Apostille of one document   - Company seal   - Good Standing Certificate with Apostille   - Provision of Nominee Hungarian resident natural person   - Provision of Nominee Hungarian resident body corporate     Recurring annual maintenance fees from the 2nd year and after   - Provision of registered office and company secretary   - Payment of government fees   - Administration services       Please contact us for  a free quotation, we shall respond immediately !     More information about Hungary is available on our web site.  Please visit our Jurisdictions Directory   to buy specific directory or  register with our  offshore and tax knowledge database  which can offer you access to more than 3,000 pages of downloadable reference information and more than 2,000 various laws and regulations currently enacted in more than 60 countries around the world. 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