Company Formation in Hungary
In Hungary there are quite a wide variety of alternatives when it comes to choosing the form of a company. In spite of this fact, as of today the most common and relevant form is the „Kft.” which is equivalent to a limited liability company (LLC/LTD).
Main Rules of the Kft. Formation in Hungary:
To form a company such as this one, certain requirements have to be met. First of all a deed of foundation has to be drafted and accepted by the founding members which includes the name of the company –this cannot be identical to a previously formed and already incorporated company-, the seat, main activity or aim, information about the founders and first managing director and the capital contribution. Currently the minimum capital requirement is HUF 3.000.000,- Half of this sum has to be paid upon incorporation and it is obligatory to pay the residual within one year. There is a possibility to form the company with less contribution or to pay later, although in this case the members have no right to receive their dividends.
It is indispensable to keep in mind that after the deed of foundation comes into existence, the request for the incorporation of the company has to be issued to the court of registration within 30 days. By that time, the above mentioned part of the capital contribution and other costs has to be paid and the deed of foundation and other significant documents (such as the copy of the title deed in connection with the right to use a real estate as the seat) have to be attached to the company formation request.
Costs of the Kft. Formation in Hungary:
The costs of the formation contains the fee regulated in the attorney retainer agreement, the duty (HUF 100.000,- and in case of a simplified procedure: HUF 50.000,-), the expenses of publication (HUF 3000,-) and the costs of identification of a client (HUF 1670,- per person).
The Hungarian law allows no possibility for submitting supplementary documents (although it is allowed to request the formation of the company again in 8 days), that’s why it is so important to comply with these rules and to act with the utmost care.
The last stage of the Kft formation procedure is the resolution of the registration court. In practice, the incorporation usually takes about 3-4 days, but where more difficult cases occur, the court has 15 days to reach a decision. After that the court delivers a certificate about the company’s registration number, tax number, statistical code and the formation order which is sent to the attorney and to the initator of the procedure.
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