Setting up a foundation in Hungary
Foundations are legal persons set up to pursue the long-term objective defined in the charter document. The founder shall define in the charter document the funds made available to the foundation and the organizational structure of the foundation.
Therefore, the objective of the found doesn’t has to serve general interests, but –based on the Hungarian judicial custom -, the objective has to enable a persistent operation, that lasts longer than a year.
Based on the Hungarian civil law, foundations are considered as legal entities, therefore, they are able to enter contracts, to lease premises etc.
1. Limitations on the activities of foundations
According to the Hungarian case-law, a foundation can be set up for any objective, that doesn’t offense the law.
The most important limitation is, that a foundation may not be formed with the objective of performing economic activities. On the other hand, foundations are authorized to perform such economic activities, which are directly connected to the achievement of the foundations goals.
A foundation may not be a partner with unlimited liability in another legal entity, may not set up another foundation, and may not join another foundation. Moreover, a foundation can not be established in the interest of its founder, any member current or future, any officer of the foundation, any member of a foundation organ, or the family members of these persons.
2. Organs of the Foundation:
Managing board (kuratórium): 3 private persons. The founder is not enitled to be involved in the managing board;
Founder: 1 private person or legal entitiy.
3. Filing an application
The application for setting up a foundation must be filed by the court, which is competent regarding to the location of the foundation. The founder needs to attach to the application:
– the charter document
– the copy of the document, that certificates the legal title of using the location,
– certification about the allocation of the foundation’s capital.
The process is free from charges (stamp duty), but a foundation cannot be established without founding capital. Whether the amount of the capital is enough for the objectives defined in the charter document, will be proofed by the court.
Length of the procedure: Because of the complexity and the detailed control of the court: between 30 and 90 days.
Should you have further questions, please do not hesitate to contact us.