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Hungary: Recent Changes Affecting Day-to-Day Legal Activities

Hungary: Recent Changes Affecting Day-to-Day Legal Activities

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A number of changes have been recently introduced and will be introduced in the near future in Hungary that fundamentally affect both the most commonly applied legislation, as well as the day-to-day work of lawyers. Below is an overview of the important points of these developments.

Relevant changes regarding the implementation of the Digital Directive

In Hungary, the registration of companies and civil society organizations are managed separately until mid 2023. However, on July 1, 2023, the new Registration Act (Act XCII of 2021 on the Registration of Legal Persons and the Registration Procedure) will enter into force, creating a unified register of legal persons. The private law legislation to date has also anticipated the need for a unified approach to registration, but from July this year this will also be introduced in Hungary, in line with the practice in several EU Member States (e.g. Austria, Belgium, Denmark, Poland). 

The new Registration Act clarifies the provisions implementing the Digital Directive (Directive (EU) No 2019/1151). In particular, the harmonisation obligation concerns the authenticity of the register, its publicity and cooperation with EU bodies. A key regulatory aspect of the new Registration Act is that it facilitates the exchange of information at EU level, whereby Member States inform the requesting Member State whether the person named in the request is subject to a prohibition on holding a position of executive officer in the Member State concerned.

Major changes in employment law

As of January 1, 2023, the Hungarian Labour Code (Act I of 2012 on the Labour Code) has been significantly amended, posing a major challenge for employers and lawyers alike. As a result of the changes, employers’ information obligation has been broadened, consequently employers must now provide employees with detailed written information on, amongst other matters, working hours, the rules concerning the termination of employment and the employer’s training policy.

With the amendment of the Labour Code, provisions on paternity leave and parental leave were introduced. In the former case, the father is entitled to 10 working days’ leave, at latest by the end of the second month following the birth or adoption of his child, meanwhile, in case of parental leave the employees are entitled to a total of 44 working days of parental leave up to the age of three of their children. In addition to the above, there have also been substantial amendments to the provisions on probatory periods, time limits, the reasoning in connection with the termination of the employment relationship and flexible work conditions.

Changes regarding the Land Registry Act and the electronic land registry system

In 2021, a new Land Registry Act (Act C of 2021 on the Land Registry) was adopted by the Hungarian legislator, with the declared aim of replacing paper-based administration with electronic methods, linking the land registry with other publicly certified registers and creating a more transparent regulation of the land registry. The new act was originally due to come into effect in February 2023, however this date has been postponed to 2024, giving the practitioners an extra year to prepare for the major changes. 

In addition to the above, from 2023 the possibility for lawyers and individuals to obtain a non-authentic property deed and a copy of the profile map has been abolished. As a result, from now on only the less cost-effective certified copies of these documents will be accessible. 

New forms in electronic company registration procedures

As of January 1, 2023, the technical conditions for the electronic company procedure being in place since 2008 have changed. Therefore, starting from this year, a new type of form-filling software must be used during the preparation of the applications for company registration ensuring the compliance with the newly introduced standards. Consequently, forms that do not meet the requirements of the new regulation are temporarily unavailable, therefore lawyers working with these software will have to find new alternatives.

Changes to the rules on electronic communication with the courts and authorities

In addition to the form-filling programs used in electronic company procedures, the technical rules on electronic communication with courts and authorities have also changed. The outdated technology-based form-filling software (ÁNYK) previously widely used for electronic communication was already phased out for authorities in 2022, while in case of the courts, the new, more modern forms (iFORM) for communication are introduced from this year. Both of these software are based on the personal client gate technology operated by the Hungarian state, and in preparation for the changes, the two software will be usable simultaneously until September 2023.

By Aron Bagdi, Attorney at law, Partner, and Zsombor Szakal, Associate, Provaris

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