With respect to the evaluation of the success of the incorporation of certain provisions of the Hungarian Civil Code in the practice and the regulatory proposals developed by the case law, the amendment of the Civil Code has become necessary, therefore, at the end of June 2021, an act amending the Hungarian Civil Code has been published.
Some provisions entered into force on 1 July 2021. For instance, the rule has been eliminated under which the general partnership and the limited partnership must be terminated by the operation of law in case the number of members in the general partnership is reduced to one, or the membership of all general members or all limited members in the limited partnership ceases to exist. In the light of the above, the provision maintains the six-month obligation for the company to register a new member with the court of registration, but it terminates the limitation nature of this period and it does not link the consequence of the termination of the company to the failure of this obligation.
Most of the new provisions will enter into force only on 1 January 2022. For example, the rules on additional payment (in Hungarian: “pótbefizetés”), which are already well established in the limited liability company regime, will be transferred to the common rules for companies. However, in case of a public limited liability company there is no reason to introduce the institution of additional payment, therefore, its statutes cannot provide for the additional payment. Furthermore, the so-called "fill-up" rule will be significantly simplified, which is difficult to interpret currently. The amended rule sets out in a clear provision what the legislator actually intended, namely that the members may decide to provide a cash contribution to the burden of dividends, in whole or in part. The company is therefore entitled to decide on dividend, however, dividend cannot be paid to a member who has not yet provided its cash contribution, but it must be settled against the cash contribution not yet provided. In practice, the need has arisen to set a time limit for the provision of the cash contribution, therefore, the member must provide its cash contribution within three months following the adoption of the accounts for the second full financial year (covering a period of twelve months) from the date of the registration of the company at the latest.
Finally, some new provisions will enter into force only on 11 July 2023, e.g. the rule that makes it clear that not all shares of the public limited liability company need to be listed on a stock exchange. The stock exchange and securities market rules require only that at least one series of shares shall be listed on the stock exchange.
By Lidia Suveges, Attorney at law, KCG Partners Law Firm