“Considering the recent legal developments of the Hungarian market, I would emphasize the latest amendments to the company registry system and the recently-adopted act regulating business and trade secrets,” reports Zoltan Tenk, Managing Partner at Tenk Law Firm, when asked for the buzz in Hungary.
In describing the changes to the company registry system, Tenk explains that now any changes in someone’s personal data in the registry of natural persons will automatically be changed in the corporate registry too. “I consider it an important step for the development of company registries and thereby for the alleviation of the companies’ administrative burdens,” he says, “even though there is one disadvantage: when we submit a request to the Commercial Court and the personal data on the request does not match the one in the registry of natural persons, the request will be rejected immediately.” As a result, he explains, lawyers have to be very careful when preparing documentation for the Commercial Court, making sure to verify that there are no typos and that all the information is accurate and updated.
“Also, in August, 2018, the government changed the regulation of trade secrets,” says Tenk’s Managing Partner. “Previously the applicable rules were in the Hungarian Civil Code, but now we have a special act for the protection of trade secrets.” According to Tenk, the 54/2018 act clarifies what is considered a trade secret and what is not, what constitutes a breach, how a breach shall be penalized, and so on. “From a compliance point of view it is advisable for companies to review their internal regulations and if it is necessary they shall make amendments to be in-line with the new requirements,” he says. “We as lawyers shall also consider the act when drafting non-disclosure agreements and clauses.”
“We also have new amendments regarding the company dissolution procedures,” Tenk reports, “which means that companies undergoing a simplified dissolution procedure now only need to fulfill two conditions in case of a disintegration: they cannot be subject to the requirement of an audit and they should be able to finish the dissolution procedure within 150 days.” He adds that as long as these two requirements are met, companies need not appoint an administrator for the procedure, as the managing director can coordinate the whole process by law in a simplified way. “There is no further need to submit a direct request to the Commercial Court,” he continues. “Companies are required to report the initiation of the procedure to the tax authority, which automatically informs the Commercial Court. On basis of this automatic announcement, the Commercial Court must register the initiation of the procedure and announce it to the public.” He smiles. “This means actually less work for lawyers, but it’s definitely an important improvement from a business point of view.”
“And if we're talking about innovations, since one of my specializations is insolvency and restructuring, let me also mention that finally Hungary also has its insolvency and bankruptcy register (available at https://fizeteskeptelenseg.im.gov.hu/), provided by the Company Information Service,” Tenk says. According to him, the website was established under the requirement of the EU Regulation 2015/848 that requires every member state to establish its own insolvency and bankruptcy register which will then become centrally connected and searchable by the EU. “Through this webpage all liquidations and bankruptcy proceedings in Hungary can be traced. Considering how important trust in business is, this is a very market-supportive measure,” he believes.
When asked what the current situation of the Hungarian market is when it comes to bankruptcy and insolvency, the Managing Partner of Tenk Law Firm smiles again. “The Hungarian economy is booming, there are a lot of real estate developments and transactions, and the number of insolvencies is actually less than it was 3-5 years ago.”