As end of the year is approaching, we have summarized below this year’s amendments relevant to legal entities. As of 1 January 2022, the rules for legal entities have undergone some relevant changes. These amendments to the third book of Act V of 2013 on the Civil Code (“Civil Code“), have already previously appeared in the established case law of recent years, and now they became law..
As of the beginning of the year, a legal entity can be not only a director but also a member of the supervisory board. In this case, the legal person must appoint an individual to act as a supervisory board member on its behalf. The rules on disqualification and conflicts of interest also apply to the individual appointed by the legal entity.
In addition, from the beginning of this year, new rules allow for a departure from majority voting for the governing body of the legal entity: board of directors, supervisory board. This will allow for the institution of weighted voting, thus giving more flexibility to of certain operational bodies of legal persons. However, the protection of the majority of votes remains unchanged for the decision-making body, i.e. the assembly of members or the general meeting.
The changes extended the possibility of deciding on supplementary capital contribution (pótbefizetés) to all forms of companies, with the exception of public limited companies. This provision will help to ensure the stability of companies and their solvency. It stipulates that unused additional capital contributions may be used as decided by the governing body, thus ending the automatic repayment to members. It also allows one-person limited liability companies and private limited companies to decide on a supplementary contribution in the absence of provisions in their articles of association.
Thanks to the amendment, in the case of limited partnerships (betéti társaság) and one equity partnerships (közkereseti társaság), if the number of members is reduced to one, there is no automatic dissolution. In this case, the amendment retains the 6-month time limit, but only for submitting the required notice, as it no longer results in the automatic dissolution of the company. Instead, there is a possibility of a legal supervisory measure. Furthermore, in the case of a limited partnership, if only an outside partner remains, their liability becomes the same as that of the inside partner for the period until a new member joins the partnership. Furthermore, an outside partner of a limited partnership can only become a managing director by appointment or election, not automatically.
Under the new rules, members may have more than one capital contribution (törzsbetét), making it easier to take on debt against each contribution separately and simplifying the sale if a member wishes to sell only one contribution. It is important to underline that in this case the person is still considered as one member, i.e. the voting rights based on the capital contributions should be counted as one.
The January changes to the Civil Code state that members of a limited liability company may decide to make a financial contribution in cash, partly or wholly at the expense of the dividends. It also sets a deadline for the payment of the financial contributions, which is the end of the third month following the adoption of the second full financial year – 12 months – after the registration.
Prior to the amendment, there was no derogation from the rules of the Civil Code on the minimum interval between the original general meeting and the resumed general meeting. However, as of January, the date of holding a repeated general meeting is left to the discretion of the company concerned.
The January changes removed the provisions on the proportion of ordinary shares and other shares. They also introduced clarifications on the listing, operation and board of directors of public limited companies. Finally, the January amendment introduces important changes in the areas of creditor protection and the protection of minority votes, such as the invalidity of the articles of association of legal persons and the judicial review of decisions of legal entities.
