An investor planning to open a SPV company in Hungary is making an important step towards risk minimization. The special purpose vehicles (SPVs) are enterprises representing an important protection element from bankruptcy or other losses.
A Hungarian company formation expert can help you establish a SPV company in Hungary and safely continue your business in this country.
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Advantages of SPV companies in Hungary
Securitization is starting to become more and more popular in Hungary and an interesting option for big companies intending to safely invest in this country and in Eastern Europe. The SPV provides risk isolation thus permitting capital raise and options for debt structuring.
It allows an enterprise to isolate assets and to simplify several financial issues. It can offer your projects protection from operational problems and it allows the realization of different financial transactions.
Apart from its importance in the transfer of risk, you might as well consider to establish a financial vehicle corporation in Hungary as a source for funding. The company registration in Hungary is a simple procedure allowing you to establish a SPV as soon as possible.
How to open a SPV company in Hungary
The SPVs can be a subsidiary company that a larger parent company incorporates in order to reduce risks and to easily manage the financial aspects of the company. The SPV is also helpful in case of selling, by simplifying in a significant measure the procedure.
You can register a SPV under one of the legal forms available in Hungary, such as limited liability company or limited shares company. When you decide to set up a special purpose vehicle in Hungary you should keep in mind several key factors.
One of them is to find a company which is capable to provide you with sufficient financial and legal facilities. The next step is to conclude an agreement between your company and the assignor. One of our specialists in Hungarian company formation can help you with the securitization transaction.
We kindly invite all investors intending to open a SPV company in Hungary to contact one of our company incorporation experts in this country who can give you useful information on the company formation procedure in Hungary.
What is the law for securitization vehicles in Hungary?
With regards to the incorporation procedure, the SPV company is regulated by the same rules of law that apply to other types of companies. However, there are other regulations that are specifically designed for this sector, or legal frameworks that also apply to the SPV businesses.
In the list below, our consultants in company formation in Hungary have prepared a presentation regarding these laws:
- Act XXX of 1997 on Mortgage Loan Companies and on Mortgage Bonds (it regulates the types of bonds issued by the SPV companies);
- the Securitization Regulation EU 2017/2402;
- the law has been applied in Hungary starting with 1 January 2019;
- the Civil Code (the amended version of March 2014 and 2017).
What is the main regulator of the Hungarian SPV companies?
When you open a Hungarian company, you will need to address various institutions that are involved in the registration process. After this is completed, investors will have to address other institutions, which can vary depending on the industry the company will operate in.
With regards to the Hungarian SPV company, it must be noted that the main regulator is the Hungarian National Bank (HNB). In order to have the right to operate as a SPV business in this country, investors must notify the institution on the type of securitization activity that will be carried out here.
The SPV company is also required to obtain an approval on the types of bonds issued by the company. Further on, the HNB has the power and the authority to verify numerous other aspects of the SPV business, such as on its sponsors and lenders.
What are the accounting procedures for SPV businesses in Hungary?
Once the process of company formation in Hungary is completed, any business has a set of obligations. The company must register for taxation, for employment taxes and it must conduct proper accounting procedures.
The accounting of any business must always be completed by persons who are accredited as accountants in Hungary. The same obligations are imposed to SPV businesses.
According to the current law, the SPV company does not have to abide by any special accounting regulations, with the exception of the ones that are prescribed under the accounting procedures.
The SPV has to abide by the International Accounting Standards Regulation (IFRS), which is currently in force in Hungary, as per the rules of the Regulation (EC) 1606/2002.
The law states that companies that are listed on the stock exchange (which can also include SPV companies) must prepare their annual consolidated accounts in accordance with the IFRS procedures.
Where a company is not listed, then the consolidated accounts must be prepared as per the rules of the IFRS, while the annual accounts must be completed as per the Hungarian accounting procedures. Our accountants in Hungary can provide more details on this subject.
What legal entities are available for Hungarian SPVs?
As we mentioned above, one of the ways to open a company in Hungary is by registering it as a limited liability company. The SPV can also take the form of a company limited by shares – and here, there are 2 options – a private company or a public company.
Besides this, the 2017 amended version of the Civil Code prescribes that a SPV can also take the form of a trust. Our consultants in company registration in Hungary can provide more information on how to incorporate a trust if you are interested in this entity.
The trust has been included in the Hungarian Civil Code since 15 March 2014, while the 2017 version provided certain clarifications with regards to the activity of a SPV under a trust structure.
Please contact our team of accountants in Hungary for advice on the accounting procedures applicable to a SPV company. This company type has its own particularities when it comes to taxation, therefore receiving professional assistance would be recommended.
At the end of the financial year, the SPV must prepare its financial statements, and this must be done by accountants with expertise in the field.