The share capital is the amount required for the incorporation of a business in Hungary. While for some entities, there aren’t any capital requirements, for others investors have to prepare a large amount to invest in the company. You can find out below some of the most important matters concerning the share capital in Hungary.
Requirements for companies in Hungary
Some types of Hungarian companies require a minimum share capital in order to be incorporated. The amount of the minimum initial capital in Hungary depends on the kind of enterprise. The shareholders can bear liability according to the investments made in the company.
The share capital in Hungary is one of the first business start-up costs that need to be taken into consideration when deciding to open a Hungarian company. Foreign investments in the country are encouraged and full ownership is allowed.
Hungary has also signed a series of double taxation treaties with other countries and other bilateral treaties guarantee the rights of foreign investors.
Types of companies that require a minimum share capital
The types of companies that require a minimum share capital are:
- the limited liability company (Kft);
- the public limited company;
- the private limited company.
The unlimited partnership and the limited partnership do not require a minimum initial capital. A limited liability company in Hungary has a predetermined initial capital provided by its founding members.
Investors who want to open a Hungarian company of this kind should know that the minimum share capital required is HUF 3 million (around EUR 7,700). The contributions to the initial capital can be in cash or in-kind.
The public limited company requires a minimum share capital of HUF 20 million (EUR 51,900), while the private limited company requires at least HUF 5 million (EUR 12,986). The Companies Act allows that the share capital of these two business forms to be in-kind contributions.
The 2 types of companies mentioned above are known as company limited by shares, that can be set up in the form of a public (Nyrt.) or a private (Zrt.) entity. Our company registration experts in Hungary can help you open a bank account for your company and make the initial share capital deposit.
For accounting services, you can contact our accountants in Hungary, who can help any business type in any accounting procedure that is required by law. Accounting procedures are done following the rules of the Accounting Act.
Also, the statutes of the Ministry of National Economy apply to local and foreign businesses operating on the local market, including to the permanent establishments of foreign companies.
Important matters on the shares of a Hungarian Kft.
If you want to open a company in Hungary as a Kft. (the limited liability company) you must know that, as a shareholder, you will only be held accountable for the company’s debts only to the value of the share capital you participated with at the formation of the entity.
This implies that this legal form offers protection to the investors, in the sense that they benefit from limited liability and that their personal assets can’t be used as a way to redeem corporate debts. It must be noted that the shareholders can participate with different capitals.
However, there is a minimum amount required and the law states that each shareholder must subscribe at least HUF 100,000. Also, it is necessary to know that the amount of shares a shareholder owns will be directly correlated to the capital subscribed.
All matters concerning the shares owned by shareholders, their capital contribution and others are stipulated in the company’s founding document, which must contain a set of compulsory elements.
The document is signed in front of a public notary and when establishing the constitutive document it is highly recommended to receive legal assistance from our team of consultants in company registration in Hungary, who can advise on the stipulations included in the document.
Shares of a Hungarian company limited by shares
Regardless if investors will start the process of company formation in Hungary for a private or public company limited by shares, the law states that at the moment of the incorporation, the company can be set up if the investors deposit at least 30% of the minimum share capital required.
For this company type, there are several categories of shares that can be issued, as mentioned below:
- ordinary shares;
- redeemable shares;
- preference shares;
- employee shares;
- interest-bearing shares.
What other costs are associated with company formation in Hungary?
The share capital in Hungary is just one of the costs investors have to prepare for when starting a business. The amount of the initial investment can increase due to costs such as:
- registration costs;
- lawyer’s fees, notary’s fee and the fees of other parties involved in the incorporation process;
- costs associated with the location of the business (renting/purchasing a commercial space, running the respective location);
- employment costs;
For the 5th point, we recommend you to address our accountants in Hungary, who can advise on your corporate tax obligations (reporting, preparing financial documents), tax minimization procedures, tax benefits and other tax deductions your business can be entitled to.
When it comes to fees for company registration in Hungary, the Hungarian Point of Single Contact specifies the following costs:
- the lowest registration costs are for partnerships, which can cost HUF 50,000 (EUR 130);
- the registration costs for limited liability companies and private company limited by shares are HUF 100,000 (around EUR 260);
- the highest registration fee is charged for the public company limited by shares, which is of HUF 600,000 (EUR 1,550);
- there is also the possibility to open a company in Hungary following a simplified registration procedure, in which case the registration fees are much lower (HUF 25,000 for partnerships, HUF HUF 50,000 for limited liability companies and private companies limited by shares);
- there is also a publication fee, of HUF 5,000, which does not apply for the simplified registration procedure.
Other details about the shares in a Hungarian company
Each member of a limited liability company owns a percentage of the total capital. This quota can be owned by one or more individuals. The company can be incorporated by depositing a minimum contribution, which depends on the company type.
The remaining amount must be paid within one year since the registration. Our experts can help you with details about these contributions if you want to open a Hungarian company.
The public and private limited liability companies can have different classes of shares, like ordinary shares, employees’ shares, convertible shares and others. Shareholders are entitled to participate in shareholders’ meetings and are entitled to dividends, in proportion to the value of their shares in the company.
For more information about the share capital in Hungary and the shareholders’ rights, you can contact our company registration agents in Hungary.