The new Hungarian Civil Code was enforced in May 2014 and unlike the previous Civil Code it contains provisions about the corporate law. The new Civil Code also brings regulations about the management of companies in Hungary, mainly known as compliance management.
What does compliance management mean for Hungarian companies?
Compliance management represents a set of rules meant to discover and stop corporate crimes, to prevent problems from happening and improve business operations. Compliance management was introduced in order to improve the management and the employees’ work environment. Compliance management can be done through:
– Laws on how to conduct or perform an activity in a company;
– Internal regulations;
– Work and wage regulations;
– Equal and fair employment opportunities;
Executive officers according to the new Hungarian Civil Code
The new Civil Code in Hungary has set new laws about the executive officers of companies and their rights and duties towards the business. Hungarian executive officers have the right to decide about the company management. A limited liability company will be managed by a general director and a management board or a board of directors, and a private limited company is managed by a chief executive officer (CEO). Executive officers must fulfill their tasks by themselves and must have an employment relationship with the company.
The Hungarian executive officer will have the company’s best interest in mind and can only be replaced by the articles of association, by legal actions or by the decision of the company’s supreme body. Executive officers may be nominated for an indefinite amount of time, or for five years, if the term is definite.
Executive officers have the following tasks:
– To found a company;
– To provide information and access to documents and register regarding the company;
– To legally represent the company;
– To file the annual reports to the competent authorities. If you are looking for the services of legal experts to get citizenship in Hungary, you are welcome to get in touch with our lawyers. They can guide you in detail about the possible routes of acquiring citizenship here. For instance; you will be eligible if you have lived on Hungarian soil for three years and meet the following criteria: You have been wed for three years to a citizen of Hungary, and you are his or her spouse (or a widow); you are the parent of a minor kid who is a citizen of Hungary; your adoptive parents are Hungarian nationals; you are a refugee.
Liability of executive officers in Hungary
According to the new Civil Code the executive officers will be held liable to the legal person only if damages have been made by breaching a contract. If damages have been done as consequences of circumstantial facts that could not have been foreknown, the executive officer will no longer be liable.
A new law has been enforced in case an executive officer harms a third party without any contractual liability. If an executive officer causes damages to a third party in connection with his office, the executive officer will be held liable as representative of the company and on a separate account from his office.
If you want to set up a company and need details about the new Civil Code you can contact our law firm in Hungary.