SMP

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Hungary

Typical legal form for start-ups

korlátolt felelosségü társaság (kft.)

Brief information

Hungarian start-ups usually use the legal form of the kft. It is suitable for start-ups in particular due to the limited shareholder liability. The kft. is the equivalent of the German GmbH.

A PE/VC Fund may in principle participate in the Supervisory Board if it is established. Rights for reservation of approval would make a case-by-case examination necessary.

The managing director or directors (ügyvezető) manage the kft. They are responsible for all tasks that are not exclusively assigned to the shareholders' meeting.
A supervisory body is not mandatory. A Supervisory Board (felügyelőbizottság) may be established to monitor the management of the Company. It is usually established only when an investor requests it. The Supervisory Board shall have access to the books of account, shall be provided with the annual report and may convene the Shareholders' Meeting. In addition, the Supervisory Board may be granted a reservation of approval for certain management decisions.

A PE/VC Fund may not participate in the Management.
A PE/VC Fund may in principle participate in the Supervisory Board if it is established.
If the Supervisory Board is granted reservations of approval, it must be examined on a case-by-case basis whether this still leaves sufficient room for the Management to make decisions.

Other legal form

zártkörűen működő részvénytársaság (Zrt.)

Brief information

The Zrt. (private stock company) is rarely chosen by start-ups. It cannot offer its shares publicly or list them on the stock exchange.

A PE/VC Fund may in principle participate in the Supervisory Board if it is established.

A Board of Directors or a single general director (vezérigazgató) manages the Zrt. The establishment of a Supervisory Board (felügyelőbizottság) is generally voluntary and only mandatory under certain conditions (number of employees, demand of 5% of shareholders)

A PE/VC Fund may not participate in the Board of Directors.
A PE/VC Fund may in principle participate in the Supervisory Board if it is established.

The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. Before taking over a board seat in a portfolio company, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.

In collaboration with: Lakatos Köves & Partners / Kinstellar

Sources: Wegen/Spahlinger/Barth, Gesellschaftsrecht des Auslands 2. EL Januar 2018