The new Civil Code has been approved on February 11, 2013 and will enter into force on March 15, 2014. It was adopted in this law that an ltd (kft.) can be established with a registered capital of HUF 3 million again.
But what does it actually mean?
The most important detail which has an impact on company establishment is that the minimum registered capital of establishing an ltd(kft.) will be HUF 3 million in 2014. Kft. could be established only with a minimum equity capital of HUF 3 million before; the minimum equity of HUF 500,000 has been in force since September 1, 2007. This change in legislation has also made it possible for the operating companies to lower their share capital from HUF 3 million to HUF 500,000. A significant number of companies have availed themselves of this possibility.
Did any of the parties may derogate from this rule?
According to the general rules yes, but there are some limitations. Its fixed rate is not defined anywhere for the minimum equity. It is expected to be determined by the Registry Court. But it seems certain that Registry Court judges will not likely to allow from the minimum capital requirement. For example, for the protection of creditors, in case of general rules, derogation possibilities are limited, so if the Registry Court considers that the protection of creditors is undermined because of a rule difference – and discrepancy from the capital requirement may absolutely be such a difference – then a minimum registered capital of HUF 3 million is required in case of ltd (kft.) establishment.
Shall the share capital of existing ltd’s (kft) be modified?
It is likely that the existing kft’s will be required to be modified. It also means that business owners will again be required to carry out modifications in their companies, the cost of which is higher than that of the required modifications at the beginning of 2013.
If modification is required, when?
It is expected that moratorium will be imposed on share capital increases of the existing kft’s, which was typically 1,5-2 years earlier. I would like to point out that the relevant rules are still under consideration. At least 200,000 kft’s will be subject to a mandatory capital increase.
What do you need to know about the period before the rule enters into force?
The new Civil Code will come into force on March 15, 2014. In other words, since this date, it is almost certain that no kft. can be established with less than a registered capital or share capital of HUF 3 million. However, until then everyone has the opportunity to establish a kft. with a registered or share capital of HUF 500,000.
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