Directors’ Duties in Hungary

>> Board Requirements in Hungary

Appointment of directors

The shareholder has the discretion to decide on the appointment/removal of (any) director. According to Hungarian law, directors can be appointed by the sole shareholder either for a fixed duration of time up to five (5) years or for  an indefinite period.

A limited company requires at least 1 director, unless the articles of association of the company specify a higher number of directors. There is no maximum number of directors that a limited company may appoint.

Board meetings and composition requirements

The following restrictions apply to the appointment of directors:

  • The director must be of legal age and must have full legal capacity in the scope required for discharging his functions.
  • If the director is a legal person, that legal person has to designate a natural person to discharge the functions of the director in its name and on its behalf. The restrictions relating to directors apply to the designated person as well.
  • Any person who has been sentenced to imprisonment for the commission of a crime may not be a director until the crime is deemed as spent.
  • A person may not be a director if he has been prohibited from doing so by any competent authority. Further, any person who has been prohibited by final court order from practicing a profession may not serve as a director of a company that is engaged in the activity indicated in the verdict.
  • Any person who has been prohibited from holding an executive office may not serve as a director within the time limit specified in the prohibition order.

Signatory rights/powers of directors

There is no board of directors in private limited liability companies (“kft.”) in Hungary, managing directors (hereinafter: directors) carry out the duties of the board instead. Directors are entitled to represent the company and handle management tasks individually.

Please note the company is represented by the director and their signatory rights shall be registered by the Court of Registry. Any restriction or division of the power of representation vested upon the director or rendering such director’s actions conditional or subject to approval is not effective as against third parties.

Conflicts

Directors may not acquire any interests, ie share capital, of a legal entity, excluding shares in public limited companies, which is engaged in the same economic activity as GBT.

Further, where a director accepts a new executive office, they have fifteen (15) days from the acceptance of the position to notify any other company in which they already serve as an executive officer or a supervisory board member; particularly where the business activities are regarded as similar.


Latest version updated 22nd March 2018

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9.8

Million

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Hungarian Forint

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