Before incorporating a company, we check the proposed company name. This is because it must be different from the names of all previously registered companies and must not be confusingly similar to any of them. The surest way to verify this is through a name reservation. Name reservation is done by submitting an application to the Commercial Registry, for which a fee of 15,000 HUF must be paid.
Within one business day of receiving the application, the Commercial Court will verify whether, at the time of the inquiry, the chosen name is already registered in the commercial register, is in the process of being registered, or is subject to a name reservation. If the chosen company name is eligible for registration in the company registry, the Commercial Court will, by order, reserve the specified company name for the applicant for a period of sixty days and record it in its electronically maintained registry of company names.
During this period, no other legal entity may be registered in the commercial register under this company name, nor may the company name be reserved. Among two or more companies with the same name, the right to use the chosen name belongs to the one that submitted its application for company registration first or that exercised the right to reserve the name.
Based on our clients’ ideas, we also help define the company’s scope of business. Unlike previous rules, it is no longer mandatory to specify the scope of business according to a classification defined by a separate law (the so-called NACE or, in Hungarian, TEÁOR codes). Nevertheless, we usually recommend that our clients use TEÁOR codes for the sake of clarity.
When establishing a company, the members of the company must be named, or in the case of a single-member company, the sole member, as well as the company’s executive officer. In the case of a limited liability company, this is the managing director. As a result of the most recent legislative changes, it is no longer sufficient to enter only the names of the individuals mentioned above, their mother’s birth name, and their address in the company register; their tax identification number must also be included. In the case of foreign nationals who do not have a Hungarian tax identification number, the tax number issued by their home country must be provided.
What is electronic company registration?
According to current Hungarian legislation, company documents are handled electronically, which means that decisions made by the Commercial Court (e.g. orders regarding company registration) are also issued electronically. In practice, this means that the Commercial Court sends its decision in an electronic message, which can only be opened using a special piece of software. We naturally have this software at our disposal, so we can forward the decision to our clients in an easily accessible form.
What is accelerated company registration?
The law permits an accelerated company registration procedure. In such cases, based on experience, the Commercial Court will decide on the registration application on the working day following its receipt. This is the so-called “simplified company procedure”, during which only the articles of association template attached to the law may be used, and no deviations are permitted. This model provides a relatively wide range of options for determining the structure of the company, but there are certain details in the template articles of association that cannot be changed. One such example is the financial year, which in the simplified procedure for companies established using the model agreement runs from 1 January to 31 December. If the founder or founders wish to deviate from this, they cannot choose the faster, simplified procedure and the template articles of association, but must establish the company in accordance with the general rules.