In
Hungary, the types of business associations and other entities used for
business operations are regulated in statutes and one may only choose from the
regulated entities when considering investment in Hungary.

The
following company forms are the most common in the business sector:

·       
general
partnership (“Közkereseti Társaság”, “Kkt.”)

·       
limited
partnership (“Betéti Társaság”, “Bt.”)

·       
limited
liability company („Korlátolt Felelősségű Társaság”, “Kft.”)

·       
private
company limited by shares („Zártkörűen működő részvénytársaság”, “Zrt.”)

·       
public
company limited by shares (“Nyilvánosan működő részvénytársaság”, “Nyrt.”)

·       
branch
office (“Fióktelep”)

·       
representative
office (“Kereskedelmi Képviselet”).

The
members of the general partnership and the general partners of the limited
partnership have unlimited liability for the obligations of the company. The
shareholders of limited liability companies and companies limited by shares may
not be held liable for the obligations of the company.

Foreign
companies may also establish a Hungarian branch office or a commercial
representative office. Neither of these entities possess separate legal
personality but they are considered units of the foreign company (“Head
Office”). The branch office may perform the same business activities as
companies registered in Hungary, while the representative office is limited in
its operations. The representative office may only be engaged, in the name and
on behalf of the Head Office, in the mediation, preparation and conclusion of
contracts, provision of information to clients and partners and other related
client service activities.

The
most common company form for investment in Hungary is the limited liability
company, however, a private company limited by shares may be established in
case the issue of shares by the company is necessary for any reasons. Establishing
a branch office is also a favoured option for smaller operations or when the
business presence in Hungary is necessary for a limited time only.

The
company is represented by one or more executives (either natural or legal
persons) who may have individual or joint representation rights. A supervisory
board may, or in some case shall be established at the company, tasked with
reviewing and approving the decisions of the management. The companies may, or
in some cases are obliged, to appoint an auditor for the annual review and
audit of their financial statements.

The above is a non-exhaustive description of
the relevant Hungarian legal provisions. The above summary should not be
considered as legal advice and should not be relied upon when making business
decisions. Before resolving on investment in Hungary, we recommend that you
contact our law firm for detailed, tailor-made legal advice.