Liquidation of the company in Hungary

We, as the Prikhodko and Partners Law Firm, have experience in the liquidation of companies in many jurisdictions, but today we would like to draw your attention to the specifics of the liquidation of a company in Hungary.

Based on our experience, we can note that the liquidation of a company in Hungary is a complex and regulated process that requires strict compliance with legal norms and procedures.

The liquidation procedure can be both voluntary, initiated by the owners of the company, and forced, carried out by a court decision. Below we will consider in detail the procedure for the liquidation of companies according to the current legislation of Hungary, step-by-step actions and features of this process.

The procedure for the liquidation of companies according to the current legislation of Hungary

Hungarian legislation on the liquidation of companies is based on the Companies Act (Act V of 2013 on the Civil Code) and other regulatory acts. These laws define the procedures that must be followed to liquidate a legal entity.

The main stages of liquidation include the following:

1. Making a decision on liquidation: This is the first step that needs to be approved at the general meeting of shareholders or participants of the company. The decision on liquidation must be documented in the form of meeting minutes.
2. Appointment of liquidator: One of the directors of the company or another authorized person can be chosen as the liquidator. The appointment of a liquidator is mandatory for the further conduct of the liquidation process.
3. Notice of liquidation: The liquidator is obliged to submit an application to the Registration Court to make an entry about the liquidation in the commercial register. This announcement is also published in the Official Gazette for the information of the public and creditors.
4. Informing creditors: The liquidator must notify all known creditors of the start of the liquidation process and set a deadline for presenting their claims.
5. Settlements with creditors: The liquidator carries out an inventory of the company’s assets and organizes their sale to meet the demands of creditors. This includes both monetary settlements and the transfer of property to account for debts.
6. Completion of liquidation: After completing all the procedures, the liquidator prepares a financial report on the liquidation, which must be approved by the shareholders or participants of the company, and then submitted to the Registration Court for the final removal of the company from the commercial register.

The step-by-step liquidation of the company, which is quite similar to the procedure in Ukraine, consists of the following:

1. Making a decision on liquidation:

• Holding a general meeting of shareholders or company participants.
• Drafting of minutes of meetings indicating the decision on liquidation and the appointment of a liquidator.

2. Appointment of liquidator:

• Selection of the liquidator at the general meeting.
• Drawing up the relevant documents and submitting them to the Registration Court.

3. Notice of liquidation:

• Publication of the liquidation announcement in the Official Gazette.
• Sending notices to all known creditors about the start of the liquidation process.

4. Settlements with creditors:

• Keeping the register of creditors of the company.
• Inventory of company assets.
• Valuation of assets and, if necessary, their sale to satisfy the demands of creditors.

5. Closing accounts and distribution of remaining assets:

• Closing the company’s bank accounts after all settlements are completed.
• Distribution of residual assets among shareholders or participants of the company in accordance with their shares.

6. Completion of the liquidation and submission of the report:

• Preparation of the final financial report on liquidation.
• Approval of the report at the general meeting.
• Submitting a report to the Registration Court to exclude the company from the commercial register.

The peculiarities of the liquidation of companies on the territory of Hungary include the following

1. Legal regulation: Hungarian legislation provides for clear and transparent liquidation procedures, which helps to protect the rights of both shareholders and creditors.
2. The role of the liquidator: The liquidator is responsible for managing the company’s assets, fulfilling financial obligations to creditors and preparing reports. Its actions are strictly regulated by legislation that prevents possible abuse.
3. Tax obligations: The company must fulfill all tax obligations to the state before the liquidation is completed. This includes filing all required tax returns and paying taxes.
4. Duration of the process: Liquidation of a company can last from several months to several years depending on the complexity of the case, the amount of assets and the number of creditors. The involvement of professional lawyers and accountants can significantly shorten this period and ensure the successful completion of the procedure.
5. Communication with authorities: The liquidator must maintain constant contact with the Registration Court and other government authorities to ensure that all necessary procedures are followed.

The liquidation of a company in Hungary is a complex and multi-stage process that requires careful planning and compliance with all legal requirements, with which the specialists of the Law Firm “Prikhodko and Partners” can help at a professional level.

Contacting our specialists and accountants will help to avoid mistakes and ensure the successful completion of the liquidation procedure.