[ESTABLISHING A BUSINESS ENTITY IN HUNGARY]
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The membership rights in limited liability companies are represented by so-called „business quotas”. The business quota is a notional concept as it is not embodied in physical or electronic form, but is solely registered in the members’ list of the company. The business quota represents membership rights and obligations of each member of the company. In general, each quotaholder has one business quota, however, if there are different rights attached to certain types of business quotas, then the quotaholder is entitled to have more than one business quota in a company. The size of the business quotas of the different members can, however, be different. Furthermore, one business quota may be held by more than one quotaholder. In such case, it is considered as a joint business quota and the relating rights may be exercised by the joint representative of the quotaholders. If not provided otherwise, the extent of voting rights, rights to dividend and other membership rights are linked to the capital contribution made by the respective quotaholder. d. Special rights Special rights can be attached to the business quota of any of the quotaholders. Such special right can, for instance, offer the quotaholder voting preference, dividend preference, liquidation proceed preference or other preferences (i.e. right of the appointment of executive officers) relating to the transfer of business quotas. There are no limitations or restrictions on the extent of such special
rights, they are merely subject to the agreement of the quotaholders. These rights must be clearly defined in the company’s articles of association to ensure enforceability and transparency. The flexible regulation of special rights allows quotaholders to shape the structure of the company according to their specific business interests. e. Transfer of ownership rights Business quotas are freely transferable among the members of the company. However, the members may decide on various restrictions relating to the transferability of the business quotas to third parties, such as pre-emption rights or the requirement for the members’ meeting’s consent. Business quotas may be transferred via a written contract between the seller and the purchaser. The purchase of the business quota must be notified to the managing director of the company which, upon such notification, register the new quotaholder in the members’ list of the company. Business quotas can also be subject to in- kind contributions. In this case, the consideration of the provided business quotas is ownership stakes in the receiving company. f. Dividend Members are entitled to receive a dividend from the distributable portion of the company’s equity as determined and ordered for distribution by the supreme body, in proportion to their respective capital contributions, unless the members agree otherwise (i.e. by granting special rights to certain members). Only those members shall be
ILN Corporate Group – Establishing a Business Entity Series
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