[ESTABLISHING A BUSINESS ENTITY IN HUNGARY]
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financial year. The financial records must reflect a true and fair view of the company’s assets, liabilities, financial position, and profit or loss. The company has to take into account the basic principles of accounting when preparing its records. Such basic principles contain rules for the invoices and accounting documents issued or received and the method of the accounting. Non- compliance with accounting obligations may result in administrative fines or other legal consequences. b. Reporting requirements The company needs to prepare at the end of each financial year a financial statement. A company is entitled to prepare and submit a simplified financial statement if two of the three following conditions can be applied to the company: (i) the company’s balance sheet total does not exceed HUF 1,200 million (approximately EUR 3,100,000), (ii) its annual net turnover does not exceed HUF 2,400 million (approximately EUR 6,200,000) and (iii) the company employs not more than 50 employees in average. Companies not fulfilling the above requirements need to prepare and submit a business report in addition. Companies considered to be parent companies are required to prepare and submit consolidated reports. The companies’ financial statements need to be uploaded to the Electronic Financial Statement Website and these documents are available to the general public. c. Audit requirements The appointment of an auditor is only mandatory if the company’s yearly
revenues exceed HUF 600 million or the company employs more than 50 employees. d. Registers e. Hungarian companies need to maintain different registers themselves, e.g. register of the company’s members. These internal registers must be kept up to date and reflect the current ownership and corporate structure of the company. Annual return Hungarian companies need to submit concerning each financial year an annual return until 31 May of each calendar year if the financial year of the respective company is the same as the calendar year, otherwise, within 5 months from the end of the financial year. f. Requirements for local shareholding/directors There are no requirements for local shareholding or directors, but in regulated sectors some restrictions may apply. g. Minority shareholders’ rights and protection The protection of minority interests is guaranteed in the Civil Code. The members (shareholders) of a company having at least 5% of the voting rights can request that the meeting of the supreme body is convened. If the executive body does not comply with such request, the minority can enforce its right in the court. Minority shareholders have various additional protective rights, such as they can request that an auditor examines the last financial statement of the company or a given act of the executive officers of
ILN Corporate Group – Establishing a Business Entity Series
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