Legal Services in Hungary

Legal services play an important role in maintaining the stability and efficiency of any business. In Hungary, as in any other jurisdiction, quality legal services are essential to ensure compliance with the law, minimise risks and protect the rights and interests of companies.

1. Range of legal services

A wide range of legal services are offered in Hungary, including:

• Corporate law and business registration: Legal assistance in the incorporation of new companies, reorganisations, mergers and acquisitions. This also includes advice on corporate governance and business structuring.
• Labour law: Drafting and reviewing employment contracts, advice on labour disputes and representation in labour relations.
• Real estate and construction: Legal support of real estate transactions, including purchase, sale, lease, and legal support of construction projects.
• Tax law: Advising on optimising tax liabilities, representing clients in tax disputes and liaising with tax authorities.
• Intellectual Property: Protection of intellectual property rights, including patents, trademarks and copyrights.
• Litigation and arbitration: Representing clients in courts of all instances and in arbitration proceedings.

2. Importance of legal services for business

Effective legal services contribute to a stable and predictable business environment. Key benefits include:

• Risk Management: Minimising legal risks through a thorough understanding of legislation and regulations.
• Legal Compliance: Help you accurately comply with all current legal requirements, which is especially important in an ever-changing regulatory landscape.
• Asset and interest protection: Ensuring legal protection of the company’s assets, rights and interests against unfair actions of third parties.
• Supporting growth and development: Legal support for companies’ growth strategies and international expansion.

3. Choosing a legal partner in Hungary

When choosing a legal partner in Hungary, it is important to consider the following factors:

• Experience and specialisation: Experience in the right area of law and successful cases similar to your business.
• Reputation and reviews: Check reputation through reviews by other clients and ratings in legal directories.
• Language and cultural competencies: Ability to communicate in your language and cultural awareness of local businesses.
  

Legal Advice in Hungary

Legal counselling plays a key role in the success of businesses in Hungary. The right legal advice helps businesses navigate through complex legal landscapes, avoid legal risks and maximise their business opportunities.

1. The legal environment in Hungary

Hungary has a complex legal system incorporating elements of continental law, which is governed by a multitude of national laws and regulations and is also influenced by European Union legislation. This creates a dynamic legal environment where quality legal counselling becomes essential for:

• Compliance with corporate and tax legislation.
• Protecting intellectual property and commercial interests.
• Resolution of labour and contractual disputes.
• Guidance in mergers and acquisitions.

2. Important areas of legal counselling

Corporate Law: Corporate legal advice includes assistance with company formation, structuring corporate agreements, managing corporate responsibilities and supporting corporate transactions.

Labour Law: Expert labour law advice is needed for drafting and reviewing employment contracts, dealing with dismissals, leaves of absence and employment disputes.

Tax law: Tax advisors provide information on tax obligations, tax optimisation and help with tax planning.

Compliance: Assistance in complying with local and international legal regulations, especially in regulated industries such as finance, healthcare and telecommunications.

3. Benefits of quality legal counselling

Minimising risks: Professional legal advice helps businesses avoid legal violations and potential fines.

Optimisation of operations: Legal advice contributes to more efficient management of business processes by providing legal defence and support.

Strengthening business relationships: Proper legal execution of contracts and agreements facilitates long-term co-operation with partners and clients.

4. Choosing a legal advisor

When selecting a legal advisor in Hungary, companies should pay attention to their professional experience, industry knowledge, reputation and ability to provide services within the specific requirements of the business. It is recommended to choose professionals with a well-established practice and positive feedback from previous clients. 

Legal Documents preparation in Hungary

Preparing legal documents is a critical task for any business in Hungary, providing the legal basis for all business operations, from company incorporation to day-to-day business transactions. Efficient and professional document preparation helps to protect the company’s interests, minimise legal risks and comply with local legislation.

1. Key types of legal documents in Hungary

Foundation documents: In order to start and register any form of business in Hungary, it is necessary to prepare founding documents such as the articles of association of the company (alternatively, the memorandum of association) and deeds of incorporation.

Corporate agreements: Includes shareholders’ agreements, co-operation agreements and other documents governing internal relations and operations within the company.

Employment contracts: The legal handling of employee relations requires precision in the preparation of employment contracts, ancillary agreements and related documents such as confidentiality policies and non-disclosure agreements.

Commercial contracts: Includes supply contracts, distribution agreements, leases and licence agreements. These documents must comply with Hungarian commercial law and reflect the specifics of the industry.

Legal documents for court and arbitration proceedings: Preparation of claims, answers to claims, procedural documents and other legal materials for presentation in courts or arbitration instances.

2. Best practices in the preparation of legal documents

Accurate compliance with legislation: Ensure that all documents are drafted to reflect current changes in Hungarian laws and regulations.

Consultation with specialists: Consult regularly with qualified lawyers who specialise in the relevant areas of law to ensure the legal accuracy and completeness of the documents.

Clarity and precision: Avoid ambiguity in documents. Clear and precise wording helps prevent potential disputes and misunderstandings.

Confidentiality and data protection: Ensure that your documents comply with the requirements of the Hungarian Data Protection Act, especially when processing parties’ personal data.

Regular document updates: Keep all legal documents up to date by regularly reviewing and updating them in line with changes in legislation and company business processes. 

Legal opinion in Hungary

A legal opinion in Hungary is a document prepared by a qualified lawyer or law firm that evaluates certain aspects of a transaction, corporate transaction or legal situation. Such an opinion plays a key role in commercial transactions, providing assurance to all parties concerned that their actions comply with applicable Hungarian law.

What is a legal opinion?

A legal opinion is a formal document that is usually required in transactions, including financing, the purchase or sale of a business, international contracts and major investment projects. It confirms that all aspects of the transaction have been thoroughly vetted and are in compliance with applicable laws.

The main elements of a legal opinion in Hungary

A legal opinion can cover a wide range of issues including, but not limited to:

• Compliance with corporate requirements: Verification of the operation’s compliance with Hungarian corporate rules and regulations.
• Legality of transactions: Assessing the legality of contracts and agreements under Hungarian law.
• Rights and obligations of the parties: Analysing the rights and obligations of all parties to the transaction.
• Registration and licensing requirements: Indication of the need to register the transaction or obtain specific licences.

Importance of legal opinion for business

• Legal risk mitigation: A legal opinion helps to identify and minimise legal risks associated with commercial transactions.
• Building investor and lender confidence: It gives investors and lenders additional confirmation that the project or transaction is legally transparent and protected.
• Ensuring legal compliance: Ensures that the business complies with all relevant legal requirements, preventing potential legal violations and sanctions.

How to obtain a legal opinion in Hungary

Obtaining a legal opinion begins with selecting a law firm that is experienced in the relevant area of law and is reputable. The process includes:

• Provision of documents and information: Clients must provide all relevant documents and information necessary for the preparation of the opinion.
• Analysis and assessment: Lawyers analyse the data provided, assess the legal risks and prepare a detailed opinion.
• Discussion and implementation of recommendations: Discussing the findings and recommendations of the conclusion with the client and implementing necessary changes to the project or transaction.

Legal audit in Hungary

Legal audit is a key tool for assessing the compliance of a company’s activities with legal requirements in Hungary. This process helps to identify potential legal risks and prevent possible offences, which is important for sustainable development and maintaining the company’s reputation.

What is a legal audit?

A legal audit is a comprehensive review of all legal aspects of a company’s operations, including documentation, contracts, corporate governance, compliance with labour and tax laws, and compliance with intellectual property protection regulations. The purpose of the audit is to ensure that the company’s operations are fully compliant with current legal requirements and standards.

The main aspects of legal audit in Hungary

• Corporate governance: The audit includes reviewing the articles of incorporation, minutes of board and shareholder meetings, and other aspects of the corporate structure and governance.
• Contract Law: Reviewing all commercial contracts and agreements for legal compliance, proper drafting and potential risks.
• Employment law: Review employment contracts, HR policies and compliance with labour laws, including health and safety measures.
• Tax Compliance: Analyses of tax returns and records to verify the accuracy of tax deductions and tax compliance.
• Data Protection Compliance: Evaluate policies and procedures for processing and protecting personal data in accordance with GDPR and Hungarian laws.

Advantages of conducting a legal audit

• Minimise legal risks: Identify and address legal vulnerabilities before they lead to serious problems or legal action.
• Enhancing business reputation: Demonstrating a commitment to high standards of corporate ethics and legality, which increases trust among customers, investors and regulators.
• Operations Optimisation: Identifying redundant or outdated procedures that can be simplified or updated to improve operational efficiency.

How to conduct a legal audit

The due diligence process should begin by selecting an experienced law firm or consultant specialising in corporate law and compliance. Important steps are:

• Preparation: Collection and systematisation of all necessary documents and information.
• Analysis: Detailed examination of the submitted materials for compliance with the legislation.
• Report: Write a detailed report identifying the problems found and recommendations for correcting them.
• Implementation of recommendations: Assist in implementing necessary changes and improvements.

Trademark registration in Hungary

Registering a trade mark in Hungary is an important step to protect your brand and commercial identity in the Hungarian market. A registered trademark not only provides legal protection for your brand against unfair use, but also strengthens its position among consumers, increasing recognition and trust.

1. Understanding the trade mark

A trademark may include words, phrases, symbols, designs or combinations of these elements that identify and distinguish the goods or services of one undertaking from those of others. In Hungary, trademark protection is regulated by the Hungarian Patent Office (HIPO) and relevant international agreements.

2. Preparing for registration

Before filing a trademark application, thorough preparation is necessary:

• Database search: Before filing an application, it is important to ensure that the proposed trade mark does not duplicate or strongly resemble already registered trade marks. This can be done through the online databases of the Hungarian Patent Office or through commercial trademark search services.
• Class of goods and services definition: Trademarks are registered for certain classes of goods and services according to the International Classification of Goods and Services (Nice Classification). Determine which class your product or service belongs to.

3. Registration process

The process of registering a trade mark in Hungary includes the following steps:

• Filing an application: An application for registration of a trade mark is filed with the Hungarian Patent Office. The application can be filed online, by post or in person. The application must contain full details of the applicant, a representation of the mark itself and a list of the goods or services to which it will apply.
• Examination: The Hungarian Patent Office carries out a formal and substantive examination of the application to ensure that it fulfils all requirements and that there are no grounds for refusal.
• Publication and opposition: If the application is successfully examined, it is published for public inspection. Within a certain period, third parties may file an opposition to the registration of the trade mark.
• Registration: Upon successful completion of all steps and no opposition, the mark is registered and the applicant is issued a trade mark registration certificate.

Registering a trade mark in Hungary is a strategically important step to protect your brand and strengthen its position in the market. The process requires careful attention and can take considerable time, but its completion guarantees you exclusive rights to use the mark in commerce throughout Hungary. Seeking the assistance of qualified lawyers and trade mark specialists can greatly simplify the process and increase the chances of success of your application.

Bankruptcy of Hungarian company

Company bankruptcy in Hungary is a legal process designed to resolve insolvency, allowing the debtor to either restructure their debts or liquidate assets to satisfy creditors.

1. Legal regulation of bankruptcy

Bankruptcy in Hungary is governed by several key pieces of legislation, including the Bankruptcy and Liquidation Act. These laws define the procedures and conditions under which a company may be declared bankrupt, as well as the rights and obligations of all participants in the process.

2. Types of bankruptcy procedures

There are two main forms of bankruptcy in Hungary:

• Debt restructuring (Reorganisation): This is a process aimed at restoring the financial health of a company. Restructuring involves negotiating with creditors to change the terms of debt repayment, which may include reducing the total amount of debt or extending its maturity.
• Liquidation: If restructuring is not possible or has not resulted in a solution, the company may go into liquidation. This involves selling the company’s assets to satisfy creditors.

3. Bankruptcy process

The process begins with the filing of an application with the court, either by the company itself or by one of its creditors. The documents must clearly demonstrate the insolvency of the company. Once the application has been accepted, the court appoints a liquidator or restructurer to oversee the process and manage the company’s finances.

4. Consequences of bankruptcy

Bankruptcy can have serious consequences for a business, including loss of control of the company, damage to reputation and loss of assets. For owners and shareholders, it can mean loss of investment and company stock. Employees of the company may face layoffs or redundancies.

5. Strategies for minimising bankruptcy risk

• Ongoing financial monitoring: Regular analyses of the company’s financial condition help to identify problems in a timely manner.
• Diversifying income sources: Developing alternative sources of income can help reduce financial risks.
• Receivables and payables management: Effective management of liabilities and assets helps to maintain liquidity.
• Consultations with legal and financial experts: Regular consultations with professionals help to develop strategies for sustainable financial management.

Liquidation of Hungarian company

Liquidation of a company in Hungary is a formal process that leads to the complete cessation of its activities and removal from the register of commercial organisations. This decision may be taken at the initiative of the company’s shareholders or as a result of a court judgement in the case of bankruptcy. Understanding the liquidation process, its legal implications and how best to manage the process is critical to minimise potential damage to shareholders, creditors and other stakeholders.

1. Causes and initiation of the liquidation process

Company liquidation can be initiated for a variety of reasons, including:

• Shareholder resolution: Shareholders may decide to liquidate if the business cannot be continued, operations are inefficient or the original business objectives have been achieved.
• Legal requirements: In the event of serious breaches of the law or insolvency of the company, the court may order its liquidation.
• Expiry of term: For companies established for a fixed term, liquidation can be initiated at the end of that term.

2. Stages of the liquidation process

The process of liquidating a company in Hungary involves several key steps:

• Resolution and appointment of a liquidator: A resolution to liquidate is passed at a shareholders’ meeting, after which a liquidator is appointed to manage the process.
• Notification of creditors: The liquidator must notify all known creditors of the liquidation and publish a notice to potential creditors.
• Inventory of assets and liabilities: The liquidator conducts a full inventory of the company’s assets and liabilities.
• Satisfaction of creditors’ claims: The company’s assets are realised to satisfy creditors’ claims in the order of priority established by law.
• Distribution of remaining assets: After creditors’ claims have been satisfied, the remaining assets are distributed to the shareholders.
• Closing of the process and exclusion from the register: Once all settlements and payments have been completed, the liquidator files the documents to remove the company from the commercial register.

3. Legal and financial implications

The liquidation of a company has a number of legal and financial consequences, including loss of corporate rights, termination of all contractual relationships and potential tax liabilities. It may also affect the credit history and reputation of the founders and managers.

4. Risk management strategies

In order to minimise the risks and potential damage from a company liquidation, it is important:

• Thorough planning: Prepare a clear liquidation plan, taking into account all legal and financial aspects.
• Professional support: Utilise the services of experienced lawyers and financial advisors to properly manage the process.
• Transparent communication: Open and honest communication with creditors, shareholders and other stakeholders to reduce potential conflicts and misunderstandings.

Liquidation of a company in Hungary is a complex and multifaceted process that requires careful management and strategic planning. Following the correct procedures and utilising qualified assistance can significantly reduce the risks involved and help to achieve the best possible outcome for all parties involved in the process. 

Legal Disputes in Hungary

Legal disputes are an inevitable part of doing business in any jurisdiction, including Hungary. Effective management and resolution of such disputes is critical to maintaining operational efficiency and protecting corporate interests.

1. Types of legal disputes in Hungary

Legal disputes in Hungary can arise in a variety of areas including:

• Commercial disputes: Disputes related to commercial transactions, such as breaches of contract, partnership disputes and corporate disputes.
• Labour disputes: Issues related to employment relations, including dismissals, workplace discrimination and working conditions.
• Property disputes: Disputes relating to property and tenancy, including property ownership and lease disputes.
• Tax disputes: Disagreements with tax authorities regarding tax liabilities and calculations.
• Intellectual property: Disputes related to infringement of copyrights, patents, trademarks and other intellectual property rights.

2. Hungary’s legal system

The Hungarian legal system is based on the continental model of law and includes several levels of the judiciary:

• First instance: Includes district and metropolitan courts, which hear most civil and commercial cases.
• Courts of Appeal: Hear appeals from cases already heard in the courts of first instance.
• Hungarian Supreme Court (Curia): The final instance for all appeals and the most important body for interpreting legislation.

3. Resolution of legal disputes

Dispute resolution strategies include:

• Negotiation and mediation: Many disputes can be resolved through negotiation or mediation, allowing the parties to reach a mutually acceptable solution without going to court.
• Arbitration: Where disputes relate to commercial contracts, arbitration may be provided as the preferred method of resolution. Arbitration awards are enforceable and final.
• Litigation: For more complex or significant disputes that cannot be resolved through mediation or arbitration, litigation is the primary means of resolution.

4. Best Practices for Managing Legal Disputes

• Preparation and documentation: Careful preparation and retention of all relevant documentation can greatly simplify the dispute resolution process.
• Legal support: Use the services of qualified lawyers to properly represent and protect the company’s rights.
• Proactive risk management: Regularly assessing and managing potential risks helps prevent disputes.

Legal disputes in Hungary can have a significant impact on a company’s operations. Proactive management, including proper preparation, the use of alternative dispute resolution methods and the use of professional legal advisors, can help minimise the negative impact and ensure that the company’s interests are protected.

Real estate/property law in Hungary

Real estate in Hungary is subject to a set of legal rules and regulations that govern both local and foreign investment in the sector. Understanding the basics of real estate law in Hungary is critical for anyone involved in buying, selling, renting or managing property in the country.

1. Real estate tenure system

In Hungary, real estate can be owned by natural or legal persons. Ownership of real estate is regulated by the Civil Code and the Real Estate Registration Act. The legislation defines two main types of real estate rights:

• Full ownership: The owner has full legal and de facto right to dispose of the property.
• Limited rights of real property: Includes leases, easements (rights to use other people’s property), mortgages.

2. Registration of real estate

The registration of real estate in Hungary is compulsory and is carried out at the local Cadastral Offices. The entry in the cadastre serves as proof of ownership and is important for the legal protection of the owner’s rights. The following documents are required for registration:

• A signed contract of sale or other transfer document.
• Certificate of Title.
• Confirmation of payment of taxes and fees.

3. taxation of real estate

Property owners in Hungary are liable to pay taxes, including property tax and capital gains tax on the sale of property. Tax rates may vary depending on the location of the property and its type.

4. Rights and obligations of lessees and lessors

Property leases are governed by the Hungarian Civil Code, which protects the rights of both tenants and landlords. The rental relationship must be clearly formalised in writing and the contract must specify the terms of the lease, the terms, the rent and the terms of termination.

5. Investments in real estate

Hungary is attractive to foreign investors due to its strategic location in Europe and relatively low property prices. Foreign investors may purchase property after obtaining permission from the competent local authorities, except for EU citizens for whom the process is simplified.

6. Dispute resolution

Legal disputes related to real estate are resolved in civil courts. However, many disputes can be resolved through mediation or arbitration, which is often a faster and less costly solution.

An understanding of real estate law in Hungary is crucial for anyone involved in real estate in the country, whether buying, selling, managing or renting properties. Clear compliance with legal requirements and effective management of the legal aspects of real estate transactions protect investments and contribute to the success of a business.