HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
a wide range of measures against unlawful construc - tion, including issuing a notice to comply; if the notice is ignored, they may impose a fine or even suspend the construction until the breach is remedied. Restric - tions on designated use may also be enforced by the locally competent land registry, through similar meas - ures. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets All types of entities are available to investors to hold real estate. The most commonly used entities are lim - ited liability companies ( korlátolt felelősségű társaság , or Kft), private limited companies ( zártkörűen működő részvénytársaság , or Zrt), regulated real estate invest - ment companies ( szabályozott ingatlanbefektetési tár- saságok , or SZIT) and real estate investment funds. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Limited Liability Company The liability of members extends only to the provision of their initial contributions (the amount of each con - tribution may not be less than HUF100,000). Members shall bear liability for the company’s obligations only in very limited cases. The company can be established by a sole member. Public and Private Limited Company The shareholders of a public limited company may not be held liable for the company’s obligations (with some exceptions). Their obligation to the company extends to the provision of funds covering the nominal value or the accounting par value of shares. Limited companies with shares listed on a stock exchange are called public limited companies, while those with shares not listed on any stock exchange are called private limited companies. Investment Funds An investment fund is either an Alternative Invest - ment Fund (AIF) ( alternatív befektetési alap , or ABA) or UCITS (Undertakings for the Collective Invest - ment in Transferable Securities) fund ( átruházható értékpapírokkal foglalkozó kollektív befektetési válla-
lkozásokra , or ÁÉKBV), in accordance with the relevant EU directives and with Act XVI of 2014 on Collective Investment Trusts and Their Managers and on the Amendment of Financial Regulations. An investment fund manager must have initial capital of at least EUR125,000 (or at least EUR300,000 in the case of real estate and mixed funds). Generally, investment funds are exempt from corpo - rate income tax and local business tax. 5.3 REITs REITs are available in Hungary but are not commonly used, as a high percentage of the shares will likely be owned by small investors due to several restrictions for institutional investors. Only a public form exists. Exemptions from corporate income tax and local busi - ness tax are available. 5.4 Minimum Capital Requirement The initial capital of limited liability companies may not be less than HUF3 million, while the share capital of private limited companies may not be less than HUF5 million and the share capital of public limited compa - nies ( nyilvánosan működő részvénytársaság , or Nyrt) may not be less than HUF20 million. An investment fund manager must have initial capi - tal of at least EUR300,000 in the case of real estate funds. 5.5 Applicable Governance Requirements Limited Liability Company The supreme body of a limited liability company is the members’ meeting. The management of a company is provided for by one or more managing directors. If a company has more than one managing direc - tor, said directors may handle management issues as a board or independently, provided that they may raise an objection against the planned or executed actions of any other managing director. Members or founders may provide for the establishment of a supervisory board comprising three natural or legal persons, tasked with supervising management to pro - tect company interests. A supervisory board must be established if the annual average number of full-time employees employed by the company exceeds 200 and the works council did not relinquish employee
308 CHAMBERS.COM
Powered by FlippingBook